Frequently Asked Questions

Employee ownership can take several forms:

Interestingly, EO's roots go back to the founding of our country. Thomas Jefferson, for example, placed a condition that companies receiving tax credits must enable profit-sharing with employees.

EO companies span all industries and sizes. Large examples include Publix Supermarkets, the largest ESOP in the US with over 250,000 employees to smaller EO companies to Isthmus Engineering in Madison, WI, with 80 worker-owners. EO companies can have as few as three employee-owners.

Employee ownership is a viable solution for owner's who want a competitive exit plan that is often more predictable and offers them liquidity at fair market price. Employee ownership could help many businesses avoid closure, retain jobs, and the legacy of the founder. Employee ownership can be a good model for many companies, but it may not be appropriate for all companies or situations:

- Profitability: Employee ownership isn't the right choice for companies that aren't showing a healthy profit and for whom the financing costs aren't feasible given the business's cash flow

- Owner's motivation: Employee ownership might not be a good idea for owners who has many interested third party buyers and wants as much cash as possible for their business right now.

For most ESOPs and EOTs the answer is "$0" financial contribution from employees. For worker co-ops, there is typically an equity buy in amount, but this will be decided on by the workers themselves democratically, and will typically be nominal.

EO transitions are a net new perk for employees, i.e they follow the structure of a leveraged buyout where the cash flow of the business is used to pay for the business. Overall, employee ownership can be a win-win situation. You get a successful exit strategy, and your employees gain a stake in the company's future, potentially boosting morale and performance.

Why 5 years? This advanced planning allows business owners to prepare the people, process, and profit attributes of their business for a potential buyer. Moreover, owners can leverage various tax strategies effectively. Initiating early succession planning allows business owners to comprehensively understand the exit options, form realistic expectations, recognize potential hurdles, and potentially modify the business model to attract a broader spectrum of buyers. Waiting until the "verge of selling" significantly limits the scope of impactful changes and hampers the potential to enhance the business's valuation.

Owners use Zolidar as a time-efficient and cost-effective mechanism to reach a point where they can be more deliberate about their exit plans. Coming soon: Then, for the owners who select employee-ownership as their exit path, Zolidar can help them form a team of experienced EO practitioners, align with financiers if applicable and continue to serve as the software platform for efficient execution of the exit plan.

- Access to Cutting-edge Technology: Advisors gain access to Zolidar's innovative software solutions, streamlining the evaluation, implementation, and management of employee ownership structures.

- Educational Resources: Zolidar offers educational content and training modules, keeping advisors informed about the latest trends, benefits, and best practices in employee ownership.

- Networking Opportunities: Zolidar hosts events, webinars, and forums, providing valuable networking opportunities with other professionals, potentially leading to new partnerships or opportunities with potential clients seeking guidance on transitioning to employee ownership

Consultants: If you're involved in the assessment and strategic development phases of exit planning, Zolidar equips you with powerful tools to estimate business value, assess risks, develop strategic plans, and gauge the fit for employee ownership—helping you guide your clients more effectively.

Financial Planners: Zolidar enhances your advisory capabilities by offering financial comparisons of various transition plans, liquidity projections, and feasibility of employee ownership transitions. This helps you provide a more comprehensive strategy to your clients, ensuring their long-term financial outlook is fully considered. It complements the core skill sets of Certified Public Accountants (CPA), wealth advisors, registered investment advisors (RIA), and lawyers.

Employee Ownership Facilitators: Zolidar is an invaluable tool for advisors specializing in employee ownership. Whether you're guiding a client through their first EO transition or managing multiple EO projects, Zolidar provides the tools to help an owner gain conviction and comfort in an employee ownership exit path.

Preparation and Confidence:Zolidar doesn't just help with planning - it prepares owners to take the first steps on their exit journey. If your clients are early in the process, Zolidar builds their confidence and conviction, making them more ready to engage with you as their advisor.

Connecting Owners with Advisors: Zolidar guides owners toward finding trusted resources and advisors. By the time they use our tools, they are closer to understanding their needs and are ready to connect with professionals like you. This makes your job easier, as owners come to you more informed and prepared.

Highlighting Viable Paths: Many healthy businesses may struggle to find a third-party buyer. Zolidar empowers you to introduce employee ownership as a viable and often ideal exit path. Our software helps your clients gain awareness and deeper consideration of this option, providing actionable information that's often hard to find elsewhere. Even if you're not an expert in EO, Zolidar equips you with the tools and insights needed to guide your clients through this process, expanding your service offerings and deepening client relationships.