In early 2000, Michael and Lynn Terry started a business selling horse trailers that were lighter than their competitors’ and customized to each client’s needs. Nearly two decades later, their company, Cimarron Trailers, with tens of millions of dollars in sales, employed over 130 people in Chickasha, Okla., and their trailers were sold at 30 dealerships across the country.
And they wanted to retire.
But as the couple, who met in high school, contemplated a sale, they faced a conundrum: They had offers from dealers and competitors to buy their business; they also had an offer from a private equity firm for a price so high they were shocked. But none of those offers guaranteed that Cimarron would continue as a business with its 130 employees working in its community.
“We thought, this has got to go on,” Mrs. Terry said. “We’re one of the bigger employers here in Chickasha.”
So the Terrys went with a less lucrative option a couple of years ago — selling their company to their employees. But it ensured that their company would stay in Chickasha and their employees would continue to have jobs. It also allowed them to be paid for the company they created and retire in their community.
“Was it easy? No,” Mrs. Terry said. “But it was the best for the future of Cimarron going forward.”
Employee-owned companies are still a small segment of the U.S. corporate landscape. The number has stayed at about 6,500 for the past decade, said James J. Bonham, president and chief executive of the ESOP Association, the trade group for employee-owned businesses. But he said there were now some 10.5 million employees who own stakes in the companies they work for, through employee stock ownership programs, or ESOPs, as they’re known.
For families who own businesses and are wondering about their next step, selling to employees is an opportunity that analysts say owners should consider. It keeps the company intact, it has tax benefits for the company and the owners, and it allows the owners to sell without worrying that the business might be gutted and sold off in parts.
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