For Nexus Community Partners, business conversions to worker ownership is part of its community wealth building initiative that seeks to promote local and broad-based ownership and encourage economic practices rooted in cultural communities.
This work received a shout out in the Nonprofit Quarterly’s “Nonprofits Shift Baby Boomer Businesses to Worker Ownership in Bid for Community Sustainability.”
“If you’re a boomer business owner planning for succession, you can’t afford to overlook the employee ownership option,” writes Lori Shepherd in Entrepreneur.
At NPQ, we have written about the growing prominence of employee ownership, but mostly from the perspective of the value of preserving businesses and jobs in the community. Still, these community benefits will only be realized if business owners agree to sell to their employees. So, what would drive a business owner to do so?
While the ability to defer capital gains tax is a factor, it turns out there are also powerful market incentives. A wave of retirements (2.4 million, Shepherd estimates) has long been expected in the decade or so to come, and as Shepherd points out, “In a crowded marketplace, transferring full ownership to the workers may represent [retiring owners’] best chance to sell their businesses at fair market value.”