Cris Collingwood//December 2, 2022
Cris Collingwood//December 2, 2022
Two southcentral Pennsylvania small businesses are now employee-owned after being sold to a Brooklyn, New York-based outfit that is on a mission to put $10 billion stock into the hands of workers.
Runkles, a York-based notary, tag and title company, and Commercial Refrigeration of Harrisburg have both been bought by Teamshares, which buys small businesses from retiring owners, grants 10% ownership of the business’s stock to employees after closing, and progressively increases employee ownership to 80% within 20 years, said Teamshares Co-founder Alex Eu.
“We do this because we believe employee ownership is a win-win, with better financial outcomes for the employee owners and the business,” he said.
Teamshares believes the result is a network of financially durable companies that never have to be sold again. Retiring owners, employee owners, companies, and local economies are all better off, the company said.
“The profits from the business are used for dividends and stock buybacks, which benefit employee owners in short-term and long-term ways respectively. When a dividend is paid, all owners receive a cash distribution based on their ownership percentage,” Eu explained. “When stock is bought back from Teamshares and retired, the employee owners’ percentage ownership stake and share value increases. Over time this results in the business becoming 80% employee-owned, while paying dividends to the employee owners, and creating new wealth for countless hard-working Americans.”
The three-year-old company has bought 62 small businesses across the country, five of which are in Pennsylvania. Eu said 1,600 new employee owners have resulted from the purchases.
Chase Austin, president of Runkles, which became employee-owned Feb. 1, said the company is more profitable now that its 25 employee owners own 14% of the company.
“Everyone is part of this,” he said. “There is more satisfaction with work which creates a stronger business.”
Austin, who was hired and trained by Teamshares, said he holds regular meetings with all the employee owners on financial training.
“We talk about the bigger picture, so everyone understands what we do and why. It leads to bigger profits for the company,” he said, adding that everyone is talking about efficiency which is an asset to everyone involved.
Growth this year is expected to be about 15%, he said. Growth to date has led to $700 in dividends to each employee owner since March.
“Now that we’re employee owned, there’s been a positive shift in our company culture and employee morale. Employees are more engaged in the success of our business. We can see firsthand how the business is doing financially.” said Jenny Bisker, operations manager, who has been with Runkles for more than 20 years.
Mike Williams, president of Commercial Refrigeration agrees that enabling a small business to become employee owned is a benefit to all.
Williams joined Commercial Refrigeration in June 2021 after the company was bought by Teamshares in January 2020. “We have 18 employee owners who all work for a common purpose of serving clients and growing the business,” Williams, who also was hired and trained by Teamshares, said.
Every two weeks, Williams holds meetings to talk about monthly finances and performance. “Everyone gets involved right down to hiring, planning for long-term and short-term goals and improvements.”
The employee owners currently hold 18% of the company. “We are a customer-based service company and grow by word of mouth,” he said. “We are seeing an increase in business at the time of year when business typically slows down.”
Williams said he attributes the growth to the fact that everyone is involved in the day-to-day operation and are accountable for their jobs. “Everyone is more engaged because they know how their job adds value to the company.”
In addition to the 8% stock ownership, the long-term benefit, the employee owners have received $1,286 in dividends so far this year.
“The culture has been great since he’s been president, and people have yet to have problems that cannot be fixed said Ray Intriago, service technician for Commercial Refrigeration for seven years. “He’s a very honest man; his goal is to get us to be the number one company, and I hold him to it.”
The transition to employee ownership under Teamshares comes at no cost to employees, Eu said. “This is a free benefit.”
A company spokesperson explained that the profits are split in two parts with 50% going to dividends and stock buybacks and 50% to grow the business.
“The idea behind the company is to create wealth among more Americans,” the spokesperson said.
The model allows for each company to become 80% employee owned. Teamshares, then has more money to buy new companies and do it all again, creating more employee owners, the spokesperson explained.
“We hold 20% permanently so this is a win-win for everyone,” the spokesperson said. “This is a new business model, and everyone wins,” she said. “The retiring owner gets money, employees keep their jobs, benefits and get stock, and we solve equality and equity issues for workers in small business.”