When considering options for transitioning a business to employee ownership (EO), understanding the primary types of EO is crucial. Three distinct models have proven successful across different industries and company sizes:
- Planes de propiedad de acciones para empleados
- Employee Ownership Trusts (EOTs)
- Cooperativas de trabajadores
All successful forms of EO lead to increased productivity and profitability as employees gain a direct stake in the company’s success, especially when paired with an intentional ownership culture that emphasizes broad based education and involvement. Each model offers advantages and disadvantages and can be tailored to meet your specific business goals and succession planning needs, so let’s go over each!
Employee Stock Ownership Plans
Employee Stock Ownership Plans (ESOPs) represent the most widely adopted form of employee ownership in the United States, with over 6,300 companies currently utilizing this model. An ESOP functions as a qualified retirement plan and is usually offered alongside traditional 401(k) plans. ESOPs allow employees to build wealth as the company grows. The company generally takes on a loan to purchase shares from the selling owner, who receives fair market value, while employees pay nothing out-of-pocket.
This structure also offers significant tax advantages. For example, C-Corporation owners can defer capital gains taxes when selling at least 30% to an ESOP. And S-Corporation ESOPs pay no federal or state corporate income tax on the portion owned by the ESOP.
ESOPs work best for companies with 20+ employees, consistent profitability, and low debt. The original owner can remain in their current role if desired, maintaining traditional management structures while giving employees a meaningful stake in the company’s success. The tax savings help pay off the acquisition loan, freeing up capital for growth once the debt is retired.
Fideicomisos propiedad de empleados
Employee Ownership Trusts (EOTs) represent a newer, more streamlined approach to employee ownership. Popular in the United Kingdom and gaining traction in the U.S., EOTs hold company shares in trust for the benefit of all employees. Unlike ESOPs, employees are beneficiaries only during their employment, with profits above reinvestment needs distributed to the workforce.
EOTs offer greater flexibility and significantly lower setup and administrative costs compared to ESOPs. Some businesses choose perpetual trust structures to ensure permanent employee ownership. While EOTs may lack the tax advantages of ESOPs, they provide a simpler path to employee ownership, making them particularly attractive for smaller businesses or those seeking a straightforward transition model. EOTs can be customized to meet specific company needs.
Cooperativas de trabajadores
Worker cooperatives can fit very small companies up to large sized companies. They are highly collaborative, with each employee-owner having a voice through one-member, one-vote ownership for big company decisions such as new locations, large capital purchases, etc. This model is widespread globally and offers significant flexibility in structure and implementation.
Cooperatives can be customized to fit various business needs, from profit-sharing formulas to governance structures. Owners can transition gradually, selling portions of the business over time while maintaining leadership roles.
Financing of a worker co-op typically comes through business loans or community financial institutions, with the company paying fair market value to the selling owner.
Which Model Is Best?
While each model offers distinct advantages, they share a common thread: Creating sustainable businesses where employees benefit directly from company success.
ESOPs provide significant tax advantages and work well for larger, established companies. EOTs offer simplicity and lower administrative costs, making them attractive for mid-sized businesses. Worker cooperatives maximize employee participation and flexibility, ideal for companies prioritizing shared decision-making.
All three models enable owners to receive fair market value while preserving their legacy and creating meaningful wealth-building opportunities for employees. The key is choosing the structure that best aligns with a company’s size, culture, and goals.Ready to learn more? Watch for our upcoming, more detailed blogs exploring each ownership model in depth. Meanwhile, contact NCEOC if you need personalized guidance on which structure might best suit your business’s unique needs and objectives, or attend an upcoming EO education event.
Spanish 
English