We’re currently working on fresh new episodes of Swarfcast. In the meantime, we felt this “Best of” was fitting for the recent season on CNC Swiss machining.
In March of 2019, we interviewed Ken Mandile, founder of Swissturn, a successful CNC Swiss machine shop in Oxford, Massachusetts. Ken’s children are not interested in taking over Swissturn when he eventually retires, so five years ago Ken began restructuring his company into an employee stock ownership plan or ESOP, in which he will gradually transfer ownership and management to his employees.
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Before going the ESOP route Ken turned down two lucrative buyout offers from private equity firms. Ken reported that after the first year of restructuring as an ESOP, the value of the company increased by 51%.
Question: Would you want to work at an employee-owned business?
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Don’t have a half hour to listen to this!
Generally, the people working for you just don’t get it. They want what they want without the hard work and dedication. Understanding of the extra mile, long hours, “Get ‘er Done!”, thinking outside the box, the customer is always right along with many other concepts of success are entirely foreign.
Many employees live paycheck to paycheck. How are they to understand a balance sheet, receivables, playables, profit/loss, etc.. when they never have nor ever will manage their own personal finances.
Two Thirds of business fail within 10 years. there is a reason for that – IT IS DIFFICULT!!!
AND Two Thirds of lottery winners end up bankrupt in just a few years after receiving a large financial windfall. Why is that?
I understand there is a transition and learning period for an ESOP, but most often “you can’t fix STUPID!
Too many will immediately want the perceived perks and benefits of being an owner, such as a newer luxury vehicle, exotic vacations, fine dining, and flexible hours, not realizing the work done whilst vacationing, or unseen work, struggles and hardships accompanying some of these benefits.
How often during a “crisis” (a facility and/or machine failure during a time of high demand) all stand around scratching their heads or hiding until the boss takes charge.
IMHO – MUCH MORE than two thirds of these arrangements will end in failure, crash & burn, and/or bought out, shipped overseas, because:
THE INMATES WILL BE RUNNING THE ASYLUM…
Hello r in nyc,
I know ESOPs that have worked and those that have failed. If you listened to Ken Mandile’s podcast, he still controls 51% of the stock and the ownership is shifting over 10 ten years.
I do tend to agree that strong leadership is the key to making the transition work. Ken is shepherding the business now and it is prospering. When he finally exits it will face the true test. By then Ken will have his money out if all goes well and leadership will develop in the company.
One successful ESOP, Kurt Mfg in the Twin Cities has worked well because the former owner’s #2 guy was ready to take full management control before the owner exited. This is the way to go if you can arrange it.