August 19, 2019; Monadnock Ledger-Transcript and New Hampshire Business Review
Yankee Publishing, a family-owned firm since 1935 based in Dublin, New Hampshire—a small town located in the southwestern corner of the state, with 1,538 people—announced it had established an employee stock-ownership plan (ESOP) and completed the sale of a 30-percent ownership stake in the company to its employees. By doing so, Yankee joins a national trend of conversions of businesses to employee ownership, as the “silver tsunami” of Baby Boom business owner retirements continues.
The company, writes Tim Goodwin in the Monadnock Ledger-Transcript, employs 85 people, with offices in both Dublin and Manchester. Among its publications are The Old Farmer’s Almanac, Yankee, New Hampshire Magazine, and Family Tree Magazine. The Old Farmer’s Almanac alone is purchased by an estimated three million people a year.
The company, Goodwin explains, was started by Robb and Beatrix Sagendorph; over time, ownership had passed down to 11 grandchildren and six great-grandchildren. Goodwin adds, “The goal of the family in recent years was to create a plan that would provide the opportunity for shareholders to sell their shares while preserving the independence of the company.”
The sale is taking the form of an ESOP. CEO Jamie Trowbridge estimates it will take about four years for company profits to pay off the 30 percent stake, at which time the company would be well positioned to increase the employees’ ownership share.
“At that time, we will decide what the next step will be,” Trowbridge says.
Trowbridge also says it is the family’s intent to sell all of the company’s stock to employees over time. Speaking with Bob Sanders of the New Hampshire Business Review, Trowbridge adds he expects it to take about a dozen years for employees to acquire 100-percent ownership.
Sign up for our free newsletters
Subscribe to NPQ's newsletters to have our top stories delivered directly to your inbox.
As an ESOP, employees don’t have to pay for their shares, because the company pays for the shares out of its profits. Sanders elaborates on the ESOP’s mechanics:
Unlike worker-owned cooperatives, employees don’t have any say in running the company, though they would get to vote on a major change of ownership, such as buy out or a merger. The ESOP is represented by a trustee hired by the company.
Employees also can’t fully realize their shares right away. Under Yankee’s plan it will take six years for an employee to be fully vested, unless they retire after they turn 65, or leave the company due to disability or death. The shares also won’t have much value at first because of the debt undertaken to pay off family owners, but the value could accumulate quickly as the company uses its profits to pay down debt. Even when employees do cash out, the money is only paid out over a period of years, to conserve cash flow.
Over time, the benefits of employee ownership can be substantial. Nationally, as NPQ noted last June, “10.8 million Americans work at companies with ESOPs, and another 3.6 million Americans still have holdover ESOP accounts as recent former employees. Total asset holdings in these 14.4 million accounts exceed $1.3 trillion, which works out to over $90,000 per person.”
Trowbridge says the transition to employee ownership has generated considerable excitement among workers at the firm. “We felt we were well suited for employee ownership,” Trowbridge told Goodwin. While the idea of an ESOP had been floated for the past 15 years, serious work to transition really began two years ago, Trowbridge indicates.
“If we had sold the assets of the company to different buyers, it would have been very disruptive,” Trowbridge said. “The family members would not accept a solution that resulted in the business being broken up and our employees losing their jobs.”—Steve Dubb
Disclosure: Joel Toner, President and Chief Operating Officer of NPQ, is a member of Yankee’s board of directors.