When it’s Time To Exit Your Business, Reward Those Who Lifted You

“Responsibility equals accountability equals ownership. A sense of ownership is the most powerful weapon a team or organization can have.” – Pat Summit, former national champion women’s basketball coach

The hardest part was probably getting here: Deciding to exit the company that’s been your life, and your baby, and your endless focus. 

You want to do it on your own terms. You keep hearing this term: “ESOP.” You don’t want to just sell the business and walk away, leaving those left to whatever fate holds for them.

No, you recognize that some really great people lifted your organization’s success. They weren’t all management, either. Many were down in the trenches, doing the hard daily work that made things go.

You want to reward all your people, not just a few. Every person who showed up day after day should know your appreciation. No favorites here. No exclusions, either.

If this is your goal, your plan to exit gracefully, one solution accomplishes this (and more): an employee stock ownership plan (ESOP).

An ESOP allows you to sell stock to employees, rather than a third party. Employees can be granted shares, and allowed to buy additional stock at a set price.

An ESOP creates a culture of ownership. Employees feel like partners. You’re doing more than rewarding them financially, though – you’re helping to ensure the long-term vitality of the organization.

As owners, employees are motivated to perform better, and improve the value of their shares. Studies have borne this out, along with ESOPs improving employee retention and serving as a magnet to attract additional talent. Who wouldn’t want to work for a company where they’re also an owner?

Employee ownership is a huge incentive on many levels. When success is tied to employees’ own efforts, greater buy-in and long-range perspective tend to rule the day. Studies have indicated that employee-owned firms grow faster and have higher profitability.

Especially as demographic trends squeeze the labor force, the reduced turnover and absenteeism rates of ESOP firms bode well for their long-term survival. When employees are beneficial stock owners where they work, they tend to stay and be especially productive.

One misconception about ESOPs is that, by selling shares to employees, ownership loses control. Wrong. Ownership can stay involved in the organization on a level of their choosing, and/or hand the company over to a management team. Employees are not necessarily privy to confidential information, either.

One of the benefits of an ESOP is its flexibility. Future posts will examine how you can stay involved with your company in as large (or small) a role as desired. Meanwhile, you will have given your workforce a “thank-you” enjoyed by very few.

Intrigued? Contact Excel Legacy Group to start considering the options for rewarding those who stuck with you, even as your future unfolds. Generosity is a quality that never goes out of style.