Posted on 07/25/2023 10:32:45 AM PDT by DallasBiff
SAN JOSE -- There is something different about A Slice of New York Pizza in San Jose. And it goes beyond their award-winning pies.
It's about the people. In fact, everyone in the kitchen owns an equal slice of the business.
"We're a worker co-op, which means all the members and owners of the business work in the business," said the restaurant's founder Kirk Vartan. He started the business 17 years ago.
Six years ago, he turned it into a co-op by selling the business to his staff as a leveraged buyout. The employee-owners are now paying back a business loan with the profits generated by the company. And they all run the shop as a board of directors.
(Excerpt) Read more at cbsnews.com ...
Should work....... for awhile. Wait until the employees want to retire or quit. Will other employees buy them out? Will they still receive “dividends” if they retire. Doubt if new employees get stock.
That just means they used credit to make the purchase. Which would probably be necessary if you want what’s basically a fast food place to be employee owned, cause fast food workers probably don’t have a heck of a lot of cash lying around. So they probably spun up an LLC, made all the employees owners of the LLC, and the LLC bought the place.
Plenty of employee owned businesses out there. It can be a bit complicated, but it isn’t new, and no more likely to be fishy than any other business model.
Agreed on both points.
The owner sold the company to the employees but they took out a loan, probably with him, to buy it. Often, these employee buyouts are an ESOP, employee stock ownership plan. The owner didn't really loan any money, the employees simply go into debt to own the company, but they immediately start collecting profits, if any.
My PhD brother and two of his PhD pals, worked for the feds back in the late 70s at the Triangle at Raleigh-Durham analyzing waste products but the project was shut down by the gummint.
They got an investor that put up the cash, he took 51% of the shares and started a very successful waste analyzing company, that 10 years later received an offer from 3M for $42 Million.
The investor that owned the 51% of the shares,{he originally put up less than $ 1.5 million} told the other three he was selling out and taking his new pile of cash of $21 million, and they could each take $7 Million or buy him out, if they wanted to keep the company.
The dumb ass trio of PhD egg heads, did not take my advice or the $7 million FOR EACH ONE, then borrowed $21 million for the money man buyout, and went teats up...greed and stupidity define three PhD's of Dirt and Waste.
The business owner sold his risks to the workers, who cannot complain about wages because they are the ones deciding how successful the business should be.
It will likely fail.
I would have taken the $7m, and created a new company.
Lots of corporations have privately traded stock that is not on any public exchange. Architecture, engineering, design and construction firms are often structured like this. The board sets the price of the stock and you sell your shares to the company when you leave. Incentives are structured when you join that specify how much equity you get.
“What is a “leveraged buyout”?”
the purchasing entity takes out a loan against the equity of a business that they are buying, pay the existing owner with the proceeds of the loan, and then pays back the loan with profits from the purchased business ...
As would have any good business person, but, these three geeks had their PhDs in shit and dirt, and knew it all.
I take no pleasure in the fact that my youngest brother blew millions {had he taken the cash, I may have become his personal driver} :)
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