Common Trust: Empowering Small Businesses with Employee Ownership Buyouts

Common Trust has recently announced the successful raising of $2.6 million in seed funding.

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Securing the Future of Small Businesses and Their Employees

Common Trust has emerged as a champion for small business owners and their employees. This innovative platform recently announced the successful raising of $2.6 million in seed funding, led by Crossbeam Venture Partners and featuring participation from Schmidt Futures and other prominent investors.

A Growing Challenge for Small Business Owners

Small business owners across America are facing a monumental challenge: retirement. With millions of small businesses on the cusp of changing hands over the next decade, many entrepreneurs are grappling with the prospect of selling their life’s work. However, traditional exit options like private equity or private buyers often come at a steep cost – one that can include neglecting the well-being of employees and eroding the established company culture and values. Surprisingly, studies have shown that 75% of business owners regret their sale within a year.

The Promise of Employee Ownership

Amidst these challenges, employee ownership emerges as a compelling and ethically aligned exit strategy. It allows business owners to transfer their legacy to their dedicated workforce while ensuring the company’s continued success. Yet, the complexity and cost associated with traditional employee ownership options often deter businesses from pursuing this path.

Common Trust’s Solution: Affordable, Attractive, and Accessible Employee Ownership

This is where Common Trust steps in, offering a fresh approach to employee ownership buyouts. Common Trust serves as a financing platform that empowers small business owners to exit to their employees. The platform enables selling owners and management to:

  1. Design Customized Employee Ownership Trusts: Common Trust assists in creating bespoke employee ownership trusts tailored to the unique needs and circumstances of each business.
  2. Access Aligned Capital: The platform helps secure the necessary capital to finance the buyout, ensuring a seamless transition.
  3. Implement a Successful Transition: With the right structures in place, Common Trust facilitates the smooth shift of ownership from the outgoing entrepreneur to the dedicated employees.

A Transformational Opportunity

Zoe Schlag, Co-Founder and Managing Partner at Common Trust, highlights the transformative potential of employee ownership: “Employee ownership can be transformational for businesses, its workers, and local communities. For many founders who are preparing to retire, exiting through employee ownership offers a pathway to get a fair value out while also ensuring that their people and community will continue to benefit from the company’s growth, even long after the sale.”

Addressing the Growing Retirement Challenge

Ryan Morgan, Partner at Crossbeam, emphasizes the urgency of addressing the retirement challenge facing small business owners: “With 40% of small business owners in the U.S. on the verge of retirement, three in five small businesses will seek a sale over the next decade, and only a small fraction of them are likely to be absorbed by buyers. Common Trust’s unique, employee-centric exit strategy is transforming the space and creating positive social impact by providing small business owners an inclusive and mission-driven exit solution.”

A Vision for the Future of Small Businesses

Common Trust’s mission to empower small businesses with employee ownership buyouts aligns with a broader movement in entrepreneurship. As the platform continues to gain traction and expand its reach, it aims to secure the future of countless small businesses and their dedicated employees.

Founded in 2022, Common Trust represents a culmination of co-founders Zoe Schlag and Derek Razo’s work in the shared ownership space, rooted in their respective experiences at Schmidt Futures and Purpose Foundation. Their dedication to alternative ownership structures, community wealth, and mission-driven business practices has given rise to a platform that promises to reshape the landscape of small business ownership transitions.

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