New Fund to preserve jobs by acquiring companies and converting them to employee ownership
“ Our theory is that the reason employee ownership has been slow to grow is a lack of agency — no one is incentivized to promote employee ownership conversions in a way that can compete with the strength of the traditional mergers and acquisitions ecosystem. We believe that mission-driven capital can become that agent, helping close the awareness gap and mobilize others to the cause,” says Jessica Rose, director of employee ownershipinitiatives at The Democracy Collaborative. As a strategic advisor to Evergreen Cooperative Corporation’s newly launched Fund for Employee Ownership, Rose says, “The new Fund for Employee Ownership will test this theory.”
The Fund will raise its capital from philanthropic and social impact investors who want to see their investment dollars drive economic inclusion and community wealth building. With many baby boomer business owners approaching retirement, the idea is to buy these small and mid-size businesses at market value, convert them to employee ownership, and provide ongoing support to assure long-term success of the employee owned firms. The Fund will focus on acquiring businesses in Northeast Ohio.
The strategy is designed to be a win-win-win for retiring owners, employees, and the communities that host the businesses. According to a recent reportfrom Capital Impact Partners (CIP), the vast majority of small business owners do not have a succession plan, and most are unable to sell their businesses upon retirement. Among the businesses CIP analyzed, 9 out of 10 businesses failed to be sold. Closure not only means that the owner is unable to realize his or her investment and rely on it for a secure retirement, but jobs are lost and communities are hurt. By buying these businesses and converting them to employee ownership, Evergreen Cooperatives will help owners to realize their investment, maintain their legacy, and preserve jobs in vulnerable communities.
“The work of the Fund for Employee Ownership will be a vital way to keep quality jobs in the communities that depend on them, especially when so many business owners facing retirement lack a clear plan for succession that can preserve their legacy and protect their employees.”
For Brett Jones, executive vice president at Evergreen and director of the new fund, “The work of the Fund for Employee Ownership will be a vital way to keep quality jobs in the communities that depend on them, especially when so many business owners facing retirement lack a clear plan for succession that can preserve their legacy and protect their employees.”
The Evergreen Cooperatives are a nationally recognized network of companies based in Cleveland, Ohio, that creates jobs and builds community wealth through employee ownership. In May 2018, the Evergreen Cooperative Laundry demonstrated how the conversion strategy would work when it assumed operations of the Cleveland Clinic’s laundry facility in the Collinwood neighborhood, saving jobs for the community and putting 100 employees on a path to accelerated employee ownership.
Companies acquired by the Fund for Employee Ownership will be integrated into the Evergreen Cooperative Network, which will provide ongoing support by leveraging systems for inclusive hiring and financial empowerment, ensuring that the new companies grow successful ownership cultures, and providing shared back-office functions.
Says John McMicken, CEO of the Evergreen Cooperative Corporation, “Our new Fund will build upon the successes of existing Evergreen businesses and our decade of experience in cooperative business development and training, to bring the proven benefits of employee ownership to more workers, companies, and the neighborhoods where they operate.”
@karenakahn provides communications consulting and editorial support for Fifty by Fifty
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