On May 1st, 2021, Porterville, CA fruit growers Homegrown Organic Farms completed their transition to employee ownership with the implementation of an Employee Stock Ownership Plan (ESOP). After a year in which the men and women who grow, harvest, and supply our food faced enormous risks and adapted to extraordinary challenges, it is wonderful to see that hard work and dedication being rewarded with an ownership stake in their business.
The company’s transition from a corporation to an ESOP (Employee Stock Ownership Plan) took place in April 2021 and was finalized May 1 of this year.
In his statement announcing the ESOP, Homegrown Organic Farms co-founder John France explained how important it was to him to keep the company and its culture intact as he and the other founders plotted out their succession strategy.
“The decision to transition ownership from the founding families to the employees is a great option in retaining the culture and values that are foundational to who Homegrown Organic Farms is,” he said. “We did not want to change the essence of Homegrown as the founding families planned their exit strategy. The ESOP structure is a wonderful answer to that and a great way to further our vision of “Inspiring people to live this life for a greater purpose.”
That sentiment is one that we at the Menke Group frequently hear from business owners. They put years into building a company with a unique culture that makes people proud to show up to work every day. Now they have offers coming in from strategic buyers, but they worry that selling their company to an outside party could mean seeing that culture—along with their life’s work and legacy—broken apart, dissolved, or subsumed into some other entity.
Across the country, the tumult of the COVID-19 pandemic has prompted many businesses to begin thinking seriously about their succession plans. What if something happens to the owners? What would happen to the business, its workers, and the clients and community who depend on it? Those questions have prompted many owners to take action to ensure that, if the worst should happen, the company would continue on in the best hands imaginable—those of its employees.
Founded by John and Cindy France in 1998, Homegrown Organics has always had a heart for its employees.
ESOP companies have not only been proven to be more resilient in the face of enormous adversity like the pandemic, dramatically outperforming traditionally-owned firms in terms of protecting jobs and wages, they also ensure that your company’s culture remains intact.
A strategic buyer may make promises and have the best of intentions, but when push comes to shove, they want things done their way. When you sell your company to your employees through an ESOP, you sell it to the people who genuinely love your business, who know what makes it special, and who have a vested interest in seeing it stay local, stay intact, and thrive.
In fact, an ESOP not only protects the company culture, it enhances it. Giving employees a genuine stake in the company’s success boosts morale and productivity because workers feel a stronger connection to what they do.
“It is an opportunity to build long-term wealth for all team members and further develop an ownership mindset throughout the company,” said Homegrown Organic Farms CEO Scott Mabs.
What would an ownership mindset mean for your company? Contact the Menke Group today to schedule your free preliminary analysis to see if an ESOP is right for you.
Menke & Associates, Inc. has helped over 3,500 companies successfully transition to employee ownership. Our holistic ESOP approach enables a positive outcome for the company, its employees and its shareholders. We believe ownership is powerful.
