Sean-Tamba Matthew recently had an article, “Maximizing Stakeholder Value in Business Transitions,” published in Pennsylvania Bar News.
The article examines “stakeholder capitalism” in the context of business transition. An excerpt follows, and you can view the article in its entirety here.
“… A ‘stakeholder capitalism’ approach can have the double bottom line effects of providing economic value to closely-held business owners while ensuring opportunity and benefit for stakeholders in one critical aspect: business transitions. With nearly $10 trillion in business value transitioning during the next decade and only 20-30% of businesses that go on the market selling, transitioning a closely-held business to new owners while providing liquidity to selling shareholders can be an uncertain process that often ends with value left on the table or with businesses being shuddered after an owner retires. Such results can be disastrous for a business’s employees and the communities in which the companies operate.
“Fortunately, two mechanisms in the law allow business owners to get liquidity from their businesses while providing a chance for their employee stakeholders to build wealth — establishing an employee stock ownership plan (ESOP) or converting to a worker cooperative. Both options offer the transfer of ownership or the benefit of ownership to a company’s employees while using tax-advantaged dollars.”