If you’ve started a business, eventually you face the dilemma of what’s going to happen with it when you’re gone. Really, to continue, any business needs new ownership to carry it into the future. And there aren’t that many choices if you don’t have family you wish to pass it down to. You’re faced with a sale, and with making the best decision you can that balances maintaining what you’ve built, honoring your values, rewarding your employees, and providing a fair financial exchange for the owners.
Over the years, I’ve been horrified by some of the stories of businesses that were bought by financial firms and basically gutted, career employees fired, plants closed, and jobs shipped overseas. Granted, some of these were old companies that were potentially way overdue for an overhaul, and then decades of drastically needed changes were carried out over a very short time frame. But still….
We didn’t want to become part of another musical instrument company because we’d lose a lot of our individuality and culture.
Bob and I have thought and worried about the future of Taylor Guitars for many years. Selling was inevitable. But how, and to whom? This came into focus over the past 10 years, culminating in our creating an ESOP (employee stock ownership plan) and transitioning our ownership to our employees by means of the ESOP at the end of 2020.
From the outside, it’s easy to think guitar companies are pretty similar. They are, but they’re not. They each have their own distinct personality, with their unique culture and set of values. We didn’t want to become part of another musical instrument company because we’d lose a lot of our individuality and culture. It always happens. We like what we’ve created, and we want it to continue.
We really didn’t want to become a portfolio company of a financial firm, though that likely would have yielded the highest price. We didn’t want the motivation of the company to morph from making the best possible instruments that inspire people to create music to aligning our decision-making around return on investment and growth goals. We didn’t feel that would be a healthy transition for our business, our employees, our dealers and vendors, or the people that buy and play our guitars.
We started learning about employee ownership in 2013, and we got pretty excited. The more we learned, the more we could see that it checked all the boxes for us. Bob and I could keep our jobs and continue working into the future, which we wanted to do. Andy could continue leading our guitar design for decades into the future. We could retain our employees, many of whom have been with us for years and years. And perhaps most importantly, our employees would be the ones to benefit financially from the company’s future growth and prosperity.
Employee ownership is a unique opportunity to address wealth inequality. It provides another means for people to create wealth for themselves and their families, by putting company ownership in their hands. We felt that was more important and a better decision than selling to another company, or a financial firm, and letting them reap the financial benefits of Taylor Guitars. We couldn’t be happier with our decision.