jillian

I’m excited to share that I’ll be joining Alison Lingane, Founder of Ownership Capital Lab and host of EO Fund Spotlight for a live webinar, “Next wave of employee ownership investments” on November 6th, from 11am-12:30pm PT (2pm-3:30pm ET). I’ll be joined by Katie Kimble and Michael McGinley, Partners and Cofounders of Monarch Investment Partners.

Liquidus Partners is proud to be part of a new generation of employee ownership (EO) focused funds reshaping private credit. Alongside fellow innovators Monarch Investment Partners we’re channeling smart, values-driven capital to keep companies locally owned, preserve good jobs, and help employees share in the wealth they help create-helping expand what was once a niche concept into a powerful mainstream strategy.

If you’re interested in learning more about Employee Ownership and these still “under-the-radar” employee ownership funds shaking up the investment landscape, join the free webinar to learn more. I’m really looking forward to sharing insights but mostly learning from everyone in the discussion. Click here to register.

The U.S. economy—and particularly the retail sector—is experiencing major disruption, marked by a wave of store closures and corporate bankruptcies. While shifting consumer behaviors, inflationary pressures and other macroeconomic and operational challenges are key drivers, private equity ownership has emerged as a disproportionately large contributing factor. Although private equity accounts for only 6.5% of the U.S. economy, it was responsible for 56% of the largest bankruptcies in 2024—those with liabilities over $500 million—and 11% of all bankruptcies overall. These collapses led to more than 65,000 layoffs nationwide and were heavily concentrated in sectors like healthcare and retail, where private equity-backed firms accounted for 7 of the 8 largest healthcare bankruptcies and 21% of all such filings.

According to researchers at the Private Equity Stakeholder Project (PESP), private equity firms played a role in 11 of the 17 largest U.S. corporate bankruptcies during the first half of 2024—65% of all cases involving liabilities over $1 billion. Analysts like Valentina Dabos and Eileen O’Grady of PESP argue that these firms often justify mass layoffs and restructurings as “efficiency measures,” when they reflect financial mismanagement and debt overloading rather than genuine operational improvement. Through debt-fueled acquisitions and dividend extractions, PE owners frequently strip value from companies while leaving them ill-equipped to navigate changing markets. Instead of rescuing distressed businesses, this model often accelerates decline—prioritizing short-term profit-taking over long-term stability, and harming workers, consumers, and local economies in the process.

At the core of this systemic fragility is the storied leveraged buyout (LBO), in which private equity firms finance takeovers using debt secured by the acquired company itself. This structure often saddles portfolio companies with unsustainable liabilities, diverting revenue away from innovation, workforce investment, and resilience. As interest rates rise and markets tighten, these highly leveraged firms are increasingly vulnerable to financial distress. Moody’s Investors Service reported that as of October 2024, 73% of the most speculative U.S. companies—those rated B3 negative or lower—were private equity-backed. 

• Early 2025 has already seen additional collapses. Take for example Prospect Medical Holdings which went bankrupt with over $400 million in debt after years under private equity firm Leonard Green & Partners (LGP).Prospect Medical Holdings Bankruptcy (2025): Prospect Medical Holdings filed for bankruptcy with over $400 million in debt after years of debt-funded dividends under Leonard Green & Partners (LGP).
• LGP Acquisition and Debt Loading: LGP acquired Prospect in 2010, using mostly debt. Over the next decade, Prospect took on an additional $1.1 billion in debt to acquire hospital systems and pay $645 million in dividends back to LGP.
• Asset Sales and Financial Decline: In 2019, Prospect sold its real estate for $1.4 billion and leased it back to raise cash. By 2020, the company faced severe financial trouble, service declines, and regulatory investigations, leading to the closure of a hospital in San Antonio.
• Exit and Aftermath: In 2021, LGP sold Prospect to minority shareholders, leaving $80 million in escrow for Rhode Island hospitals. LGP exited with nearly $450 million in net returns, while Prospect was left with $3.1 billion in debt, leading to its 2025 bankruptcy.

What a happy ending, for Leonard Green & Partners that is.  To be clear, this is not an isolated case. Private equity’s footprint now spans nearly every sector and its role in amplifying corporate risk has become an epidemic.  Extracting maximum value from a company by feeding it debt-flavored steroids and forcing it to expand at all costs, then walking away when it collapses is not efficient capitalism.  It’s pillaging.  

October is a busy month highlighting some really important causes.  It’s Breast Cancer Awareness Month, National Disability Employment Awareness Month and National Hispanic Heritage Month among many others.  It’s ALSO Employee Ownership Month.  Lesser known perhaps, at least for now, but critically important in a time when most Americans feel like their economic progress is slowing or has stalled completely while a few handfuls of billionaires race further and further ahead. Employee ownership IS the antidote.  Not only does it help businesses thrive and create stronger communities – it truly gives workers a real stake in their jobs and their futures.  It gives everyone a stake in success. The The ESOP Association first began promoting Employee Ownership Month in 1982 to highlight the benefits of employee ownership and it has grown into a nationwide recognition each October, as recognized by preeminent ESOP organizations such as The National Center for Employee Ownership (NCEO) , ESOP Partners and Common Trust as well as thousands of firms across the nation and beyond. Many are hosting events, employee appreciation activities, educational webinars, and outreach campaigns and offering ESOP toolkits. At Liquidus Partners we honor the employee-owners who make it all possible and the business founders who have chosen to share ownership with their employees, whether through an ESOP, an Employee Trust or another form of ownership.  Here’s to Employee Ownership and its potential to actually, meaningfully restore the American Dream to millions of workers.  And not a minute too soon.

And a special congratulations to Software Engineering Professionals, Inc. (SEP) for being the 2025 Employee Ownership Month Winning Poster recipients, as selected by a panel of TEA Members.

Having spent a fair amount of time now studying ESOPs, I have noticed a large gap between the perceived cost and complexity of transitioning to an ESOP versus the reality of doing so. In fact, for a healthy company, creating an ESOP is much easier than you think. Determining if an ESOP is the right path is slightly different than evaluating an exit to a private equity firm or strategic partner but is by no means more complicated.  Today, the financing options for ESOP formation extend beyond the traditional combination of bank debt + seller note. Firms such as Apis & Heritage and Monarch Investment Partners provide flexible subordinated debt financing in lieu of seller notes. Experienced advisors and trustees, and standardized playbooks (valuation checklists, term sheets, comms kits, and timeline roadmaps) can help many owners move from idea to close in months—not years. And for companies that have already made the transition my firm, Liquidus Partners, can provide full or partial liquidity for any outstanding sellers notes.  Of course, as with any exit path, clean financials, the right structure, and early expert engagement make the process infinitely easier.

If you’re weighing succession, de-risking, or rewarding your team, an ESOP can be a practical, tax-smart path—without reinventing the wheel. ESOPs can deliver owner liquidity, keep the business running smoothly AND preserve culture.

I recently had the opportunity to attend a panel at the National Center for Employee Ownership Forum in Philadelphia “A Big Tent: The Movement Expand Employee Ownership” featuring a distinguished group of experts on employee ownership including Mary Sullivan Josephs, Megan Walsh Thompson, Anna-Lisa Miller, Loren Rodgers and Daniel Massey. The discussion was inspiring, thoughtful and engaging, and one of the most striking takeaways was how strongly employee ownership resonates in the public sphere, as indicated by the statistics shared. In today’s highly polarized political environment, it feels as if everything is partisan, and that Democrats, Republicans and Independents agree on almost nothing. Yet one area of broad consensus remains: Employee Stock Ownership Plans (ESOPs), and it is wildly bipartisan earning support across the aisle. Amid sharp divisions in Washington, ESOPs stand out as a rare, practical solution that everyone can get behind ensuring that ESOPs remain a vital and growing part of the American economy.

At their core, ESOPs align with values championed on both sides of the political lines.

• For conservatives and business-minded leaders, ESOPs strengthen the backbone of the American economy—private businesses. They keep ownership local, encourage long-term stability, and reward hard work with financial upside. They also provide business owners with tax-advantaged succession planning tools that preserve legacy while ensuring continuity.
• For progressives and labor advocates, ESOPs put equity directly in the hands of employees, helping workers build wealth, close the income gap, and secure retirement savings. They foster a sense of dignity and empowerment on the job, while improving productivity and lowering turnover.

Evidence That ESOPs Work

The data makes it clear why ESOPs continue to attract advocacy across party lines:

• Companies with ESOPs are more resilient, with lower default rates than their peers.
• Employees in ESOPs accumulate substantially more retirement savings than workers in traditional firms.
• Studies show ESOP companies experience higher productivity and growth, while also strengthening communities by keeping businesses rooted locally.

Policy Support and Momentum

Over the past several decades, legislation enhancing ESOPs has repeatedly passed with overwhelming bipartisan support. From tax incentives to financing structures, both Congress and state legislatures recognize ESOPs as a powerful tool for sustaining American businesses while building the middle class. New resolutions introduced in recent years have drawn co-sponsors across the political spectrum, showing that ESOPs are not only enduring, but gaining fresh momentum.

A Common-Sense Solution in Uncertain Times

Amid sharp divisions in Washington, ESOPs stand out as a rare, practical solution that everyone can get behind. They protect jobs, create wealth for workers, and help entrepreneurs transition their businesses smoothly—benefits that resonate with policymakers regardless of party affiliation.

As more companies explore employee ownership, the bipartisan support behind ESOPs ensures that this model will remain a vital and growing part of the American economy. It’s proof that even in divided times, we can still unite around solutions that work.

I want to thank my fellow panelists Todd Leverette, Malini Ramanarayanan Moraghan and Joe Belsterling who joined me at the National Center for Employee Ownership (NCEO) Forum last week in Philadelphia. We had an inspiring and honest discussion about what it will take to scale the number of employee owned businesses by 10X in 10 years. Lots of great ideas and a deep well of energy and passion in the audience. The main takeaway for me was that we’re likely at a tipping point of awareness, capital and policy initiatives. Good things are starting to happen and a lot of organizations are working on this including Ownership Works, Project Equity, Ownership Capital Lab, Ford Foundation, Expanding ESOPs, The National Center for Employee Ownership (NCEO) and others. Shout out to Geoff Woolley, my Co-Founder at Liquidus Partners for the photo!

In a crowded investment landscape, finding strategies that deliver both attractive returns and genuine differentiation is no easy task. That’s why a growing number of sophisticated investors are taking a closer look at a niche that sits at the intersection of private credit and employee ownership: buying seller notes from ESOP transactions.

It’s a strategy that’s hiding in plain sight—one with compelling economics, low competition, and an impact story to boot. 

When a business owner sells their company to an Employee Stock Ownership Plan (ESOP), the deal is often financed in part with a “seller note”—a promise from the company to pay the seller over time. These notes typically carry attractive interest rates and are backed by healthy, cash-generating companies.

But here’s the catch: sellers often don’t want to wait years to get paid. That’s where a private credit fund steps in—buying the note, providing the seller with immediate liquidity, and earning the interest and principal payments over time.

ESOPs are not small-time players. There are over 6,500 ESOP companies in the U.S., generating more than $1.7 trillion in revenue annually. Yet, despite this scale, institutional capital in the ESOP seller-note market is scarce. Banks rarely purchase these notes, and traditional lenders typically don’t understand the ESOP structure.

That lack of competition means well-structured deals with favorable terms are often available—if you know where to look.

Buying ESOP seller notes can deliver premium yields without taking equity-level risk. The repayment obligations are contractual, the companies are usually established market leaders, and the transactions are structured with strong covenants.

Because ESOP companies often outperform their non-employee-owned peers in retention, productivity, and resilience, the underlying credit quality can be exceptional.

Seller notes aren’t traded on public markets, so their value isn’t vulnerable to daily headlines. Payments are typically fixed and predictable, creating steady cash flows that can anchor an investor’s portfolio.

This stability makes them an appealing diversifier in times of market turbulence.

Introduction

Employee Stock Ownership Plans (ESOPs) aren’t just about succession planning—they can be a catalyst for stronger business performance. Beyond giving employees, a stake in the company, ESOPs create a culture of commitment, accountability, and shared purpose that drives growth from within.

How Employee Ownership Fuels Performance

1. Increased Employee Engagement
When employees become owners, they think and act like stakeholders. This shift leads to higher productivity, lower turnover, and a stronger workplace culture.

2. Long-Term Business Stability
ESOP-owned businesses often prioritize sustainable growth over short-term gains, making them more resilient in economic downturns.

3. Enhanced Recruitment and Retention
Ownership is a compelling benefit that attracts top talent and encourages employees to build their careers with the company.

The Financial Impact

Studies show that ESOP-owned companies tend to outperform peers in profitability and productivity. By aligning employee incentives with company performance, ESOPs create a natural win-win for growth and stability.

Why Liquidus Sees ESOPs as a Strategic Advantage

At Liquidus, we’ve seen firsthand how employee ownership transforms not just the balance sheet, but the entire trajectory of a business. Our financing structures are designed to make the transition to employee ownership seamless, strategic, and sustainable.

Case in Point

A mid-sized manufacturing firm we supported saw significant revenue growth post-transition. Employees became more invested in efficiency improvements, customer relationships strengthened, and the company’s market share grew—all within three years of becoming employee-owned.

Conclusion

Employee ownership is more than a feel-good initiative—it’s a proven growth strategy. With the right financing and structure, businesses can unlock the hidden potential of their people while securing a lasting legacy.

Introduction
Transitioning to employee ownership can be transformative—but it requires thoughtful financial planning. Whether you’re a founder looking to exit, or a CFO evaluating your capital structure, understanding ESOP financing is key to executing a successful ownership transition.

Types of ESOP Financing
There are several ways to finance an ESOP transaction, depending on the stage of your business and the needs of your team:

• Seller Notes: The most common structure where the selling shareholder provides a loan to the ESOP, repaid over time.
• Bank Loans: Traditional lenders may offer financing to ESOPs, but often with strict terms or collateral requirements.
• Mezzanine Capital: A blend of debt and equity, offering flexibility without giving up control—ideal for mid-sized transitions.

At Liquidus, we specialize in tailoring the capital stack to fit the company’s strategy, people, and future.

Key Considerations for Founders & Finance Teams
Before moving forward, ask the right questions:

• What’s the right valuation for the business?
• How will cash flow support repayment?
• What legal, tax, and fiduciary considerations are involved?
• How do you balance founder liquidity with employee benefit?

What Makes Liquidus Different
Unlike traditional lenders or private equity, Liquidus focuses exclusively on employee-owned companies. We understand the nuance of ESOP structures and offer fit-for-purpose capital that aligns with your company’s long-term goals—not just short-term returns.

Real-World Examples
We’ve supported founder transitions, ESOP recapitalizations, and second-stage financing needs—each with a unique financial structure. Our approach is collaborative and built around the shared goal of sustainable ownership.

Conclusion
ESOP financing isn’t one-size-fits-all. It requires experience, creativity, and alignment. At Liquidus, we’re here to simplify the process and provide the capital you need to build a resilient, employee-owned future.

Introduction
The traditional ownership model is shifting. In today’s landscape of evolving work expectations, economic inequality, and generational transition, employee ownership is emerging not only as a solution—but as a strategic advantage. More businesses are turning to employee stock ownership plans (ESOPs) to align purpose, performance, and people.

The Case for ESOPs
ESOPs empower employees to become stakeholders in the companies they help build. This sense of ownership often leads to greater engagement, improved productivity, and stronger business performance. Studies have shown that employee-owned companies are more resilient during downturns, grow faster, and experience lower turnover than their conventionally owned counterparts.

Business Resilience & Shared Prosperity
Employee ownership isn’t just about numbers—it’s about culture and sustainability. ESOPs cultivate an environment where employees think long-term, take initiative, and contribute to innovation. They also build wealth for working people, helping reduce inequality and create more inclusive economic outcomes.

Success Stories & Global Trends
Globally, countries like the U.S., U.K., and Australia have embraced employee ownership, with thousands of successful case studies across industries. In Southeast Asia, momentum is growing as founders seek thoughtful succession plans and teams look for greater stability and equity.

Liquidus’ Role
At Liquidus, we help make employee ownership possible. Our financing solutions are designed to support ESOP transitions by offering flexible capital that works for both founders and employees. Backed by Patamar Capital and A&H Capital, we bring a deep understanding of the unique needs of employee-owned enterprises.

Conclusion
Employee ownership is more than a trend—it’s a movement toward more equitable, resilient, and purpose-driven business. At Liquidus, we’re proud to play a part in building this future. If you’re exploring employee ownership, we’d love to help you take the next step.