NJ effort to get owners are selling their companies … to their employees?
The New Jersey/New York Center for Employee Ownership at Rutgers is working to stem the tide of the so-called "silver tsunami" — the wave of baby boomers closing their companies to retire, leaving employees out in the cold.
Center Executive Director Bill Castellano says there is an alternative to closing up shop, and that's turning the keys over to employees.
"You have an increasing and large number of businesses, particularly in New Jersey, that are headed up by Baby Boomers who are planning to retire over the next 10 years," he says. "Across the country, there is going to be a huge tsunami of businesses sold as a result of this demographic trend."
Castellano says they want to help small and medium Jersey businesses transition to this employee-held ownership.
"That is the strategy. Firms that look at the option of using what we call an "ESOP," an employee stock ownership program, to sell their companies to employees.
"The sweet spot for this type of transaction are companies with employees between 50 and 250 and $10 million or so in revenue."
He says employee-owned firms are more productive and employees are more engaged.
"It certainly deals with the ongoing problem of income inequality — offering employees not only a regular salary, but also ownership stakes in their companies."
Joe Cutter is the afternoon news anchor on New Jersey 101.5
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