Turning Employees Into Biz Owners
For four decades, Hal Leader owned and ran Printing Prep, steering it through one industry change after another.
Even in retirement, the founder remains ebullient about the digital printing and graphic company’s latest innovations, like images applied to a set of blinds or a tablecloth.
When he was preparing to retire, Leader wanted to ensure the Buffalo company would survive without him.
The question was, who would buy it?
The answer, it turned out, was all around him. He decided to sell Printing Prep to his company’s 30 employees, through an Employee Stock Ownership Plan, or ESOP.
“It’s the way it should be, quite honestly,” said Leader, who is 69.
Under an ESOP structure like Printing Prep adopted, employees buy shares of stock in the company from the owner. Many of the employees buy the shares with bank loans, which then must be paid back. An outside expert annually evaluates the value of the shares. Employees who leave or retire sell back their shares to the company for redistribution.
Since the company’s performance affects the shares’ value, the employees have a stake in those results. Ideally, the ownership strategy also removes the uncertainty that can occur when a business is sold to an outside interest.
Photo: Sharon Cantillon / Buffalo News.
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