I transitioned my business to employee-owned in 2022. Here’s why you should too.

Too many business owners leave their life’s work in the hands of private equity—often ending
up with a fat wallet and a broken heart as they watch their business legacy unravel overnight. I
chose a different path: I sold my company to my employees.
I started my business in 1986 when I was 24 years old and too dumb to know better. But one
advantage of starting a business when you’re young and don’t have any children is that the cost
of failure is lower. No mouths to feed and no house payment to make meant that I would’ve
been fine had I flopped.
My business grew. I worked alone for several years and slowly added people, one at a time,
year after year. We grew steadily, and I was fortunate to have a loyal team that stayed with me
for the long run. Their long-term commitment was central to our success. Now we have 65
people, and I’m grateful to the long-term employees who helped me get it to that size. They
were significant in the success of the business. That’s why when I approached my retirement
years, I decided I wanted to give back to them.
When I first started researching exit plans, the more I dug into it, the more I saw a recurring
pattern–business owners who sold their businesses to private equity firms almost immediately
regretted it.
I knew several former business owners who, as soon as the sale happened, saw drastic
changes made to businesses they had built from the ground up. Vendor and customer
relationships deteriorate, and employee morale plummets as the company morphs into
something unrecognizable. One friend of mine watched as the new owners moved all of the
administrative operations out of state within the span of two months. Technically, the employees
weren’t laid off, but many could not make the move due to family commitments in their
community.
To quote a former business owner I know, “My net worth has never been higher, and my self
worth has never felt lower.”
I didn’t want that for myself or for ACP. I wanted the people who made our company successful
to benefit from a business transition. That meant it had to work well for our employees, vendors,
and customers. For me and my business, the best course of action was employee ownership.
Since our ownership transition, sales, service levels, and profits have all gone up. The day we
announced the transition was unexpected, and a lot of the employees didn’t fully get it at first.
But they gradually understood as we transitioned leadership and regularly explained how
employee-ownership works. I see employees thinking more like owners think, saying things like,
“I never thought of it from this side of the business… I guess I should start doing that more.”
I also hear heartwarming comments. One employee-owner said to me, “My gosh, I never
thought in my lifetime that I would get an opportunity like this.” That is a business legacy I am
very grateful to be a part of.
Employee ownership is a great business exit option for many reasons. When you disrupt a
business, the customer service level drops. An option like transitioning business ownership into
the hands of employees who have long worked in their position and know the ins and outs of the
company makes sense. Employee ownership preserves continuity and protects the legacy of a
company—customers, employees, and communities all benefit.
There are many employee ownership options. The Employee Ownership Trust (EOT) worked
best for me and my business because it created a positive experience for all employees at ACP
International. With an EOT, ownership of the company is put into a trust for the benefit of
employees. The company is owned and controlled by the trust, and the benefits are paid to the
employees through profit sharing in the form of a payroll bonus.
In needing to think about business succession, I’m not alone. According to data provided by the
nonprofit, Texas Center for Employee Ownership (TXCEO), more than half of privately owned
businesses in Texas are owned by baby boomers. As 206,500 of them retire, how those owners
choose to exit will reshape the state’s economy for decades. By selling their businesses to their
employees like I did, they’ll keep loyal employees in the business, businesses in the community,
and the legacy of the business alive.
If you’re considering your own exit, I urge you to explore employee ownership. It preserves the
business you built, rewards the people who helped build it, and keeps communities strong. I
converted my business to employee-owned in 2022 for one simple reason: my employees are
the reason we’ve gotten as big as we have today. One day, I woke up in 2021 and decided I
needed to come up with a transition plan for when I retire. My employees are the reason we
grew. Employee Ownership was my way of saying thank you.
Joe Nussbaum is the President of ACP International, a manufacturing company he founded in
1986 and transitioned to 100% employee ownership in 2022.