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Published September 2024

Employee ownership can offer over-indexed impact returns

Whether you care about the vitality of America’s small business economy, the resilience of our manufacturing supply chains, local business ownership, or structural inequality, employee ownership (EO) is an impact investment thesis that offers over-indexed impact returns.

  • Small business vitality. Employee retention and engagement is a high order business need. It drives business outcomes from both a cost and revenue perspective throughout the entire operation. The oft elusive “ownership culture development” comes to life when paired with stock ownership.
  • Local business preservation. The Silver Tsunami of retiring business owners—with over half of locally-owned businesses having owners at or near retirement age—creates urgency for ensuring that these business assets remain productive in our local economies. This is relevant up and down the entire value and supply chain, and critical for preserving jobs, manufacturing and service sector companies, and local tax revenues. 
  • Structural inequality. Stubborn income and wealth gaps choke the majority of American families, with over half of U.S. households having expenses that exceed—or that just barely meet—their incomes. Fifty-five percent lack the savings they’d need to get through a new expense spike timed with a drop in income. Black and Hispanic households each own under 3% of our country’s overall wealth (but make up 27% of households), while White households own 87% of the wealth (and are 68% of households).
"Employee ownership enables the power of big finance and capital markets to positively impact broad swaths of America. If you can explicitly point these strategies at communities of color, you can address some of our most important imbalances."
Philip Reeves Apis & Heritage Capital Partners

There is an increasing recognition that systemic risks like structural inequality are “highly financially material to investors’ diversified portfolios.” As an investor, through EO investing, you can play a role in preserving and strengthening our small businesses, which are local engines of wealth creation. As it turns out, business ownership is only second to home ownership as the most important way that American families build wealth. Shared ownership—in which the full workforce at a business has an ownership stake—further deepens the impact on structural inequality.

Investors looking for impact—especially those that understand the role small businesses can play in creating wealth and jobs in our communities—should take a good look at employee ownership. 

Let us know your thoughts. We’d love to hear from you!