The recently established Employee Ownership Network at the Colorado Office of Economic Development and International Trade (OEDIT) has identified legal expertise as a primary need to support the growth of employee-owned businesses in Colorado.
A roundtable for the legal community will be held at the OEDIT office on Tuesday, December 3 for law firms interested in learning more about the opportunities to service employee ownership conversions. A previous roundtable held in October attracted such law firms as Snell & Wilmer, Dorsey & Whitney, Arnold & Porter, Ritsema-Lyon and Cerasoli Law.
“Nationally, we’ve seen a steady increase in nonprofits formed between 2014 – 2018 to assist businesses in converting to employee ownership,” said Jason Wiener, p.c. and one of the original conveners of the Employee Ownership Network. “With the signing of the Mainstreet Employee Ownership Act in 2018, the need for attorneys to assist with employee ownership conversions has exploded and we’ve really seen the scaling of employee ownership.”
The Mainstreet Employee Ownership Act opened Small Business Administration lending to co-ops and created a mandate for small business development centers across the country to explore how they could support employee ownership.
Weiner stated that his company [a public benefit corporation] receives several calls each week from around the country from business owners seeking to convert to employee ownership.
“There are a number of invested stakeholders from funders to technology providers, but the legal community has been slow to adapt to this changing business environment,” said Weiner. “As such, those who are working in the employee ownership field are overloaded and can’t keep up with demand. We can’t train attorneys fast enough.”
Yet there is a compelling business case for law firms to become more involved in servicing employee ownership conversions. Approximately half of all privately-held businesses are owned by Baby Boomers, and six out of ten of them are looking to sell their business in the next decade.
In Colorado alone, more than 8,200 businesses said their succession plan was to sell to their employees/managers according to the 2016 US Census Bureau Annual Survey of Entrepreneurs.
Kerry Siggins, CEO of StoneAge Tools, an employee owned firm located in Durango, Colorado noted, “Having a legal team well-versed in employee ownership structures, especially ESOPs, is crucial to designing an effective participant plan and creating a successful transaction.
“We relied heavily, and still do, on our ESOP attorneys to help us navigate the intricacies of setting up and maintaining our ESOP. Unfortunately, we had to go outside of Colorado to find this expertise which is why having a robust pipeline of knowledgeable legal professionals located here in Colorado is critical to the future success of employee ownerships.”
Wiener added, “There are numerous benefits to law firms who assist with employee ownership conversions. It’s a great way to recruit young, ambitious attorneys who want to do interesting work and intersects multiple disciplines — employment law, mergers and acquisitions, capital markets and finance, tax law and more. And the companies that law firms can work with scale from pro bono to million dollar transaction.
“And perhaps most importantly, it’s addressing a community need that has long-lasting impacts,” Wiener concluded.
Legal firms interested in attending the December 3, 2019 roundtable may contact John Kovacs at [email protected] or at 303.892.3840. The event will be held at the OEDIT office located at 1600 N. Broadway, Denver, CO 80202 in the 5th Floor Conference Room from 9 a.m. to 11:00 a.m. An RSVP is required.