Conversions to Cooperative and Business Transition

There is a wave of “baby boomer” small business owners in the United States retiring or planning to retire in the coming years. Many of these retiring business owners have begun to explore selling their businesses to their employees, ensuring longevity of the enterprise and saving jobs. According to the NY Times:

“Every year 150,000 to 300,000 businesses owned at least in part by boomers become candidates for employee takeovers as their owners hit retirement age. That means that over the next 15 years retiring boomers could help create two to four million new worker-owned businesses nationwide."

Through education and outreach, and the development of effective tools, the Institute aims to make conversion to cooperative a widespread option for small business owners. On a large scale, cooperative conversions – sometimes called employee buyouts – of existing, healthy businesses are an exciting job and business retention strategy with real possibilities for economic impact. Our work aims to support them to reach this level of impact. through three main activity areas:


1.Technical assistance to conversion projects
The Institute provides consulting services to owners wishing to sell and workers wishing to buy the business. We have several conversions projects currently in progress and expect this number to grow. In addition, we work in partnership with other cooperative developers to support their projects with existing models and best practices.  In these partnerships, we draw on our on-the ground worker cooperative and conversion experience, our library of models, our evolving best practices in governance and financing , our network of professional service providers, and our economic impact research to increase their likelihood of success and support them to reach scale.


2. Establishing best practices in the support of conversions
Though cooperative conversions are widely recognized as an area of great opportunity for worker cooperative growth, as well as a way to stabilize rural economies, lack of best practices and standard support materials can be a barrier to more cooperative conversions. We are developing and documenting best practices in key areas like governance and equity structure. We are also creating a toolkit for selling and buying owners to use in support of their process, including the development of a specialized business valuation and financing tool for worker cooperative conversions, and testing and refining these materials in pilot projects.


3. Economic impact research
We are working with academic partners to study an existing data set to assess the entry and exit patterns (closure rate) of rural businesses on a statewide basis over the past twenty years, looking at size, sector and industry data, as well as market conditions. The goal of this study is to determine whether worker cooperative conversions would have been an effective strategy for retaining jobs and businesses, by looking at which of the businesses would have been good candidates for worker cooperative conversion, how many jobs and enterprises might have been saved by such a strategy, and the total amount of financing dollars that needed to be mobilized.