We Want To Leave Here Today Owning The Future of our region, together, by keeping St. Louis businesses rooted locally so . . . Founders & Owners Leave a Legacy
Jobs Are Protected
Generational Wealth Is Built For More Families
Seeing Challenges As Opportunities St. Louis is facing a convergence of economic challenges, but we will explore and provide a tangible roadmap for how to turn them into opportunities.
Embracing The Power of An Ecosystem Over Silos Because we are ambitious in the challenges we choose to transform into opportunities and the impact we want to achieve, we will explore the importance of building an ecosystem full of partners of all kinds over a single organization as the “silver bullet.”
Sharing A Highly-Informed Strategy Our first time publicly sharing the Initiative’s strategy after multiple years of learning, research, relationship building and partner cultivation, designing, and iterating.
The Program ● ● ● ● ● ● ●
Welcome Why EO, Why Now: Data and Insights Lunch Panel Discussion Ecosystem Learnings From Across Country Introduction to the Initiative Call to Join Us
Why Employee Ownership, Why Now? The Silver Tsunami
The State of Business In Missouri - Risk and Opportunity Julie Leonhardt, JD — Missouri Center for Employee Ownership
The Silver Tsunami 2.34 million
51%
15%
U.S. Census 2023: Baby Boomers hold ownership of 2.34 million employer firms.
In 2022, 51% of all U.S. small business owners were Baby Boomers according to SBA data.
According to PwC’s 2023 U.S. Family Business Survey, only 15% of family businesses owners by baby boomers today have a robust, documented, and communicated business succession plan.
Missouri Businesses
St. Louis County
City of St. Louis
Boomers plan to sell their business to a third party
Historically, only 1 in 3 sellers find that buyer.
Employee Ownership for the Wins The owner gets paid for the value they created in their businesses.
Employees keep their jobs and have the opportunity to build wealth.
Jobs and services stay rooted in local communities.
Growth & Resilience
Recruitment & Retention
2.4% higher sales and employment growth year after year (NCEO)
Employee ownership creates attractive workplaces, offering employees better pay and benefits, a voice in decision making, and an opportunity to build individual wealth
Employee-owners are six times less likely to be laid off; 50% less likely in the last two recessions (Rutgers)
Median Wage Income is 33% Higher
Household net worth is 92% higher At a time when 4 in 10 Americans don’t have $400 on hand for an emergency, long-term workers at ESOP firms can retire as with real wealth.
In Missouri 187 # of ESOPs
112,883 $189,358 $88,351 # of participants
Average participant value
Median participant value
Employee Ownership Strengthens Communities Closing the wealth gap Employee owners have build wealth over time, a powerful tool for addressing wealth inequality, and in particular racial wealth inequality
Business and job retention Jobs, wealth, and services stay in our local communities, ensuring our communities continue to thrive
Employee Ownership Types
Why Employee Ownership, Why Now? What Our Insights Mean For The Field
The Architecture of Employee Ownership: What Owners Want and What Actually Works Peter Boumgarden, PhD — Koch Center for Family Enterprise, WashU
Insight 1: When Not Families, Employees Are The Preference “For many firms, families and family-like individuals (employees) are their top priority in transition.” — Olin Brookings - National conjoint study of 557 business owners (US Bank, ENOVA, Edward Jones), 2024
A Preference for Family & “Family Like” Transitions Preferred buyer identity, mean utility score (557-owner conjoint, 2024) Selling to a family member was the most preferred exit (+40 utility) — but selling to the company’s own employees was a strong second (+30), far ahead of an individual buyer (neutral) and well ahead of private equity or a competitor. This pattern held across every partner population sampled — and was strongest among the largest, most established firms. While small (~20 owners), the Kansas-Missouri subsample in the data was even more pro employee ownership (+44) and more private equity averse (-51)
+30 Employee-buyer utility — second only to family (+40)
−28
Private equity
−41 A direct competitor
Distinct Kinds of Sellers A cluster analysis of the conjoint data sorts owners into distinct segments — and only some are structurally ready for an employee-ownership deal. Family-First Legacy — 38%
Price Maximizers — 39%
Employee Champions — 6%
Overwhelming value on family; employees a strong second choice; firmly rejects PE and competitors.
Weighs the purchase price above all else; will demand close to full value regardless of buyer.
Ranks employees first and is nearly price-insensitive — willing to sell below market to the right steward.
Insight 2: Matching Ownership Architecture
Linking the ownership preference data to the downstream leverage of the ESOP provides a better sense of for whom there is a natural match.
5–10%
Typical discount owners will accept to sell to employees
44%
Will fund a real equity cushion
56%
Want close to full price instead
The Equity Cushion What owners give up determines how much debt the deal can carry Because acquisition debt in a leveraged ESOP roughly tracks sale price, the discount owners say they'd accept translates into less leverage on the business.
Linking Seller to Discount Given that sales price proportionately tracks the leverage put on the business by the seller, it is important to note that the wrong seller (or seller of a business in an industry whose size or cyclicality put it at risk) may not be the right fit for an ESOP transition.
Insight 3: The Value of Ecosystems in Addition to Policy
An early analysis of Missouri’s ESOP tax credit suggest the policy levers may be less strong than ecosystem factors — 15-year Form 5500 panel, five metro areas, 2010–2024
No Detectable Policy Effect Five-metro difference-in-differences, 2010–2024 (Form 5500 filings) Missouri’s 50% capital-gains exclusion on ESOP sales — in place since 2016, made permanent in 2023 — produced no statistically significant change in the number of ESOPs, new formations, participants, or plan assets once a credible control group (Kansas-side KC, Omaha, Oklahoma City) is used. Every estimated effect was statistically indistinguishable from zero.
If anything, this suggests the importance of broader ecosystem design (university, capital providers, TA, etc.)
The Ecosystem of Progress Determining a path forward involves both identifying what firms are a natural for employee ownership that don’t pursue it, and identifying the strategies most likely to drive long-term EO flourishing. Q2
Q1
What increases the number of firms interested in deploying employee ownership?
Natural Fit
What drive the innovation of ownership forms (within and beyond EO), and the capital stack to support it?
EO
rive Th
(Owner/Firm)
ESOP Poor Fit
(Owner/Firm)
Q3
What increases the likelihood of a firm landing in the ownership model that best fits its unique dynamics?
Stabilize
Dis so
lve
EOT
Q4
What capital structure, human capital development, and regional ecosystem design increases the likelihood of positive outcomes for the employee-owned firm?
Lunch
Panel Discussion
Our Panelists
Emmy Allison
Brad Dunn
Tristan Tahmaseb
Ryan Sawall
Apis & Heritage Capital Partners
CK Supply Inc.
ButcherJoseph & Co
Chief Executive Officer
Director
McCarthy Building Companies, Inc.
Strategic Partnerships
CEO of the Central Region
Panel Discussion
Q&A
Building an Employee Ownership Ecosystem
Why Ecosystem Development? Employee ownership is most impactful within an ecosystem of intentionally coordinated support.
Ecosystem Development ___________ The coordination of actors that support the success of EO and its ability to scale.
A Framework For Ecosystem Development Essential Elements
Important Elements
Environmental Elements
The basic building blocks for any EO ecosystem
Accelerate ecosystem growth
Help normalize, legitimize, and popularize EO
No EO ecosystem is the same, and no ecosystem possesses all elements of ecosystem strength.
Elements of EO Growth Ecosystem ESSENTIAL SKILLS & CAPACITY
FINANCING & FUNDING
BUSINESS DEVELOPMENT
TA
BUSINESS SUPPORT
CONNECTION TO MARKET
POLICY
ADVOCACY PARTNERS
VALUES DRIVEN BUSINESSES
ATTITUDE & CULTURE
EO EDUCATION
IMPORTANT
ENVIRONMENTAL
Every Ecosystem Is Different Successful ecosystems use EO to solve specific challenges and build on existing strengths.
● Integration into existing services ● Embracing innovation ● Building local awareness ● Investing in local capacity
Apex Underground ESOP Conversion Colorado ● ● ● ● ● ●
Supportive State Policy Values-Aligned Business Owner Innovative Financing via Apis & Heritage Capital Partners Ownership Culture Education 120+ new employee owners A&H portfolio firms see 66% post-conversion growth on avg.
Ward Lumber Worker Cooperative Conversion New York ● ● ● ●
Family-owned business for 4 generations 50+ employees / new owners Coordinated support via SBDC, state grants, CBO TA, and CDFI financing 50+ employees become owners
Assessing EO in St. Louis Qualitative Research
Analysis & Scoring
Essential Elements
Recommendations
Important Elements
Environmental Elements
Thank you! ● Complete your Partnership Reflection ● Leave completed cards on your table ● Complete the table top cards and leave them on your table
atnguyen@institute.coop | jmckinley@institute.coop
The Strategy
Our Vision The St. Louis economy is resilient and growing through employee ownership. Jobs are protected, employees build real wealth, and retiring owners leave a lasting legacy.
Our Region Is At A Crossroads: Who Will Own Our Future? The Core Of Our Economy Is At Risk "About 70% of business owners across the St. Louis region are at or nearing retirement” - Jim Maher Only about 20-30% of small businesses listed for sale ultimately sell successfully. - Exit Planning Institute
We Aren’t Retaining or Attracting a Workforce
The Wealth Gap Harms Too Many
If the region grew at the
21% of St. Louis households have a net wealth of zero or negative, meaning they own no assets or they owe more than they own.
rate of comparable places in the U.S., it would have 4.2 million people. Instead, we have approximately 2.8 million people. - Dr. Ness Sandoval
Align & Activate
Provide Connections & Support
Cultivate & Coordinate Capital
Our Mission
Anchored By Three Core Strategies
We are an ecosystem of partners that protect local jobs, builds the wealth of our region’s workforce, and supports retiring owners sell their business by growing the number of employee owned businesses through: 1.
Aligning partners and activating champions to grow the pipeline of potential businesses to become employee owned.
2.
Providing connections to high quality technical assistance and transaction support for businesses to become employee owned and democratically governed.
3.
Cultivating and coordinating capital providers to finance transactions and success of employee owned businesses.
The Three Core Strategies
Align Partners & Activate Champions 1. 2.
3. 4.
Build public awareness and grow broad support Grow the pipeline of businesses exploring EO through a robust referral network (e.g. chambers, business associations, wealth advisors, etc.) Convene and coordinate partners to align outcomes, strategies, and resources Grow enabling policy, systems, and government infrastructure
Connect to Technical Assistance & Transaction Support 1. 2.
3.
Increase understanding of ownership types and access to clear pathways to them Provide access high-quality vetted partners for feasibility studies, support for transactions, and connections to capital providers Deploy philanthropic dollars for feasibility studies and technical assistance for businesses to become employee owned
Cultivate & Coordinate Capital Providers
Subheading
1. 2. 3.
Assess the local, state, and national capital landscape Cultivate capital providers to integrate employee ownership into their strategy Coordinate a range of capital – bank financing, CDIFs, funds, PRIs, etc.– to finance transactions, and provide working capital to support long-term growth and sustainability
Broad Yet Targeted We are moving the Silver Tsunami from a significant risk to our local economy toward a major opportunity. Converting even a modest share into ESOPs can be transformative for retiring owners, the workforce, and the region. Yet, most business are not ESOP aligned. The Initiative believes in, invites, and convenes partners that support a broad range of employee ownership models.
ESOPs
Cooperatives
Shares held in retirement trust; democratic ESOPs allow for employees to have board seats
Workers own membership shares directly
Employee Ownership Trusts (EOTs) Trust holds shares for employees benefits
Business Profile For ESOP Transitions With 50–70% of businesses in St. Louis owned by people nearing retirement—and most lacking succession plans—this is a once-in-a-generation opportunity. Profitable
50-200+ Employees
Prioritized Industries
Profitable firms with positive cash flow, typically generating at least a few million dollars in annual earnings
This range is large enough to justify a transaction and have a significant impact on the lives on the workforce and the region’s economy
Succession ready, important to region, employees at the margins ● ● ● ●
Manufacturing Construction Transportation & Warehousing Facilities / Administrative Services
An Owner’s Path: From Awareness to Transaction 0. Awareness
Outreach, education
1. Explore
2. Assess
3. Structure
4. Execute
5. Support
Owners learn options & benefits; local support
Feasibility review (financial, legal, org)
Transition team builds deal and governance
Agreements signed, loans drawn, board elected
Ongoing training, ownership culture
Defining Success: Triple Impact For Retiring Owners
For The Workforce
For The Region
Sell for a fair value & protect and create a lasting legacy
Build generational wealth
Protect the region’s tax base and grow the economy
# of businesses transitioned
Avg. wealth of workforce at businesses transitioned to EO
Amount ($) of revenue that remains and grows in local economy
First Three Years: Proof of Concept
1. 2.
Establish the Initiative’s infrastructure. Build pipeline and public awareness. a. Grow our business referral network. b. Grow our pipeline of businesses.
1.
Employee Ownership is emerging as a regional economic development priority. 1st round of businesses become EO with 500 employees on a trajectory of closing the wealth gap.
2.
The Potential Is Unparalleled A Region Worth Calling Home Because We Own Our Future “...low/moderate-income workers have ESOP account values ranging from $15,000 to $6 million, with a median value of $165,000. By contrast, the typical American household has just $17,000 in savings.” - Rutgers Institute for the Study of Employee Ownership and Profit Sharing
$17,000
$165,000
$82,500,000 in new wealth generated by our first 500 employee owners in the region
We Have A Real Opportunity To Own Our Region’s Future The Initiative is growing an ecosystem with a role for you to win so that our region win’s. Legacy
Wealth
Regional Prosperity
Sell for a fair value & protect and create a lasting legacy
Build generational wealth
Protect the region’s tax base and grow the economy
Join Us GROW THE PIPELINE: refer your clients, become prepared to become an effective champion and ambassador.
EXPLORE EMPLOYEE OWNERSHIP AS YOUR SUCCESSION PLAN: discuss with our team and partners the options, benefits, and determine if this is a viable option. FINANCE THE TRANSFORMATION AND THE TRANSITION: fund the Initiative and/or work with us to learn about and explore financing employee ownership transactions.
Thank You For Your Time Today! “The best way to predict the future n is to create ow it.” – Abraham Lincoln ● Leave your partnership reflection ● Visit the WEPOWER & MOCEO tables