Understanding the Impacts of Esops

🚨 HoldCo News Alert. There’s a fascinating announcement that caught my eye: the launch of a new holding company called Nine Dean. Why does it matter? Because Nine Dean is betting on two powerful levers of value creation that I care deeply about—and that holding companies are uniquely positioned to capitalize on. 𝟭. 𝗟𝗼𝗻𝗴-𝗧𝗲𝗿𝗺 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗛𝗼𝗿𝗶𝘇𝗼𝗻 Nine Dean is the Ford Foundation’s largest-ever Mission Investment, structured as a permanent holding company to acquire and compound middle-market businesses—not flip them. And here's the kicker: when you find a great business, why sell it at year 5 when the real value is in year 15? 📈 Compounding earnings over time >>> selling early for short-term gain. This model removes artificial exit pressures and enables companies to grow naturally—not on a forced, PE-style growth track. And let’s be honest…natural growth is often better, more sustainable growth. 𝟮. 𝗘𝗺𝗽𝗹𝗼𝘆𝗲𝗲-𝗔𝗹𝗶𝗴𝗻𝗲𝗱 𝗜𝗻𝗰𝗲𝗻𝘁𝗶𝘃𝗲 𝗦𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲𝘀 Nine Dean also brings employee incentives to the forefront, in partnership with the Good Jobs Institute. Think ESOP-style alignment, but built into the DNA of each acquisition. Why does that matter? Because employee-owned businesses outperform. ✅ ESOP companies show 2.4% higher sales growth and 2.7% better return on assets. ✅ Median employee retirement savings in ESOPs: $80,500 vs. $30,000 in non-ESOPs. ✅ Voluntary quit rates at ESOPs? One-third the national average. This isn’t philanthropy—it’s good business. When employees win, everyone wins. What makes this extra special for me: Sean Caesar, one of Nine Dean’s Founding Members, was the spark behind me starting my own long-term oriented HoldCo, Cintar Group. So in many ways, I’m following his trailblazing path. 👏 Congrats to the Nine Dean team. I’ll be watching this one closely. Holding companies that think long-term and align incentives at the ground level? That’s the future. #HoldCo #EmployeeOwnership #LongTermThinking #NineDean #GoodJobs #QualityJobs #MissionDrivenCapital https://lnkd.in/gUS-A3m7

If every employee in your company had real skin in the game, what would change? Last week I shared how DataBank launched an Extreme Ownership Pool —making everyone (after 1-yr tenure+) a part-owner with a targeted payout of 6–12+ months salary when DataBank has a triggering transaction. I'm already noticing a difference working with the team, and everyone I've shared this with has been greatly impressed - so what's stopping everyone from doing this? DataBank built it with the help of Ownership Works, the nonprofit on a mission to create $20 billion in wealth for working Americans over the next decade. Why bet on broad-based ownership? - ESOP companies were 3-4× more likely to retain staff during COVID and half as likely to cut pay. - Employees in ownership plans show 92 % higher median household wealth and 53 % longer tenure. - Quit rates at employee-owned firms run one-third the national average. For me, it’s the ultimate expression of our value: Take Extreme Ownership. Question for the CEOs & founders in my network: What’s stopping you from making every employee an owner? Is it dilution fear, complexity, investor push-back? Eager to hear your perspective. Shared the video again in comments.

Last year, I visited Minnesota-based Room & Board, which had recently transitioned to something called an ESOP (Employee Stock Ownership Plan); the furniture maker is now 100% owned by its employees. Not many companies have tried to make an ESOP work. But the structure deserves more attention and consideration than it’s getting. An ESOP can give employees a true stake in a company’s success, which yields more than warm, fuzzy feelings — it can lead to increased productivity and dramatically lower turnover. And if their efforts help the business thrive, it can put significant returns into employees’ pockets. (Just ask the so-called Publix Millionaires famously minted by the grocery chain’s ESOP.) Turning employees into shareholders also has the potential to chip away at the growing US wealth gap. Over the last 50 odd years, the top 0.01% has grown its wealth nearly six times as fast as the bottom 50%. One of biggest drivers of this disparity is the fact that some 40% of Americans own no stock. Most companies perpetuate the problem by granting stock only to those at the very top of the org chart; at an ESOP, all employees get shares in the company. Here's my deep dive into Room & Board and ESOPs for Bloomberg Opinion. https://lnkd.in/ePfXpkYz