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Employee Ownership
For Small- and Medium-Sized Businesses in Massachusetts
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About the Massachusetts Center for Employee Ownership
Employee ownership preserves jobs in small- and medium-sized businesses. Failure to plan for business succession is the leading preventable cause of job loss in the U.S.
If you are considering converting your business to employee ownership, Massachusetts Center for Employee Ownership (MassCEO) can help!
MassCEO is administered by the ICA Group, in partnership with Working Wealth with funding from the state. This means that we are able to provide business owners with free support for succession planning. If you are a Massachusetts business owner considering employee ownership (converting your company to a worker cooperative, ESOP, or other hybrid model) we can:
- Help you identify your goals around transitioning your business to employee ownership
- Complete an initial valuation of your business
- Assess whether a transition to employee ownership is financially and operationally feasible
- Connect you with service providers who can assist you with a transition to the appropriate employee ownership model
For more information or to sign up for a free consultation, contact Insiyah Bergeron at ibergeron@icagroup.org or call 617-232-8765 ext. 1117.
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Types of Employee Ownership
Employee Stock Ownership Plan (ESOP)
An ESOP is a specialized stock bonus plan that is allowed to invest primarily in employer stock. ESOPs are governed by both the Internal Revenue Service and the Employment Retirement Income Security Act (ERISA). In an ESOP, workers do not own the stock of the company directly, but rather through a trust.
Worker Cooperative
A type of firm where the employees directly own and control the business on a democratic basis of “one person, one vote.” Typically all workers, including management, are eligible to be member owners after meeting certain requirements, including paying a membership fee. In a worker cooperative, ownership and control of the business are derived from working in the company, rather than from simply investing capital in it.
Hybrid Worker-Owned Firm
A type of firm that shares ownership with its employees. This can take on many forms
and structures.
To learn more about these options, read our guide Types of Employee Ownership.
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Why is Massachusetts investing in employee ownership?
2 out of 3 small business owners don’t know all of their exit options. Only 17% have a written exit plan.
49% of firms employing 10-100 workers are majority controlled by Baby Boomers, now retiring at unprecedented rates.
Each year, approximately 42,000 Massachusetts jobs are lost due to businesses that permanently close.
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Employee ownership is a powerful succession strategy that is gaining traction around the country. Converting to employee ownership is good for:
Selling owners who can cement the legacy they’ve built in their community while receiving a fair return from the sale of the business
Workers whose jobs are preserved and who are able to build equity via the business
The Commonwealth which will benefit from a strong base of firms that are less likely to close or lay off staff during economic downturns
Through MassCEO, the state of Massachusetts is now able to provide the necessary supports to ensure that retiring business owners have an exit plan in place and that they are exploring all their available options, including selling to their employees.
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Employee-Owned Businesses in Massachusetts
Paragus IT provides outsourced IT services to small and medium businesses in the Pioneer Valley. These services include help desk services, IT project services, security and compliance, and IT strategy. The company employs 50 full time people and switched to employee ownership in 2016.
PV Squared is a solar company that was founded as a worker-owned cooperative in 2002, with the goal of creating sustainable, living wage jobs to strengthen the local economy. Today, they serve as an example of how worker-ownership creates a culture of investment.
A Yard & A Half is a landscaping cooperative based out of Waltham, Massachusetts. When founder Eileen Michaels was ready to retire, she chose to sell A Yard & A Half to her employees who have continued to grow the business and secure its long-term success.
Keep the Doors Open: ICA’s Business Resilience Program
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Resources
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Created by an act of the Massachusetts Legislature in 2017, the Massachusetts Center for Employee Ownership advocates employee ownership through education and outreach to business owners across the Commonwealth. MassCEO is administered by Working Wealth and the ICA Group. The ICA Group is the oldest national nonprofit organization dedicated to the development of worker cooperatives with a mission to center worker voice, grow worker wealth, and build worker power.
For more information or to sign up for a free consultation, contact Insiyah Bergeron at ibergeron@icagroup.org or call 617-232-8765 ext. 1117.
