Working Paper – Investing in Employee Ownership: A Fund-Level Model for Conversions


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Note: This is a working paper, for a final version to be released after a comment period in July 2019.

We are pleased to share with you our latest report, Investing in Employee Ownership: A Fund-Level Model for Conversions

As the wealth gap continues to grow, especially along racial lines, it is imperative that all stakeholders – movement leaders, workers, and aligned investors – consider all of the options for creating asset-building opportunities for marginalized communities.

Employee ownership is a way for workers to participate in the value they create, exercise their power and agency, and build material assets that reflect the worker’s contribution vis à vis capital. Decades of studies have confirmed that employee ownership yields measurable benefits for workers, the companies that implement it, and the communities where those companies are located.  

Business owners, especially retiring ones, are increasingly looking to convert their businesses to employee ownership structures. Conversions provide an exit for the owner and are a viable alternative to a private equity or strategic sale that keeps jobs local and creates wealth for workers.

What will lead to more conversions to employee ownership? An obstacle historically has been the availability of aligned capital that meets the needs of owners without placing undue risk on workers.

This report explores the viability of a new fund model that combines a private equity + ESOP structure, already in existence, to shepherd companies to employee ownership while centering workers, especially people of color and low-wage workers from marginalized communities. As such, it provides both a model for the conversion process at scale with non-extractive finance, and impact recommendations and guardrails to ensure that benefits accrue first and foremost to workers.

We hope this contribution helps activate a drastically higher amount of capital for employee ownership conversions that center workers.

We welcome your comments through July 1, 2019 (email