About 600 employee owners of Vermont Information Processing, or VIP, a maker of software for beverage manufacturers and distributors such as Guinness and Heineken, are set to receive payouts following its $1 billion sale to global private equity firm Warburg Pincus.
The transaction, which includes debt, brings to an end the company’s 20-year stretch as a 100% employee-owned business under an employee stock ownership plan, or ESOP, VIP announced. VIP founder Howard Aiken sold the company to employees in 2001. Aiken, a retired electrical engineer, still serves on the company’s board.
The sale to Warburg Pincus presented the opportunity “to invest more in our growth—whether through acquisitions that were out of our reach, expanding our product offerings, enhancing our software, and improving our customer experience,” the company said. Warburg Pincus, with over $86 billion in assets under management, is a founding partner of Ownership Works, a nonprofit coalition of private equity firms that have pledged to create $20 billion in wealth for workers by 2030 through employee ownership.
Making millionaires
Starting next month, around 50 of VIP’s longest-tenured employees, who have accumulated shares through the ESOP over two decades, will receive payouts of about $10 million each, an employee shared anonymously with a local Vermont publication. About 300 employees will reportedly receive more than $1 million each. VIP employees start accumulating shares through the ESOP after one year with the company.
Warburg Pincus, which did not respond to a request for comment, is said to be offering one-on-one consultations with investment and financial advisors to help employees manage their new wealth. The PE firm will retain the company’s current leadership team, including CEO Dan Byrnes, and will not be involved in VIP’s day-to-day operations.
Strategic growth
As an employee-owned business, VIP made several strategic acquisitions, including the 2022 purchases of eoStar (formerly Rutherford & Associates), a Michigan warehouse management software maker, and BizStride Logistics, a supply chain logistics services company, both focused on the food and beverage industries.
The acquisitions, coupled with future projections, “meant that we had a considerable repurchase obligation to the vested employees when they leave or retire,” VIP wrote. In the near future, the repurchase obligation — the buy back of shares from exiting employee owners by an ESOP — “would have consumed all of our cash and limited our ability to continue expanding.”
