Guide to convert a business to a worker cooperative

The conversion process is unique for each business, but generally has five stages. Each stage engages different stakeholders, outside professionals, and has different estimated costs.

Many steps in the process require specialized technical assistance. Local conversion guides should join the Workers to Owners collaborative to learn and partner with an experienced pool of professionals.

Assess

Structure

Complete

Explore

Key stakeholders learn the conversion process

Support

$0

$10,000

$25,000

$10,000

$50,000

Professionals assess financial and legal feasibility

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Seller structure the deal

Buyers design the business

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The business legally changes hands

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Employees build ownership culture with outside support

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estimated

Workers to Owners https://becomingemployeeowned.org/

Checklist of steps

Explore

Assess

Complete

Support

Workers to Owners https://becomingemployeeowned.org/

• Initial consultation
• Client does background reading and possibly has discussions with companies that converted
• Facilitate discussion with other key stakeholders (partners, key management, etc.) on the option
• Q&A / address any lingering concerns
• Client makes decision on whether to move forward

• Initial valuation
• Cash flow analysis
• Choice of entity and capital structure analysis
• For deals with a financial buy-in for workers, create process and timeline to determine worker commitment to deal
• Leadership succession plan analysis / determine capacity gaps if owner(s) leaves
• Assess viability of owner’s desired role moving forward
• Assess management readiness for a democratic workplace
• Optional discussion about initial democratic structure and ownership culture

Structure

• Work with finance institutions, other experts to obtain outside financing, if relevant
• Work with lawyer to draft up documents for transaction (this can be done with just the developer and the lawyer depending on the lawyer’s familiarity with worker ownership forms)
• Complete pre-transaction elements of leadership succession plan. Ensure plan continues to be viable
• Facilitate a decision-making process around bylaws and governance structure
• Work with local lawyer to prepare final draft of bylaws and other governing documents
• Facilitate worker trainings
• Facilitate discussion on ownership culture preferences and timeline

• Coordinate the process whereby the documents are signed, financing is executed, and ownership is transferred
• Execute any transaction-timed elements of leadership succession plan
• Work with local lawyer to enact new democratic bylaws
• Execute any transaction-timed elements of the implementation plan for policies to support an ownership culture

• Company follows plan to transition to new leadership over the defined timeline, reassesses as needed
• Implementation of policies and ongoing training and education offerings to support a strong ownership culture