Essential workers won a measure of respect during the pandemic shutdowns. Malini Ramanarayanan Moraghan founded the Essential Owners Fund to help such workers share in the enterprise value that they create for their employers.
In medical transport, food manufacturing, senior care, logistics and other critical roles, “essential workers power companies through all different parts of our lives,” Moraghan says. “Those same workers who are so important to the operating stability of their companies are also living at a level of economic precarity that’s not just moral failing, but also bad for their businesses.”
Moraghan will join today’s Agents of Impact Call, “Sharing the wealth through employee ownership” (register).
The Essential Owners Fund uses debt and equity capital to finance non-control employee ownership conversions in which workers get at least a 30% share of a business, through employee stock ownership plans, employee ownership trusts and other ownership structures.
“I think every single American company should be at least 30% employee-owned,” Moraghan says. “When that happens, we will have the kind of social stability and community stability that we’ve all been working for.”
Ownership funds
Apis & Heritage Capital Partners’ Michael Brownrigg believes in public service: he’s a city councilmember (and former mayor) of Burlingame, Calif. Apis & Heritage, a Washington, DC-based private equity firm, has championed employee-led buyouts, or ELBOs, to help companies with large low- and middle-income workforces transition to 100% employee ownership.
A&H has financed five of such ownership transitions at businesses in Colorado, Maryland, Texas and Oregon, with a combined value of $65 million. Through employee-led buyouts, Apis & Heritage says worker-owners can retire with an additional $70,000 to $120,000 in savings.
Ownership Capital Lab’s Alison Lingane co-founded Los Angeles-based Project Equity, where she managed the Employee Ownership Catalyst Fund and built a portfolio of employee-owned businesses using ESOPs, EOTs and worker-owned cooperatives and other structures. Lingane’s latest project is Ownership Capital Lab, a nonprofit to expand investment capital for employee ownership.
Ownership Capital Lab and Transform Finance have identified 22 funds raising a combined $670 million to finance high-impact transitions to employee ownership.
Policy support
Ownership is among the few broad wealth-building strategies able to attract bipartisan support. Case in point: this month’s article by Jim Sorenson and Terrence Keeley in National Review, “Democratizing American Prosperity.”
Lafayette Square Institute’s Jack Moriarty has been working such channels to build support in Congress for the Employee Equity Investment Act, which could increase the number of worker buyout funds from today’s handful to hundreds (listen to “Why employee ownership is the next big thing in impact, and America”).
At Lafayette Square, Moriarty has led the creation of 535 Insights, a new resource that provides data-driven insights on affordable housing, employee and home ownership risks and opportunities in local communities.
Toronto-based Social Capital’s Jon Shell, with financial partner Bill Young, has built a portfolio of employee-ownership strategies in the US as a template for Canada’s enabling legislation for employee ownership trust, or EOTs (see, “In Canada, employee ownership trusts offer a path to shared prosperity and national sovereignty”).
