By Sahid Fawaz
Buyouts are often great for investors and awful for employees.
That is one reason why this brewery has decided to go the employee ownership route instead.
"In a time when seemingly every other week brings news of another craft brewery buyout, we have something intriguingly fresh to report today. Modern Times, the popular San Diego brewery known both for their bold design aesthetic and well-balanced beer portfolio, has announced that it will bypass the traditional 'buyout' by becoming employee owned. The Employee Stock Ownership Plan (ESOP) will begin with a 30% stake of the company, which has been repurchased from outside silent investors who had initially invested in the company when it opened in 2013.
'This is my single proudest achievement as Founder & CEO of Modern Times,' said founder/majority owner Jacob McKean in a press release announcing the new plan. 'I’m supremely excited for our deserving employees, who have shown an almost perverse degree of dedication over the last 4 years. Now, they will benefit directly from the company’s success as co-owners. This is as it should be. Making Modern Times an employee-owned company gives me a sense of satisfaction that is somewhere beyond joy.'
With additional questions about the plan and the company’s decision to go in an employee-owned direction, we contacted McKean with additional question. As the sole founder and original CEO, he started the company by raising money from friends and family, who have now sold their shares back to begin the ESOP. The remaining 70% resides largely with McKean, who does not count as an “employee” as far as the ownership is concerned, and this portion will slowly be added to the ESOP over time.
'There will be subsequent rounds in which the company buys back the remaining shares held by investors, including mine,' McKean told Paste. 'We will do that as soon as it is financially feasible. When an employee leaves, the company buys back their shares and it is returned to the employee pool.'
This system obviously incentivizes employees to remain with Modern Times and add to their ownership stake, while simultaneously giving them the ability to eventually cash out without contributing to the company being 'bought out' by an outside party. When asked about those incentives, McKean said it was simply 'the right thing to do' in order to let employees 'share in the company’s financial success.'"
For the rest of the story, check out the full piece here.