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When Halsey Platt started thinking about retirement from his decades-old residential construction business, he had to decide what would happen next.
When his children weren’t interested in taking over, he started to consider another option: worker ownership.
Now, he’s working to transfer sales of Platt Builders to a group of workers, who will together own the business.
“I’ve currently got about 20 employees who are just terribly excited to take over the business, buy it from me and own it as an employee cooperative,” Platt said.
For Platt, who plans to officially retire in anywhere between three and 10 years, it will mean continued investment in the company he started over 30 years ago, and will help address an issue of transience that he sees in the construction industry.
For supporters of worker ownership, a sale like Platt’s is exemplary of what they’d like to see as a normal option in the state. A bill at the State House would help support sales, like Platt’s, from owners to workers.
That legislation, which was discussed at a hearing in front of the legislature’s Joint Committee on Economic Development and Emerging Technologies, June 6, is aimed at making purchase of a business by its employees more commonplace across Massachusetts.
Advocates from the Coalition for Worker Ownership and Power, a statewide collection of worker-owned businesses, nonprofits and organizers working to grow worker-owned co-ops in the state, said that they anticipate the legislation will help address forecasts of a growing number of retiring business owners, as well as a landscape where many business that are put up for sale simply don’t find new owners.
An estimated 70% to 80% of businesses put on the market don’t sell.
“This bill helps to provide a ready buyer in a climate where buyers are scarce. That’s what we’re trying to do here,” said Alex Papali, director of regional economies at the Center for Economic Democracy, a nonprofit which coordinates the Coalition for Worker Ownership and Power.
Similar to tenant-right-to-purchase policies that were almost included in last year’s housing bond bill, which would have given tenants the first opportunity to purchase the building in which they live, if sold, the worker ownership bill would require employee groups be considered as potential buyers if the owner wants to sell.
The bill, if passed, would require business owners who are looking to sell to inform employees of their intent. A group of employees would then have 30 days to purchase the business if they can match other proposals for the sale.
It provides exemptions for businesses being sold or transferred to siblings, children or spouses.
Supporters say the legislation would help support the growth of worker-owned co-ops across the state.
“I think that if that becomes the baseline expectation, that it will end up creating an environment whereby more and more employees learn about what it would be to be an employee owner,” Platt said. “When the business that they work at, ends up transitioning that there will be an easier path forward.”
To encourage sales to employees, the bill would exempt business owners from paying Massachusetts capital gains tax — a, generally, 5.1% tax which is paid on the sale of an asset like a business — on the first $1 million of the sale, if the business is bought by a group of employees.
As currently written, any value above that $1 million would be taxed as usual.
That $1 million threshold, the specifics of which was the subject of questions from legislators at the hearing, is intended to focus the impact of the legislation on small businesses across the state, said Papali.
“The state has an interest in keeping these businesses afloat and keeping the state economy thriving over time,” he said.
For Platt, the tax exemption is a valuable incentive, but isn’t the main focus of the bill.
“The most important piece is changing that landscape, changing the basic expectation,” he said.
Supporters of the legislation said encouraging employee ownership is an important step to address the so-called “silver tsunami,” which refers to the social and economic shifts caused by the aging of the United States baby boomers.
According to the United States Census Bureau, as of 2022, about 56.8% of Massachusetts business owners were 55 years-old or above; nationwide that number was about 51.7%.
At the hearing, John Abrams, who has worked as a worker-owner and supported other businesses to switch, said he views this as “such a timely moment for this bill.”
About 43,000 businesses in the state are set to trade hands or close in the next 15 to 20 years, as employers 55 years or older retire.
“Some of those companies will be passed down in families, but less than in the past,” Abrams said at the hearing. “Many will unceremoniously close their doors, finding no buyer, leaving holes on main street.”
For Kevin O’Brien, a worker-owner at Worx Printing Cooperative in Worcester, the kind of sale to workers that the bill would support might make the process easier for owners looking to sell, and increase the likelihood of the business continuing to succeed
“You already have the buyer there. They show up every day; they have an interest in the business,” O’Brien said. “With ownership, I think you’re actually increasing the likelihood of your legacy, carrying on through continuous operation of the business, past retirement.”
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