Founded in 2020, the Minnesota Center for Employee Ownership is a free and unbiased hub for information and resources on employee ownership. MNCEO provides business owners and their advisors throughout Minnesota with articles, case studies, and a list of service providers who can assist them with all facets of their employee-ownership journey.

Employee ownership refers to a situation where a company's employees hold shares or ownership rights in the business. This means employees have a financial stake in the company's success, which allows them to participate in the organization's profits and decision-making process to some degree.

According to recently published data by the U.S. Department of Labor, there are approximately 225 employee-owned businesses in Minnesota and 6,500 nationwide.

The three most common or popular types of employee ownership are:

1. Employee Stock Ownership Plans (ESOPs).

2. Worker-Owned Cooperatives (WOCs).

3. Employee Ownership Trusts (EOTs).

ESOPs are retirement plans, somewhat like 401(k)s, except the invested dollars all go into the company where employees work. More importantly, like a 401(k), an ESOP is tax-advantaged. Whatever portion of the company is owned by the ESOP pays no federal or state corporate income tax.

An EOT is a trust that is created to own the shares of a company. The primary purpose of an EOT is to run a company on behalf of the organization’s employees. The EOT also owns the company’s shares perpetually and cannot be sold.

A WOC is a values-driven business that is owned and managed by its workers. Worker cooperatives are based on the idea that employees should benefit from their labor and have a say in how the business is run. Profits not retained for growth are also distributed evenly among employee-owners.

For business owners, the primary benefits of considering employee ownership include increased employee engagement and productivity, reduced employee turnover, an enhanced company culture, potential for increased profitability, successful succession planning, tax advantages, and improved community perception, which all stem from employees feeling a direct stake in the company's success and working harder to achieve shared goals. 

Research by the National Center for Employee Ownership shows that workers tend to have higher wages, more considerable retirement benefits, a lower risk of job loss during economic downturns, and higher job satisfaction. 

Companies across different industries and sizes can benefit from employee ownership, including construction, manufacturing, professional services, transportation, and more. Some examples of employee-owned companies in Minnesota include Room & Board, Split Rock Studios, Long Haul Trucking, and Windings, Inc. 

The process of transitioning a company to employee ownership can take anywhere from a few months to a couple of years. The most common timeframe is 6 to 12 months, depending on the complexity of the company and the level of preparation involved. Some transitions might be completed faster with expert guidance, while others may take longer due to intricate legal and financial considerations. 

In Minnesota, there are currently 52,000 business owners over the age of 55 who willmost likely exit their respective businesses in the next three to five years. As a result,it is imperative that they consider all their selling options so that jobs are not lost,which would have a negative impact on workers and the local economy. This closely watched phenomenon is often referred to as the “Silver Tsunami” by business leaders and reporters.

As one of 11 state centers created by the Employee Ownership Expansion Network, MNCEO provides business owners and their advisors throughout Minnesota with articles, case studies, and a list of service providers who can assist them with all facets of their employee-ownership transitions.

MNCEO’s initial funding came from its board of directors, professionals in the field, employee-owned companies, and the Employee Ownership Expansion Network. Today, grants from the McKnight Foundation, Otto Bremer Trust, the Duluth Superior Area Community Foundation, and many others have allowed MNCEO to grow and expand the message of employee ownership throughout Minnesota.