About 40 years ago, a smattering of critics said ESOPs were nothing more than a way for wealthy owners to cash out of their businesses. The typical ESOP, these critics said, wouldn’t last more than a few years. After that, it would be sold to the highest bidder.
Those critics were right about one thing—ESOPs are a great way for owners to cash out of a business. But the critics misunderstood a vital factor that motivates owners to sell to employees, instead of someone else.
It is longevity.
When you start or own a business, you invest a great deal of yourself into it. You bear a responsibility to your customers, and to the people you employ. And the way you meet that responsibility reflects who you are as a person; it reflects your values and ideals.
If you value what you have built, you want to see it live on. And you want the people who helped build it to shepherd it into the future, and to be rewarded for doing so.
In short, you want your company to carry on.
If your business is solely a way to make the greatest amount of money possible, why go to the trouble of setting up an ESOP—which might sell to the highest bidder a few years later? Why not cut out the middle man and sell to the highest bidder today?
For proof that ESOPs are an enduring form of ownership, just look at the list of Silver ESOPs—companies that have maintained an ESOP for at least 25 years. The ESOP Association has been honoring members that reach this milestone since 2008. In that time, 386 member companies have achieved Silver ESOP status.
Take those 386 companies and multiply them by the 25 years they’ve each had an ESOP, and you come up with 9,650 years of ESOP management.
Any many of those firms are still going strong—which probably makes their founders and former owners very happy indeed.
The 2016 Silver ESOP Award companies are:
American Systems Corporation, Chantilly, VA
Black, Gould & Associates, Inc., Phoenix, AZ
BRPH Companies, Melbourne, FL
Bryant Air Conditioning & Heating, Lincoln, NE
Cannon Cochran Management Services, Inc., Danville, IL
CTL Engineering, Inc., Columbus, OH
EBO Group, Inc., Sharon Center, OH
Edmund A. Allen Lumber Company, Momence, IL
First State Bancorp, Inc., Caruthersville, MO
Goettle Construction, Cincinnati, OH
Granco Clark, Inc., Belding, MI
Great Lakes Orthodontics Ltd., Tonawanda, NY
Jackson’s Hardware, Inc., San Rafael, CA
KCI Technologies, Inc., Sparks Glencoe, MD
Kemner-Iott Group Agency, Adrian, MI
Kendall Electric, Inc., Portage, MI
Messer Construction Co., Cincinnati, OH
Morton Buildings, Inc., Morton, IL
New England Controls, Mansfield, MA
Pavement Recycling Systems, Inc., Mira Loma, CA
Prime-Line Products Company, Redlands, CA
Rable Machine, Mansfield, OH
Slakey Brothers, Sacramento, CA
Telephone Electronics Corporation, Jackson, MS
Trans-Overseas Corp, Romulus, MI
Veterinary Service, Inc., Modesto, CA