Types of employee ownership

Business owners have many reasons to be proud—and many reasons to consider employee ownership. When we bring on a client, we listen closely to their goals. Not only do we ensure a fair price can be negotiated for their business, we strategize the process to meet each individual needs.

There are three main types of broad-based employee ownership, all of which have been around for many decades: Employee Stock Ownership Plans (ESOPs), worker cooperatives and Employee Ownership Trusts (EOTs).

Each employee ownership model has key characteristics. We can help you decide what will work best for your company.

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EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)WORKER-OWNED COOPERATIVEEMPLOYEE OWNERSHIP TRUST (EOT)
SUITABLE COMPANY SIZE40+ employees,
$750K+ EBITDA
Any sizeAny size
TAX BENEFITS TO SELLING OWNERCan opt for $1042 deferral of gainsCan opt for $1042 deferral of gainsNo
TAX BENEFITS TO EO BUSINESSS Corp tax avoidanceTax deduction for patronageTax deduction for profit-sharing
SETUP AND ONGOING COSTSHighLowLow
FLEXIBILITY OF MODELWithin ESOP parametersWithin coop parametersHighly flexible
EMPLOYEES BUY THEIR SHARESNocheckNo
EMPLOYEE ROLE IN STRATEGIC DECISION-MAKINGOptionalcheckOptional
PARTIAL EO TRANSITIONcheckcheckcheck
PROFIT-SHARING BUILT INNocheckcheck
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EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

SUITABLE COMPANY SIZE40+ employees,
$1 million+ EBITDA
TAX BENEFITS TO SELLING OWNERCan opt for $1042 deferral of gains
TAX BENEFITS TO EO BUSINESSS Corp tax avoidance
SETUP AND ONGOING COSTSHigh
FLEXIBILITY OF MODELWithin ESOP parameters
EMPLOYEES BUY THEIR SHARESNo
EMPLOYEE ROLE IN STRATEGIC DECISION-MAKINGOptional
PARTIAL EO TRANSITIONcheck
PROFIT-SHARING BUILT INNo

WORKER-OWNED COOPERATIVE

SUITABLE COMPANY SIZEAny size
TAX BENEFITS TO SELLING OWNERCan opt for $1042 deferral of gains
TAX BENEFITS TO EO BUSINESSTax deduction for patronage
SETUP AND ONGOING COSTSLow
FLEXIBILITY OF MODELWithin coop parameters
EMPLOYEES BUY THEIR SHAREScheck
EMPLOYEE ROLE IN STRATEGIC DECISION-MAKINGcheck
PARTIAL EO TRANSITIONcheck
PROFIT-SHARING BUILT INcheck

EMPLOYEE OWNERSHIP TRUST (EOT)

SUITABLE COMPANY SIZEAny size
TAX BENEFITS TO SELLING OWNERNo
TAX BENEFITS TO EO BUSINESSTax deduction for profit-sharing
SETUP AND ONGOING COSTSLow
FLEXIBILITY OF MODELHighly flexible
EMPLOYEES BUY THEIR SHARESNo
EMPLOYEE ROLE IN STRATEGIC DECISION-MAKINGOptional
PARTIAL EO TRANSITIONcheck
PROFIT-SHARING BUILT INcheck

Interested in learn more about employee ownership?

Explore these case studies and discover what owners have to say about becoming employee-owned.

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