THE BOTTOM LINE

What if...

…. you were told that you could sell some of your company to your employees for fair market value and enjoy the fruits of your hard work now?

What if the employees paid nothing for their shares, but now had real retirement funds?

And what if the company became more productive and was exempt from Federal and State tax on profits? 

Crazy? No…It’s called an ESOP.

An ESOP is an “Employee Stock Ownership Plan”. In 1996, the federal government created a program that allows owners of businesses to sell some or all of their companies to their employees.

The employees pay nothing...rather, the business takes on a note (a “mortgage”) that gets paid over a number of years. 

The owner gets paid fair market value, and now the employees have real ownership, and real retirement savings. Not surprisingly, Employee Owned companies are much more productive than non-employee owned firms.

And here’s the best part...An ESOP company’s profits are tax free – forever.

And very few people know about this. 

We are the nonprofit Pennsylvania Center for Employee Ownership. We are CEO’s and former CEO’s, Industry Experts, Foundations and major US Universities interested in helping you. We don’t sell anything or charge for helping. We want to support communities, while improving the economy and the lives of citizens of our Commonwealth. This is good for all of us.

Here’s a true story from an employee of a Pennsylvania plastics manufacturing company:

Why We’re An ESOP Company

By Ann Phy

NewAge Industries manufactures plastic and rubber tubing in Southampton, Pennsylvania, just north of Philadelphia. In 2006 we became a partially employee-owned company when Ken Baker, our CEO, sold thirty percent of the S corporation to an employee stock ownership plan (ESOP).

Baker sold another ten percent to the ESOP in 2013 and in June 2016, transferred an additional nine percent, bringing the ESOP’s total ownership to forty-nine percent. Why? Because having employees become invested in the company instills the pride of ownership, puts a succession plan in place and discourages buyers that may target NewAge for acquisition.

A company-wide meeting is held annually and individual ESOP account statements are distributed to all employee owners. Although we know the company is very successful, we’ve still been pleasantly surprised to see the amount of money growing and waiting for us at retirement. Since its inception, the value of our ESOP has increased nearly sevenfold, growth that’s hard to beat with any other type of investment.

Our ESOP puts more decision-making, customer satisfaction goals and future success into our hands. Financial and recognition-based incentives encourage everyone to think of the customer first and to look for ways to improve processes, products and ourselves. 

NewAge Industries has expanded carefully in recent years and continues to do so. We’re currently renovating space for new production and storage areas and have job openings in several departments.

The media shares news of companies across all industries being bought and sold on a regular basis. ESOPs can help dispel employees’ fears of competitive buyouts, plant closures and job losses. It’s a viable option that involves employees on many levels as it improves morale, and most importantly, benefits customers, owners, employees and the future success of the company.

NewAge® is a registered trademark of NewAge® Industries, Inc. Ann Phy is NewAge Industries’ Marketing Coordinator and a 26-year employee. She has witnessed the company grow from 25 employees to 130 and from a small distributor to the multi-million dollar, respected manufacturer it is today.

Some Pennsylvania ESOP Companies you may know:

Dansko Shoes, Sheetz, Wawa, Bradford-White Water Heaters & 250 others!

If you would like to learn more, please feel free to contact Kevin McPhillips, Executive Director, at , or visit us at www.paceo.org. We would love to hear from you. We’re helping to change lives in Pennsylvania…one company at a time.