First off, many companies do employee buyouts: 6,000 companies and 2 million employees take part of Employee Stock Ownership Plans (ESOPs). But this is still only 1% of US workers – and a tiny fraction of US businesses.
So what’s the problem?
We see two big problems: awareness and incentives. Conventional exits (driven by established firms and private equity investors) have a thriving ecosystem: massive marketing budgets to find companies, 5-10% transaction incentives for business brokers, and incentives so your existing lawyers and accountants can get a piece of the transaction cost. Because employee buyouts are less common, they require specialized expertise, so lawyers and accountants are afraid of losing business, and business brokers and most investment banks can’t make as much money.
Plenty’s mission is to build awareness and change incentives: by creating a platform to connect sellers, service providers, and capital around employee buyouts, we want to increase volume and align incentives to doing more deals – recognizing that everyone benefits by decreasing costs, streamlining processes, and taking employee buyouts more mainstream.
Plenty does this in three ways:
First, we provide a free seller concierge to simplify and streamline the process for business owners.
Second, we don’t make money based on services, but by charging investors who want to fund employee buyouts an asset management fee – including retail investors who can earn market returns while funding employee buyouts.
Third, we invest in marketing – including by turning every employee buyout into a PR event that creates opportunities for company customers and stakeholders to help finance employee ownership.