What is EO?

EO is a business model in which the employees have an equity stake in the business making them full or part owners. EO is beneficial to the business, the employees, and the community.

There are three models of broad-based EO, each with a unique set of considerations and benefits.

Employee Stock Ownership Plans (ESOPs) are qualified retirement plans that transfer all or a portion of the company's stock into a trust administered on behalf of the employees.

• Recommended for companies with 40 to 50+ employees with $2M+ in revenue
• Tax benefits for the seller, the employees, and the business
• Highly regulated by the Employee Retirement Income Security Act and the Department of Labor
• No cost to employees who are given shares at retirement

Worker-Owned Cooperatives are fully employee-owned businesses. The employees share in both the equity and the governance of the business. They have lower start-up costs and allow workers to make decisions as business owners.

• Works for any size business
• Governance is democratic with workers voting on board members, making up the majority of the board, and making major decisions in alignment with agreed-upon bylaws
• Ownership is equal amongst employees
• Lower setup and administrative costs
• Tax benefits for the seller and the business
• Employees have a small financial buy in, giving them a greater sense of ownership

Employee Ownership Trusts (EOTs) safeguard EO by combining a trust with aspects of a worker cooperative.

• Ensures perpetual ownership by employees
• Flexible structure allows design specific to the needs of the business
• Lower setup and administrative costs
• Free to employees 

To find out which EO model may be right for your business, talk to an EO expert.