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The basics:

• NJEDA‘s new ESOP Assistance Program now accepting applications
• Eligible businesses can get 90% of feasibility costs covered, up to $35K
• Program aims to expand employee ownership models
• Rutgers will host free info webinar May 28

A recently approved Employee Stock Ownership Plan Assistance Program went live May 5 in the Garden State.

Last month, the New Jersey Economic Development Authority board approved the program, which is aimed at increasing employee ownership models in the state. It will connect applicants with an approved contractor to perform feasibility studies and provide technical assistance. The NJEDA board had previously approved Onyx Partners Group and Lazear Capital Partners as contractors for the program – with both firms boasting experience in this space.

“By expanding ESOPs, the NJEDA aims to create life-changing economic opportunities for workers and their families while supporting sustainable business transition plans, strengthening communities and businesses across the state,” said NJEDA CEO Tim Sullivan in an April 22 press release.

“Through the promotion of employee ownership models, the NJEDA aims to close racial wealth gaps, preserve diverse businesses, and increase household incomes for working class families,” said NJEDA Chief Diversity and Inclusion Officer Michelle Bodden. “Reducing economic disparities in New Jersey will contribute to a stronger and fairer economy for every resident and business owner – strengthening the state’s economic competitiveness.”

Transformational effort

John Harmon Sr., African American Chamber of Commerce of New Jersey founder, president and CEO, applauded the program.

“The ability to connect the hard-working citizens of NJ, to this level of professional assistance can be transformational,” Harmon said April 22. “The wealth disparities in our state are significant, and the best way to mitigate them is to first acknowledge the disparity and then apply proven strategies with intentionality to attain meaningful outcomes. The ESOP Assistance Program can be the catalyst to achieving these goals.”

Last July, the NJEDA entered into an agreement with the Rutgers School of Management and Labor Relations to create programming aimed at increasing the number of New Jersey businesses using an ESOP. According to the NJEDA, the Garden State is home to nearly 90 ESOPs, representing almost $65 billion in plan assets covering 423,000 current employees and retirees – with an average stock account of around $190,000.

The Rutgers Institute for the Study of Employee Ownership and Profit Sharing supports the new program.

“This is a transformational moment for New Jersey business owners,” said Bill Castellano, associate director of the Rutgers Institute for the Study of Employee Ownership and Profit Sharing. “Our research shows that an ESOP can improve performance and productivity, save jobs and help employees to build wealth. The problem is that many business owners don’t know it’s an option, or they don’t have the money to hire a consultant to explore it. That’s where this new program will help.”

Our research shows that an ESOP can improve performance and productivity, save jobs and help employees to build wealth. The problem is that many business owners don’t know it’s an option …
– Bill Castellano, Rutgers Institute for the Study of Employee Ownership and Profit Sharing

Key features/details include:

• Starting May 5, New Jersey business owners with at least 20 full-time employees can apply to the program here
• If eligible, they will receive partially covered feasibility study services to explore creating an ESOP
• Program will cover 90% of the service costs – up to $35,000
• Funds available for a limited time
• Rutgers Institute for the Study of Employee Ownership and Profit Sharing and its technical assistance unit, the NJ/NY Center for Employee Ownership, will conduct direct outreach to business owners around the state
• Rutgers will host a free, informational webinar 1 p.m. May 28

Adria Scharf, associate director of the Rutgers Institute for the Study of Employee Ownership and Profit Sharing, noted that the Silver Tsunami is coming faster than we think.

“Retiring business owners do not have to close up shop or sell to private investors,” said Scharf. “An ESOP preserves the business they’ve put their heart and soul into and makes it even stronger. The employees start to think like owners because they are. And research finds that businesses perform better, and employees stay longer, when that happens.”

Paulo Rodriguez Heyman is the president and founder of Renova Environmental Co. in Ocean Township – whose company launched its ESOP four years ago and said it has been a “win-win.”

“I converted paper wealth into tax-deferred, diversified assets, while employees are seeing real growth in their accounts,” said Rodriguez Heyman. “One supervisor noted that project efficiency directly impacts his ESOP balance – a clear sign of ownership driving performance.

“When we own something – we care more.”