A decade ago, Roger Ryberg began considering who would take over his Windings Inc. business when he retired.

With no family members involved in the 43-year-old manufacturing plant in New Ulm, Ryberg chose to hand the reins to his nearly 100 employees.

Today, the employees have purchased nearly 75 percent of the company’s stock.

Employee Stock Ownership Plans are growing in popularity and a Minnesota foundation is starting a new program to encourage and help finance ESOPs for owners considering retiring in a decade or more.

“We chose an ESOP as a key element of our succession plan because I want our employees to have the opportunity for substantial benefit from the continued growth and profitability of this company they helped build,” Ryberg said.

Scott Ward, a vice president of Windings, said the employee ownership has been good for the company, good for employees and good for Ryberg.

“Employees build up equity that they take when they leave. They start asking more questions about how the business is run. They have a stake in it and they hold the management accountable,” Ward said.

Ward and vice president Jerry Kauffman are the top executives of the company, while Ryberg has taken a less active role in the business.

Encouraging boomer owners

Scott Martin, president of the Northland Institute, said thousands of Minnesota businesses could take advantage of ESOP transitions, and his group has started a program to promote and finance them.

The non-profit Institute has a mission to promote economic activity in Minnesota communities.

He said ESOPs are the best way to ensure companies, profits and jobs stay in local hands.

“We want to introduce this idea to the large number of baby boomer business owners who may or may not have a family succession plan,” Martin said.

“For a lot of owners, they just get to the day where they put a ‘For Sale’ sign out. Once the sale sign goes up, you don’t know if the business is going to be sold to an outside firm, whether jobs will be cut, or whether the company buying the business will simply close it because of market share strategy.”

Martin said it’s key that an owner plan for an ESOP early — while they are in their upper 40s or early 50s. “It takes some time to do it.”