Small business owners spend years building their businesses, cultivating relationships with customers and employees, and establishing a brand. Eventually, the time comes to consider retiring and passing on the business to a successor. For many small business owners, the thought of selling their business is daunting.
But what if there was a way to transition small businesses to the employees who work there while narrowing the wealth gap in America? That’s where the Teamshares model comes in.
Teamshares has successfully purchased more than 82 small businesses across 29 states and 40+ industries and transitioned them to employee ownership, and is just getting started on the vision of 10,000 employee-owned small businesses.
How Teamshares started
Before he became an entrepreneur and business owner, Teamshares co-founder and CEO Michael Brown spent several years in the investment banking industry advising corporations on buying and selling businesses.
This experience introduced him to the world of business ownership and to his eventual Teamshares co-founders, Alex Eu and Kevin Shiiba.
After Michael’s time in the banking industry, he began down the path of small business ownership and entrepreneurship by purchasing one small business, an electrical contractor in Western Canada.
“I left New York for two years to figure out how to run the business,” Michael explains.
While this first business was generally successful, it also came with hard-earned learnings and many mistakes. Michael quickly found that learning by trial and error was a natural part of running a small business, and that these insights would be key when acquiring additional businesses in the future.
While Michael’s original goal was to buy five businesses over the course of 10 to 15 years, things quickly took off once Alex joined full-time to buy the second business after having been an original investor. “Over time, we ended up buying eight small businesses. It transitioned into entrepreneurship from there,” Michael describes.
Kevin also reconnected with Michael and Alex during this time, joining them as a formal technology advisor for the small businesses.
At the time, one of their company’s largest customers was a fully employee-owned general contractor with billions of dollars in annual revenue. Just a generation prior, it was purchased from the founding family for around $40 million.
That growth had changed the lives of the employees. This success story, and common interest in reducing wealth inequality, piqued the Teamshares co-founders’ interest in employee ownership.
Through the process of acquiring more businesses, the co-founders worked closely with former owners and began to notice a recurring succession problem. According to a report by the Exit Planning Institute, 70% of small businesses listed for sale in the U.S. don’t find a buyer, forcing them to close. The impact is devastating for the owner, employees, and community.
To Michael, Alex, and Kevin, this small business succession problem was an opportunity to create a better option for retiring owners while helping to address wealth inequality in America.
Are you a broker or business owner that needs an exit plan to keep your company and employees in place?
They thought, “Why not make the employees owners of the small business in a way that benefits the selling owner, the employees, and the local economy?”
So, in 2019, Teamshares was born.
Ever since, we’ve been on a mission to make employee ownership the future of small business in America.
What is the Teamshares model?
Our vision is to help a network of 10,000 small businesses become employee-owned, creating $10 billion of stock wealth for hard-working Americans while supporting a generation of business owners through confident retirement.
To do so, Teamshares buys small businesses with $1 to 10 million in revenue from retiring owners. After we close a transaction, we issue 10% of the company’s stock to existing employees at the business, immediately making them employee owners.
Retiring owners who sell to Teamshares benefit from a fast close, near-immediate access to funds from the sale, and the ability to exit the business quickly and enjoy their well-earned retirement sooner than typical business sellers.
“Teamshares closes 90% of its letters of intent, which is basically unheard of.”
To ensure the former owner can retire confidently with the peace of mind from an intact legacy, we also recruit and train a talented generalist leader to take over the business.
As the business grows, a percentage of its excess cash is used to buy back shares from Teamshares slowly buying Teamshares out until the employees are the super-majority stakeholders within 20 years.
Why the Teamshares model works
Because of this unique employee ownership model, when Teamshares purchases a small business, it never has to be sold again and can continue to operate as a vital part of the community.
Employee ownership also strengthens company culture. When employees are given ownership of a business and are educated about what ownership means, they drive its success forward. This means that not only will the business continue to operate, but its employees will also have the opportunity to build personal wealth.
Employee ownership can help improve employee engagement and motivation, which ultimately leads to increased employee happiness, productivity, and profitability.
By giving employees a stake, they are more likely to be invested in its future and work harder to ensure its continued success.
Employee ownership results in a culture of accountability where employee owners are empowered to improve operations within their sphere of influence. With an increased sense of ownership, Harvard Business Review found that this model results in 14% higher profits.
“When you give people a stake in the outcome and a financial asset [such as] equity in the business, you re-energize growth,” Michael explains.
The retiring owner experience
Teamshares is committed to helping all acquired companies grow and thrive.
To ensure a smooth transition and ongoing support, Teamshares supports retiring owners with a dedicated Former Owner Program.
We recognize that selling a business can take several years and can be an emotional process. For most retiring owners, being a business owner provides a sense of purpose and structure.
When the company is sold, it’s suddenly no longer under their ownership, which can be hard to handle. The Former Owner Program helps retiring owners navigate these complex emotions and provides them with a community of peers who can support them through the transition, easing their nerves and sharing their experiences during a highly emotional time.
The network of retired owners also receives a monthly newsletter with Teamshares updates, change management resources, connection opportunities and helpful financial information.
Additionally, retired owners within the Teamshares network have an opportunity to attend in-person conferences to deepen the peer relationships in their network.
While former owners stay engaged at the business for a short period of time post-sale, typically six months after the transaction has closed, we ensure that their legacy lives on through employee ownership.
"I had a good experience selling to Teamshares. I liked the fact that they granted [existing employees] ownership in the business. Knowing that I could preserve their careers was comforting to me. I'm happy we found each other.”
While selling a small business is challenging and emotional, the Teamshares model offers a unique approach that’s a win-win situation for both retiring small business owners and their employees.
If you’re a small business owner considering retirement, find out if Teamshares is the right small business buyer for you.
Teamshares writers follow strict principles for sourcing credible information within articles. Any outside information including direct quotes, paraphrased information, and concepts that are derived from external sources adhere to our standards for accuracy and transparency.
- Feldman, L. (2023, January 20). Bonus Episode: A New Way to Sell Your Business. 21 Hats. https://21hats.com/bonus-episode-a-new-way-to-sell-your-business/
- State of Owner Readiness – Exit Planning Institute. (n.d.). Exit-Planning-Institute.org. Retrieved April 14, 2023, from https://6863690.fs1.hubspotusercontent-na1.net/hubfs/6863690/State_of_Owner_Readiness_2013_Report-1.pdf
- Walsh, P., Peck, M., & Zugasti, I. (2018, August 8). Why the U.S. Needs More Worker-Owned Companies. Harvard Business Review. https://hbr.org/2018/08/why-the-u-s-needs-more-worker-owned-companies
