Employee ownership: the real driver of meaningful Social and Governance objectives... and of building better businesses

Last week saw Peter Stavros and KKR's exit of employee owned CHI Overhead Doors where, on average, every one of the firms 800 staff received $175,000 with a 10x return for KKR. A life changing amount financially but also an impact that goes well beyond money with so many other positive outcomes for the individuals involved, the business they belong to and society as a whole.?

As investors and business owners, I think we have one of the key ESG levers already at our fingertips and yet it is so often overlooked in search of other ideals to achieve Social and Governance objectives. This is not about philanthropy, nor does it involve making less money for business owners but simply, it is about building better businesses with greater long term value and a better, inclusive society with mobility and opportunity.?

As someone who is proud to have been part of building an Employee Owned, Queens Award winning business and having seen the enormity of impact that has for the success of the business and for the individuals involved, I've often wondered why other businesses do not offer equity incentives for everybody to participate in wealth creation... Not just for the top few, nor simply options designed to get to a financial event but real, equity with the sense of ownership, dividend and governance that fosters??With high profile examples like Richer Sounds and now KKR, as well as a significant array of evidence pointing to real/long term financial, operational, Governance and Societal benefits from employee inclusion, I wonder why this is not standard practice to build into every business and every transaction?

In our EO business, the guys were able to pay off their caravans in Skegness with the dividends alone - clearly not the same as a CEO buying an island or their 3rd pad on the East Coast - but for that individual, it's something they likely never imagined possible.?More significantly, the business ran with greater efficiency, Governance became embedded in every action because of the 'care of ownership', the culture was incredibly strong and innovation flowed - making greater returns and long term choices that allowed for generations to benefit. In short, the individuals benefited but so did the business.?

In addition to the sense of purpose that ownership instilled in employees,?the social impact of happier employees, able to have a say in their day-to-day business lives and?share in the privilege of financial autonomy was significant... Imagine the impact that then had on the local communities with the additional spending power felt in more humble areas of Britain and Europe - the extra cappuccinos in Crew, hotels in Halifax, holiday bungalows in Blackpool and restaurants in Ramsgate that benefit from distributed wealth.?

Imagine the impact of affording better food and education, holidays, healthcare and saving for retirement that wealth also allowed for 'normal' hard working families.?

Arguably the social impact of successful Employee Ownership is far greater than if wealth is concentrated in the hands of a few (not matter how philanthropic) who love to holiday in the Maldives, send a small number of privileged kids to Harrow and buy Sun Seekers (although there is absolutely nothing wrong with a bit of that too and I would if I could!).?

I am just a headhunter these days and not a rain maker in Private Equity but, to me, as someone who looks across the market and has privileged insight daily, the CHI/KKR example is perhaps more than a private equity deal. This is an example of how to start to address the multi-generational and systemic inequality baked in to, and deeply dividing today's global society.?

If this has sparked any thoughts, here is a little further reading:

Garage-door maker employees get cash reward in takeover as private equity tests ownership model (cnbc.com)

KKR completes sale of CHI Overhead Doors (privateequitywire.co.uk)

Employee Ownership Association (UK)