16 Mt. Lebanon Magazine | MARCH 2023



TOW N TOP I C S
W ith 10,000 Americans turning 65 ev-
ery day, what’s being referred to as
a “silver tsunami” is expected to take
place over the next eight years.

Seventy percent of the businesses in this
country are owned by people over the age of
55 and most of them don’t have a succession
plan. The five owners of Bill Few Associates,
all in or nearing their 60s, didn’t want that to
happen. They knew they were fortunate to acquire
founder Bill Few’s stake in the company 20
years ago. Rather than selling to a third par-
ty, the five owners sold the business to their
employees through an Employee Stock Own-
ership Plan (ESOP) in June 2021.

Mike Kauffelt, co-CIO and part owner,
equates it to elderly parents selling their house
to their children. “Our decision to sell was really
to keep the firm intact,” he said.

They knew selling to a larger company could
mean layoffs for many of the firm’s 35 employ-
ees. “It’s hard to protect everybody’s job unless
you basically sell to yourselves.”
Bill Few Associates opened its Washington
Road office in 2007. “It’s just been a pleasure
to be part of Mt. Lebanon. We’re very proud of
that office. And the ESOP will probably sustain
that commitment to the community for quite a
while,” Kauffelt said.

Bill Few Associates is one of an estimated
5,000 ESOPs nationwide.

ESOPs fall under a 1974 act of Congress,
allowing companies to take out a loan to buy
a company from previous owners, then divide
the ownership among employees. Since profits
of fully employee-owned businesses are gen-
erally tax exempt, the owner gets paid full fair
market value, the business is now tax free and
the tax savings can be used to pay off the loan.

“There’s nothing else in the tax code like this
and nobody knows about it,” said Pennsylva-
nia Center for Employee Ownership (PaCEO)
Executive Director/CEO Kevin McPhillips.

Bill Few Associates employees took advantage of an Employee Stock
Ownership Plan to purchase the business from its founder. From left:
Jeff Marzina, Alison Wertz, Mike Kauffelt, ReShelle Barrett, John
Nichols and Emily Marzina.

That’s part of the reason there aren’t more
employee-owned businesses. The PaCEO is
trying to change that. Its mission is to raise
awareness about employee ownership. The
nonprofit is made up primarily of volunteers;
many are current and former CEOs with experi-
ence with various kinds of employee ownership.

“The things that drive the decision to do em-
ployee ownership are usually things like inter-
est in legacy and a recognition that they didn’t
get there by themselves,” said McPhillips. “I
want to feel really good about what I’ve done
for so many people and it’s those people that
will choose employee ownership.”
Wages in employee-owned business-
es average 33 percent higher, and
employee owners have up to four
times the wealth of non-employee-
owners. When PaCEO started in 2016, Pennsylvania
was 23rd in new employee-owned businesses.

In the last five years, Pennsylvania’s standing
has risen to second in the nation, behind Cali-
fornia, which has three times the population.

There are currently more than 300 partially
or fully employee-owned companies in Penn-
sylvania, including Thermo Twin Windows,
Nicklas Supply and Joy Cone. Two large con-
venience store chains in Pennsylvania, Sheetz
and WAWA, are partial ESOPs.

According to a study by the National Cen-
ter for Employee Ownership, average wages in
employee-owned businesses are 33 percent
higher than in non-employee-owned business-
NICK SANTILLO
Friendly takeover:
employee- owned
businesses es. Employee owners have two-and-a-half
to four times more wealth than non-employ-
ee owners, according to a Rutgers University
study, and employee-owned businesses are 8
to 12 percent more productive.

Employee ownership also has a major im-
pact on worker retention. According to McPhil-
lips, most of the major engineering firms in
Philadelphia are employee owned, in an effort
to retain good employees.

The benefits to a community are threefold.

“What we see on a regular basis is job growth,”
said McPhillips. “They prosper, they grow, they
hire more people and all of that creates com-
munity wealth. More people are spending
money in a community and supporting that
community.” According to McPhillips, PaCEO is increas-
ingly seeing younger business owners, maybe
in their 50s or even their 40s, doing a partial
ESOP, allowing them to take some money off
the table and watch the business grow. Then,
they sell more at a higher share price, watch
it grow again, and when they’re ready to re-
tire, they sell the final portion at an even higher
share price.

“What we’re trying to do is improve commu-
nities and change lives for the better. We’ve got
some challenges in this nation and it’s going to
take special kinds of thinking to address those
and make this place a better place for our chil-
dren and our grandchildren,” said McPhillips.

For more information, visit PaCEO at
www.ownershippennsylvania.org or email
kevin@paceo.org —CARRIE MONIOT
lebomag.com | 17