| Photo by Christina @ wocintechchat.com on Unsplash
TRENTON, NJ – The New Jersey Economic Development Authority (NJEDA) has partnered with Onyx Partners Group and Lazear Capital Partners to help New Jersey businesses create Employee Stock Ownership Plans (ESOPs). This initiative is part of the NJEDA’s forthcoming ESOP Assistance Program, which aims to connect approved applicants with vendors to perform feasibility studies and provide technical assistance.
The program is designed to help businesses navigate the complexities of creating an employee ownership model, which can create generational wealth for workers and provide unique succession plans for business owners. This initiative aligns with Governor Murphy’s Executive Order No. 262, which established the Wealth Disparity Task Force to address wealth disparities affecting Black and Hispanic or Latino New Jerseyans.
“As part of ensuring equitable economic growth, ESOPs serve as a resource for New Jersey companies that want to craft sustainable business transition plans, create access to economic opportunity for workers and their families, and support the state’s growing, diverse, business ecosystem.” said NJEDA Chief Executive Officer Tim Sullivan.
By promoting employee ownership models, the NJEDA aims to build generational wealth and reduce economic disparities, particularly among people of color. The program will help New Jersey companies determine if the ESOP model is feasible, eliminating technical and financial barriers that can be difficult for business owners to navigate.
NJEDA’s ESOP is part of a broader trend across the U.S. to promote employee ownership. While the specifics of each state’s program can vary, some common themes and differences are worth noting. New Jersey is not the only state that plans to establish an ESOP. California, Ohio, Massachusetts, and New York have implemented their own.
New York has the New York State Employee Ownership Center, which provides technical assistance, education, and outreach to promote employee ownership. The state also offers tax incentives for businesses that establish ESOPs. California has a robust support system for ESOPs, including the California Center for Employee Ownership, which provides resources and support for businesses looking to transition to employee ownership. The state also offers tax incentives for companies that establish ESOPs.
Ohio is known for its strong support of employee ownership through the Ohio Employee Ownership Center (OEOC). The OEOC offers various services, including feasibility studies, technical assistance, and educational programs to help businesses transition to employee ownership. Massachusetts has the Massachusetts Center for Employee Ownership, providing support and resources similar to California and Ohio. The state also offers financial incentives for businesses that establish ESOPs.
While the NJEDA’s ESOP initiative shares similarities with programs in other states, its focus on addressing wealth disparities and promoting generational wealth sets it apart. According to NJEDA, New Jersey has 88 ESOPs, holding $64.9 billion in plan assets covering 423,429 current employees and retirees. The average stock account for eligible current employees is $188,868.
In July 2024, the NJEDA contracted the Rutgers School of Management and Labor Relations to create educational and informational programming to increase the quantity of New Jersey businesses utilizing an ESOP.
“Employee ownership is a powerful solution that extends the promise of the American Dream to workers and business owners across all backgrounds,” said Michelle Bodden, NJEDA Chief Diversity, Equity, and Inclusion Officer.
Onyx Partners Group and Lazear Capital Partners were selected following a Request for Proposals for the forthcoming ESOP Assistance Program in September 2024, which solicited proposals from firms experienced in ESOP transitions, including the design and development of feasibility studies and valuations.
This month, the NJEDA’s ESOP Assistance Program will be presented to the NJEDA Board for final approval. Following approval, applications are expected to open in early April.
