Question: How do you get the employees of a CPA firm to treat the business as their own? Answer: Sell the business to them through an Employee Stock Ownership Program. That's exactly what Minneapolis-based HLB Tautges Redpath Ltd. did earlier this month.
One hundred percent of the ownership of the firm will be redistributed from the partners to the 85 employees under the ESOP plan. Partners will continue in their role at the firm and will be paid an undisclosed amount of money over the next fifteen years for their stake in the business.
"We think its going to help us recruit people and help us retain people," said Jim Redpath, 46, vice president of tax operations at the 32-year-old business. "It helps create a pride of ownership."
One of the goals of the move is to position the firm to remain independent. The firm feels confident that remaining independent will allow them to capitalize on some of the business opportunities created by the aftermath of Enron, and feels that the ESOP move is a strategic one to assure the future independence and success of the firm.
Employee ownership is still a new phenomenon and relatively rare among public accounting firms. Just a handful of the largest 100 firms are employee owned, but the trend is growing.