4 reasons an ESOP might be right for your business
If maintaining a carefully curated culture is a priority for your business when considering a succession plan, an ESOP may be a good option.
After more than 50 years in business, Peter and Olaf Harken, founders of Harken, were looking to ensure the company’s viability for the next half century.
Even though it was their name on the masthead, the duo wanted Harken — a designer and manufacturer of yacht equipment (sailboat deck hardware, winches, and hydraulics) — to maintain the workplace culture that lifted up employees as much as the bottom line.
The Harken brothers surveyed many succession planning options for their company, including selling to private equity, but ultimately decided on a Wells Fargo Bank, N.A. financed ESOP in September 2020. The Harkens felt the ESOP was the choice that would help them to leave a legacy, maintain the company’s culture, and provide retirement fund potential for their employees.
“We started this company to build the best sailing products we could at a fair price. We've had good success doing it, and that makes us proud,” said Peter Harken. “What we might not have anticipated was how much the culture of this place means to its success.”
“More and more, it's our people who have made this place the leader it is,” he said. “In 2067, we want it to be stronger than it is today. We hope it will still feel like Harken, but it needs to be doing more than we can even dream of today.”
Four common reasons many businesses choose an ESOP
Opinions expressed in this article are general and not intended to provide specific advice, recommendations for any individual or association, or an offer to extend credit. Contact your banker, attorney, accountant, or tax advisor with regard to your individual situation. The author’s opinions do not necessarily reflect those of Wells Fargo Commercial Banking or any other Wells Fargo entity. All Wells Fargo credit decisions are subject to credit approval.
