Dealflow | June 28, 2021

Employee ownership to get a boost from Apis & Heritage’s buyout fund

Roodgally Senatus
ImpactAlpha Editor

Roodgally Senatus

ImpactAlpha, June 28 — Washington, D.C.-based Apis & Heritage Capital Partners helps small and mid-sized businesses with large workforces of color transition to employee ownership (see, “Black and brown employee ownership for the post-COVID economy).

Its Apis & Heritage Legacy Fund is looking to raise $50 million to finance at least eight employee-led buyouts, or ELBOs, over five years. In the pipeline: a Midwest sewer and pipe services company, a janitorial enterprise in the Northeast, an energy retrofitter and an electric services company in the MidAtlantic, Michael Brownrigg told ImpactAlpha.

A&H worker-owners can retire with $70,000 to $120,000 in savings. “We are focused 100% on helping workforces of color own their businesses — and therefore to own their futures,” says Brownrigg.

Investors in the $30 million first close include Rockefeller Foundation’s Zero Gap Fund and the Ford and Skoll foundations, along with Capricorn Investments, Gary Community Investments, Ascension Investment Management and others.

ELBO structure and benefits

The employee-led buyout model helps retiring business owners transfer ownership to employees at a fair market price. LISC’s New Markets Support Company will be the senior lender in the transactions. Employee-owned deals also come with tax advantages.

Businesses that are entirely owned by their employees pay no federal taxes, and no state tax in 44 states, said Brownrigg. “On day one, our new companies have 15-25% more resources than when they were traditionally owned.”