Congressman Dan Goldman Works to Incentivize Employee-Owned Small Businesses

The ‘Employee Equity Investment Act’ Would Facilitate Employee-Business Ownership Transactions

Current Market Discourages Retiring Small Business Owners from Selling to Their Employees

Read the Bill Here

Washington, DC – Congressman Dan Goldman joined Congressman Dean Phillips (MN-03), Senator Van Hollen (D-MD), and Senator Marco Rubio (R-FL) in introducing the bipartisan ‘Employee Equity Investment Act’ (EEIA), which would incentivize employee business ownership by reducing the cost barriers that small business owners currently face when transferring ownership to their employees and empower owners to preserve family legacies and community jobs.

The bill would create an investment vehicle within the Small Business Administration's (SBA's) Small Business Investment Company (SBIC) program to provide loan guarantees for investment funds devoted to expanding employee ownership.

“Employee-owned businesses are proven to be more productive, more effective at combating inequality, and better at boosting local economies compared to traditional ownership structures,” Congressman Dan Goldman said. “Yet, when a small business owner is looking to sell their business, we make it far too easy for them to sell to an investment firm, and far too difficult forowners to sell the firm to their workers. Instead, we must pave the way for workers to secure a piece of the pie and begin building their own American Dream.”

Nearly half of all private businesses are owned by individuals who are at or near retirement age, and together, those businesses employ more than 32 million workers across 2.9 million firms. Yet, fewer than 15% of owners who are expected to retire over the next decade have a succession plan in place. Many will sell their businesses to buyers in the mergers and acquisitions market or close their doors, resulting in the loss of jobs and businesses across the country.

Whereas traditional buyers in the mergers and acquisitions market often initiate transactions and finance the sale, nearly all employee ownership conversions must be initiated and financed by the seller, which forces owners to wait 5-10 years before receiving full payment, discouraging employee ownership.

The Employee Equity Investment Act supports private sector investors proactively pitching business owners on employee ownership transactions and provides financing so the seller can more easily and quickly benefit from the sale of their business. By supporting the sale of businesses to employees, the Employee Equity Investment Act would return a greater share of American profits to American workers.

Congressman Dan Goldman is committed to ensuring small business owners have the resources they need to thrive.

Last month, Goldman convened a Small Business Roundtable discussion to provide resources forsmall business owners, discuss the Inflation Reduction Act’s impact on small businesses, and answer questions from business owners on how his office and various other agencies can support them.

Goldman also co-sponsored the ‘PREPARE’ Act which would create a Small Business Administration (SBA) Pre-Disaster Mitigation Loan Program to help small businesses take preventative action to bolster their resiliency infrastructure in preparation for future flooding events.

Earlier this week, the Congressman co-sponsored the ‘Child Care Small Business Insight and Improvement Act’ to increase U.S. Small Business Administration support for child care small businesses. This bill would expand the U.S. Small Business Administration’s role in supporting for-profit child care small businesses across the country.

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