How We Converted to an Employee-Owned Company

What is employee ownership and why would you do it? 

In the US the dynamics of the relations between Employer and Employee are mostly strained and at times barbaric.  About 25% of US employees do not have paid vacation time as part of their employment; and about 30% do not get paid health insurance for their family.  These statistics reflect the nature of US employee relations where the traditional company management outlook of distrust, exploitation, and lack of care for employees is rife.  As the founders of several small high tech life science companies, we wanted to change the outcome and options for our business.  For a small company the endgame is usually to either pass the business to a relative, or to sell it to another company.  The first option can be risky if the son or daughter does not have a desire to run a company, especially an assay company.  After selling a small company the company is normally totally changed into a form of the new larger entity — essentially analogous to the shark eating the minnow. 

Barb and Russ, as part of Arbor Assays, were in Boston in April 2013 for an Endocrinology meeting and were sitting in a bar with a beer or 2 thinking of these great dilemmas.  One the label of one the beers from Harpoon Brewers it said that the company was employee owned (EO). A lot of small craft breweries and other companies follow this ESOP way of divestiture.  Being simple scientists we decided to do something different.  ESOPs have to spend a lot of time and a lot of money calculating a share price so that each new employee and each retiring employee gets a fair price for their stock.  We decided on using the UK method of perpetual trust ownership.  We used the model of WATG, a US design company, as our way to go.  Graeme Nuttall, OBE from the London-based law firm, FieldFisher, handled all the UK legal side and on January 1, 2017 Arbor Assays, Inc. became a UK perpetual trust.  

What does this mean for customers, suppliers and employees? 

For customers it means a level of consistency in products not normally seen in our industry.  For suppliers it means we are making a long-term commitment to purchase products from them and they can rely on us.  For employees it should mean a more caring work environment, a part of the profits from their endeavors, a say in how the company is run and managed, and a company that engages with them.  EO companies tend to have high employee retention, be more profitable, and have extended lifespans.