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Could Employees Be the Next Owners of Your Company?

Posted on November 5, 2020

Editor’s note: Daniel C. Kenary is Co-founder and CEO of Mass. Bay Brewing Company, Inc. (The Harpoon Brewery) and a former Board Chair of Associated Industries of Massachusetts.

The crowd was unusually quiet and well-behaved for a Harpoon company meeting.

It was a Wednesday afternoon in July 2014 in our Seaport Beer Hall.  The taps were open only a few feet away.  All two hundred or so of our employees were gathered together for a special meeting.  Most thought it was to discuss priorities for the second half of the year.

A few noticed some unknown visitors standing on the other side of the bar.  Somewhat concerning was that several of them had on suits, a rare sight at the brewery.  Whispers started that maybe this was a more important meeting than usual.

Would Mass. Bay, holder of brewing license 001 from the Commonwealth of Massachusetts, be going the way of so many other craft breweries and announcing a sale to a large brewer or private equity firm?

After some introductory remarks I got to the point of the meeting which was to introduce the new owners of a 48 percent stake in our brewery.  At his point you could hear a pin drop.

I asked everyone to turn to the person next to them and shake hands since they were all now owners of our company.  After a second or two of quiet disbelief, the Beer Hall erupted into cheers and applause – and a few tears of relief and joy.

Jobs were secure.  Ownership was settled.  And the people who had helped me build one of the largest craft breweries in the country were going to share in the future financial success of our business.  Check out this video for a recent take on what this means to our employees.

Employee stock ownership plans (“ESOPs”) have a marketing problem.  Lots of misconceptions or half-truths circulate in the business world about the pitfalls or drawbacks of employee ownership.  Like all good things in life, ESOPs come with strings attached.  But the benefits to all parties involved – and to society at large – are potentially enormous.

The benefits for employees are more obvious, but I want to focus here on the benefits for company owners and economic policy makers.

For owners, if you decide to sell your company to your employees through an ESOP:

  • You and other stockholders will receive the full appraised value of your shares payable in one lump sum or over time – your choice. And if you own at least 30 percent of the shares, you may be eligible to defer taxes on your capital gains.
  • You can finance the sale not with employee’s money but with pretax profits the company earns in the future.
  • You can preserve the legacy of the business you have worked so hard to build.
  • You will be protecting the jobs of people who helped you along the way and leave them in a situation where they are likely to achieve greater financial security.
  • If you are not ready to retire, you can choose what role you want to play in the company and for how long – and enjoy the significant benefits to company culture resulting from employee ownership.

For political leaders and economic development officials, imagine what it would look like if many of the businesses in Massachusetts were owned by their employees:

  • The local economy would be more vibrant and deliver higher productivity.
  • The wealth created would be shared more widely, leading to more broadly based prosperity.
  • The employee-owned companies would be less likely to move away and their employees are less likely than others to be laid off during a recession.
  • you would have the opportunity to champion an economic program that enjoys broad bipartisan and public support.

So why aren’t there more ESOPs?  As I said, we have a marketing problem.  With the “gray wave” of Baby Boomer-owned companies coming up for sale over the next decade, we have the opportunity – and responsibility – to encourage good decisions by business owners and public officials.

For more information, please join me for a panel discussion Is an ESOP Right for your Business? at noon on December 2.  For more details, click here.

*Some material in this article was taken from the Guide to Employee Ownership prepared by the National Center for Employee Ownership (