Latest news with #ProjectEquity
Forbes
04-08-2025
- Business
- Forbes
A New Take On Shareholder Primacy
Evan Edwards is the CEO of Project Equity, a national nonprofit that helps businesses and communities build wealth through shared ownership. Much has been written about a shift away from shareholder primacy—the idea that an enterprise's primary duty is to maximize returns for its shareholders—as the top measure of its success. Shareholder primacy traditionally focuses on concentrating power and wealth in the hands of a few. This imbalance leads to many negative business and social outcomes that critics typically highlight—decisions that prioritize quarterly earnings over long-term growth and sustainability, a widening wealth gap between executives and frontline workers and a lack of business resilience in economic downturns. Critics have pointed out how this approach often leads to short-term decision-making, wealth disparities and even economic instability. In response, many alternative models have been proposed, from stakeholder capitalism to ESG-driven governance. While these conversations are meaningful, they frame shareholder primacy itself as the fundamental problem. But what if we addressed shareholder primacy's potential imbalances by coupling shareholder satisfaction with increasing the overall number of shareholders at the same time? I'm talking about employee ownership (EO). Beyond Zero-Sum I spent years working in the tech startup world, where equity ownership was a given. Founders, investors and employees are all expected to have a stake in the company's success. In many ways, tech startups challenge the traditional shareholder model, recognizing that widespread ownership helps attract talent, fosters commitment and drives innovation and productivity. This principle should extend beyond startups. At Project Equity, we approach these challenges through a different lens. Ownership, management and governance at employee-owned companies are not zero-sum games. Ownership, when broadly shared, can be a tool for alignment, accountability and long-term success. Employee ownership provides a proven way to bring in more shareholders. And by expanding ownership to workers, we can distribute the benefits of economic success more equitably while strengthening the businesses themselves, often in multiple ways. More Impact In More Ways One important way employee ownership strengthens businesses is by enhancing their ability to attract and retain talent. For example, Rutgers University found that during the pandemic, employee stock ownership plans (ESOPs) helped retain jobs at a rate of four to one compared to non-employee-owned companies. EO businesses are also less likely to face layoffs during economic downturns, adding to the overall stability of the business. Take Local Ocean Seafoods on Oregon's central coast, for example. Since completing its transition to an employee ownership trust (EOT) with a loan from our Employee Ownership Catalyst Fund in November 2022, the culinary company's turnover rate has steadily decreased to 40% last year, roughly half the industry standard rate of nearly 80%. Even though they were only an EOT for a few months in 2022, they elected to run a simulated profit share at the end of the year, allocating $122,000 to their team. Employee ownership often drives this kind of culture shift, where new ideas and collective decision-making are prioritized. Na Young Ma, the founder of Proof Bakery, a business we helped transition to EO, shared this insight with researchers from the University of California, Berkeley. She noted that when the bakery transitioned to employee ownership, it experienced rapid growth, tripling its revenue within a few years following the transition. As the co-op grows, it creates new opportunities to nurture its members' unique contributions and provides a workplace where they can actively exercise their ownership. Transitioning to employee ownership shifts the mindset from "this is where I work" to "this is what I'm building." We often refer to this shift as an ownership culture, where new ideas are generated among highly motivated and informed people, becoming the norm with EO. I've seen how this change can strengthen workforce retention and engagement, while elevating the recruiting process by attracting motivated individuals who want to create a lasting impact and share in the success they help achieve. Workers As Shareholders: A Good Idea For All Ultimately, through employee ownership, incentives can be aligned with traditional shareholder models by prioritizing the interests of both workers and shareholders. It's not an either-or situation. In working with CEOs as they transition to employee ownership, I have observed that employees are motivated to perform for the organization as a whole, rather than just for their own individual benefit. The beauty of EO as a business strategy is that it recognizes that ownership, operations, management and governance are not at odds. This alignment expands the number of shareholders while creating a more just and sustainable economy. Shareholder primacy, when viewed through the lens of employee ownership, can form a successful loop that benefits everyone within the economic ecosystem. Forbes Nonprofit Council is an invitation-only organization for chief executives in successful nonprofit organizations. Do I qualify?
Entrepreneur
08-05-2025
- Business
- Entrepreneur
Why Buying a Retiring Business Is the Smartest Move for Young Entrepreneurs
Boomer-owned businesses tend to be in better financial and operational shape than others; the longer it's been in operation, the better its track record. Opinions expressed by Entrepreneur contributors are their own. An upheaval is reshaping the small business landscape, but contrary to popular belief, it's not necessarily a destructive force — it could be your golden opportunity. Financial experts are calling it the "silver tsunami": the wave of small business ownership transfers triggered by the retirement of the Baby Boomer generation, who currently own 30 percent of the nation's nearly 35 million small businesses, according to Guidant Financial and the U.S. Small Business Administration, respectively. For younger entrepreneurs, this could be a game-changer. With Baby Boomers retiring at an accelerating pace, now is the ideal time for Gen-Xers and Millennials to step into business ownership — if they're prepared to navigate the unique dynamics of buying a company from a retiring generation. Related: Baby Boomer Businesses Are Up for Grabs — Here's How Entrepreneurs Can Benefit In 2025 Why should you buy from a Baby Boomer? Let's break it down with hard numbers. Fewer than 15 percent of boomer companies are passed on to the family's next generation, according to Project Equity, a non-profit employee advocacy group. The rest? They're up for grabs. Often, the reason isn't that the business is struggling. In fact, Boomers tend to run businesses that are more financially stable and operationally sound than others. Their companies have survived economic downturns, evolving markets and changing technologies, and many have grown stronger because of it. For prospective buyers, this means more stability and less risk. But that doesn't mean you can skip the due diligence process. As always, carefully vet any business you're considering purchasing. However, compared to other businesses, those owned by Baby Boomers tend to have a better track record, especially as they're generally more seasoned and experienced. The challenges of buying from a Boomer Despite the clear advantages, buying a business from a Baby Boomer comes with its own set of challenges. For many, selling a company they founded feels like giving up a child. If the owner is the sole decision-maker, their departure could leave a leadership vacuum that makes the transition challenging. It's crucial to assess whether the company is prepared for leadership succession and whether there are any gaps in the management team. Additionally, many Boomer-owned businesses may rely on outdated technology. While some owners are tech-savvy, others have resisted upgrading their systems. This presents an opportunity for the buyer to modernize and grow the business using newer tools, including AI, digital marketing and automation. If you're comfortable with technology, this gap is your chance to gain an edge. Another consideration: while this emotional attachment can complicate the transition, the right buyer might actually find that it clears the way for a smoother exit. If the owner's children aren't interested in taking over, the business may not carry the same emotional weight. For instance, a medical device company that transitioned from family ownership to a third-party buyer saw an 87% increase in valuation just 18 months after the sale. Related: Want to Start a Business? Consider Buying One Instead — Here's Why. Key considerations before you dive in 1. Get expert guidance You'll need a seasoned business broker who specializes in your industry. Look for one with experience, credentials, and transparency in both their process and fees. Additionally, enlist the help of an experienced CPA to scrutinize the business's financials and ensure there are no surprises post-sale. A smart, well-negotiated deal could give you the leverage you need to succeed from day one. 2. Evaluate company culture If the team is close to retirement or the business has long-term employees, you may face the challenge of retention. Consider offering incentives to retain key staff, especially if the owner's departure could create unrest among loyal employees. Also, evaluate whether the company's culture aligns with your vision for growth and innovation. 3. Negotiate a transition period One of the best ways to ensure a smooth transition is by negotiating a transition period where the previous owner stays on for several months. During this time, they can train you, introduce you to key vendors and customers, and help you integrate into the community. This is especially important if the owner has strong local connections or a reputation that could give your business an initial boost. Be sure to include this transition period in your purchase agreement. Turning a legacy into your own Though you may encounter comments like, "The old owners never did this," buying a Boomer-owned business can set you up for success in ways that starting from scratch never will. The silver tsunami isn't just a wave to watch from the shore — it's a massive opportunity for those ready to ride it. Acquiring a business with an established customer base, track record, and reputation allows you to build on a solid foundation. Instead of re-inventing the wheel, you can leverage years of experience and industry connections to grow and innovate. And with the right adjustments — whether it's streamlining operations, upgrading tech, or enhancing company culture — you can leave your own mark on the legacy and build your own. Now, more than ever, Baby Boomer retirees are opening the door for the next generation of entrepreneurs. If you act strategically, the silver tsunami could help you build your own legacy, with the lessons and opportunities of the past firmly in your corner.
