By Meera Raman | The Globe and Mail
A British Columbia-based support services provider has become the largest company in Canada to transfer ownership to its employees through a new model designed to help owners sell their businesses without seeking outside buyers.
Taproot Community Support Services, based in Maple Ridge, B.C., announced to its workers Tuesday that it has been sold to its 750 employees through an employee ownership trust, or EOT, a structure only introduced in Canada last year.
The move makes Taproot the country’s largest EOT to date, according to Employee Ownership Canada, and highlights how the model could play a role in succession planning as thousands of small business owners prepare to retire.
“This employee ownership trust is the simplest way of transitioning ownership,” said Taproot’s chief executive Mike Fotheringham, who first learned about the concept while listening to a podcast on his commute last summer. “It provided current shareholders an opportunity to sell their shares, which was really important for a lot of them. Some of them had retired and weren’t with the business any longer.”
Taproot provides support services for adults with disabilities, as well as vulnerable youth and families across B.C., Alberta and Ontario. The company generated $54.3-million in revenue last year. Before the transition, it was owned by about 30 long-time and prior employees, some of whom are retired.
Finance Minister François-Philippe Champagne said in a phone interview that Taproot’s move is “something extraordinary.”
Visit Employee Ownership Canada to learn more about Employee Ownership Trusts.
Share with a friend
Related reading
Watch the video: Why do Canadians work so hard and get so little?
Low productivity means lower wages and a lower standard of living. Canada does need to boost productivity—but we keep trying the wrong things. Watch SCP CEO Matthew Mendelsohn explain the productivity conversation Canada actually needs to have.
Market study submission: Competition in financing for Canada’s SMEs
Small- and medium-sized businesses (SMEs) face significant barriers to accessing capital and we believe that the lack of competition in the banking sector is one of several important contributing factors. We provided comment on the Competition Bureau's upcoming market study on SME financing because we believe that unlocking capital for SMEs and entrepreneurs will strengthen the Canadian economy, bolster our sovereignty and provide more Canadians with pathways to building wealth. We look forward to seeing how the evidence collected will help inform policymakers interested in tackling this issue.
Watch the video: Why would a company sell to its employees?
Canada is facing a $2-trillion business handoff. What if employees owned more of it? In this video, our Director of Policy Dan Skilleter explains why a company would sell to its own employees, how it happens and who stands to benefits. Spoiler alert: employee-owned companies are shown to be 8-12% more productive, share more wealth with their workers, keep businesses Canadian-owned and shore up the resilience of local communities and the broader economy.