22nd Annual ESOP Economic Performance Survey (EPS)

Posted by Aaron Juckett, CPA, CPC, QPA, QKA on Mon, Sep 16, 2013
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The Employee Ownership FoundationThe Employee Ownership Foundation published the results of the 22nd Annual ESOP Economic Performance Survey (EPS)

  • 94% of ESOP companies found that creating an ESOP was “a good business decision that has helped the company.”

  • 77% of ESOP companies found that the ESOP positively affected the overall productivity of the employees.

  • 70% of ESOP companies reported profitability increases.

  • 78% of ESOP companies reported an increase in revenue.

  • 83% of ESOP companies reported an increase in stock value.

  • 71% of ESOP companies reported a better performance than the previous year.

  • 64% of ESOP companies have created an ESOP education program or ESOP advisory committee.

Here is the press release:

ESOP Companies Report Economic Growth in 2012

September 10, 2013 (Washington, DC) – Results from the Employee Ownership Foundation’s 22nd Annual Economic Performance Survey of ESOP (employee stock ownership plan) companies show that ESOPs saw increased economic growth over the past year. Additionally, ESOP companies continue to have increased share value, report high productivity, and overwhelming support among leaders of the companies, according to the results of this survey which was conducted among members of The ESOP Association.

Since the annual survey began 22 years ago, a very large majority, 94% of survey respondents, reported that creating employee ownership through an ESOP was “a good business decision that has helped the company.” It should be noted this figure has consistently been over 85% since 2000. In addition, 77% of respondents indicated the ESOP positively affected the overall productivity of the employees. In terms of profitability and revenue, both were up from previous years — 70% of respondents reported profitability increased and 78% of respondents noted revenue increased. In terms of stock value, the majority of respondents, 83%, stated the company’s stock value increased as determined by outside independent valuations; 14% of the respondents reported a decline in share value, and 3% reported no change. The survey also asked respondents what year the ESOP was established. Among those responding to this survey, the average age of the ESOP was 16 years with the average year for establishment being 1997.

“Employees with employee stock ownership, including those with ESOPs, in general, have more sustainable employment. Our national leaders need to take note and understand that we need national policies to encourage employee stock ownership among working Americans. It’s the best jobs policy we have,” said Employee Ownership Foundation President, J. Michael Keeling.

The survey asked companies to indicate their performance in 2012 relative to 2011:

  • 71% indicated a better performance; 17% indicated a worse performance; and 12% indicated a nearly identical performance to the previous year

  • 78% indicated revenue increased; 22% indicated revenue decreased

  • 70% indicated profitability increased; 30% indicated profitability decreased

  • 64% of companies have created an ESOP education program or ESOP advisory committee since establishing the ESOP

The 2013 Economic Performance Survey was distributed to The ESOP Association’s over 1,500 members in June 2013. The results are based on 495 responses, a 35% response rate.

The survey results reiterate another benefit of Incorporating an ESOP in your Exit Strategy.  In addition to growing faster and being more recession proof, ESOP companies provide greater employee stability and job satisfaction, and reward employees and help preserve a company's legacy.  Other benefits include:

1) Enables a business owner to Sell in 60-90 Days with an ESOP Built-In Buyer, providing Diversification and Liquidity, while at the same time Retaining Control of the Company and Protecting Local Jobs and the Local Community,

2) Increases the After-Tax Proceeds for the Seller, Providing a Greater Overall Return,

3) Pays For Itself by Eliminating Company Income Taxes and Increasing Company Cash Flow,

4) Provides an opportunity for an Additional Rate of Return of 10-15%+, and

5) Offers Additional Opportunities to Find Value for the Business Owners

Related Links:

Benefits of an ESOP as Business Exit Strategy eBook


Topics: Studies and Statistics, Employee Stock Ownership Plan (ESOP)

Aaron Juckett, CPA, CPC, QPA, QKA
Written by Aaron Juckett, CPA, CPC, QPA, QKA

Aaron is President and Founder of ESOP Partners and provides implementation, administration, and consulting services to hundreds of companies. He is a member of The ESOP Association (TEA) and the National Center for Employee Ownership (NCEO).

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