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Cooperative Conversion and Employee Ownership

Over the next two decades, an estimated 70 percent of privately held businesses will change hands, many as a result of retiring baby boomers. Who will take over these business and will they remain in their communities? Converting businesses to employee or consumer ownership is gaining traction as an effective method for retaining businesses, jobs, and wealth in local communities.

Business conversions can take many forms including transitioning to a worker cooperative, a consumer cooperative, or an Employee Stock Ownership Plan (ESOP). If you’re in Wisconsin and interested in learning more about converting your business to employee or consumer ownership, please contact Courtney Berner at cberner@wisc.edu.

Solar panel installation
Northwind Renewable Energy converted to worker ownership with assistance from UW Center for Cooperatives

Examples of Cooperative Conversions

Four Star Video Cooperative

Madison’s favorite video store since 1985, Four Star Video Cooperative makes underground, art, and foreign films, as well as more mainstream Hollywood movies, available to customers. In 2014, four employees launched a crowdfunding campaign to raise funds to to purchase Four Star Video Heaven from its retiring owner.

North Wind Renewable Energy 

North Wind Renewable Energy is a solar power system design and installation company organized in 2007 in Stevens Point, WI. In 2016, the company began the process of transitioning to a worker-owned cooperative. They saw the opportunity to solicit long term commitment from key employees and to build wealth on their behalf, to improve governance, management, and decision-making, and to build strong relationships with like-minded businesses and organizations in the communities they serve.

Shine On: Solar energy provider converts to worker-owned cooperative. Rural Cooperatives, 2017.

Electric Violin Shop

Electric Violin Shop is a 5-employee instrument sales and repair shop in Durham, North Carolina that serves both retail customers and a global mail-order business. The founder, planning to retire, saw in his employees a level of expertise and commitment to the business that would be impossible to find in an outside buyer.  Succession was made easier by long-standing practices of empowering staff with leadership and management roles.

New Era Windows Cooperative

The New Era Windows Cooperative is a Chicago-based windows manufacturing company specializing in energy-efficient vinyl windows. Founded in 2012 by a group of former employees of the Republic Windows and Doors factory, which declared bankruptcy and laid off its entire factory workforce, the New Era Windows story is partially that of a business conversion to worker ownership, and partially that of a start-up cooperative business.

Resources

Cooperatives and Business Succession Strategies Webinar (Webinar recording). UW Center for Cooperatives, 2018.

Cooperatives and Business Succession Strategies Webinar (Powerpoint). UW Center for Cooperatives, 2018.

Successful Cooperative Ownership Transitions: Case Studies on the Conversion of Privately Held  Businesses to Worker Cooperatives. UW Center for Cooperatives and Democracy at Work Institute, 2015.

Becoming Employee Owned: A Small Business Toolkit for Transitioning to Employee Ownership. Democracy at Work Institute, 2018.

CO-OP Conversions At Scale: A Market Assessment for Expanding Worker Co-op Conversions in Key Regions & Sectors. Citi Community Development and Capital Impact Partners. 2018

Technical Service and Professional Services Providers for Employee Owned Businesses in the Upper Midwest. UW Center for Cooperatives

Ensuring Your Legacy: Succession Planning & Democratic Employee Ownership. The ICA Group, 2016.

An Owner’s Guide to Business Succession Planning. The Ohio Employee Ownership Center, 2008.

Converting Existing Business to Worker Cooperatives  (Interview with Melissa Hoover from the U.S. Federation of Worker Cooperatives). Democracy Collaborative, 2013.

Startup Resources for Worker Cooperatives. Democracy at Work Institute.

The Rural Succession Dilemma and the Cooperative Solution. Democracy at Work Institute.

In Good Company: The Guide to Cooperative Employee Ownership. Northcountry Cooperative Foundation, 2006.

Business Conversions to Worker Cooperatives: Insights and Readiness Factors for Owners and Employees. Project Equity, 2015.

Worker Cooperatives: Pathways to Scale.The Democracy Collaborative, 2014.

Buying a Business to Start a Co-op: A Case Study of Food Co-op Conversions. Food Co-op Initiative, 2013.

Co-operative Conversions, Failures and Restructurings: Case Studies and Lessons from U.S. and Canadian Agriculture. Centre for the Study of Cooperatives – University of Saskatchewan and UW Center for Cooperatives, 2009.