In Slovenia, we stand on the cusp of an unprecedented wealth transfer since denationalization - the transfer of business ownership. This impending shift will significantly impact the SME sector, responsible for employing about 75% of all private sector workers. However, our current ownership landscape resembles a monocultural desert, leaving us unprepared for the imminent change. The decision on where this wealth will end up lies largely in the hands of policymakers. Implementing a targeted policy can create innovative instruments for smooth ownership succession.
With considerable wealth set to change hands, it becomes crucial to consider who will become the new owners. A political decision is vital to ensure a diverse ownership landscape. While discussions revolve around the necessity of private capital markets and private equity models to invigorate the Slovenian economy, the question arises - growth for whom?
Private equity serves as a prime example of short-termism, often focusing on maximizing immediate gains at the expense of long-term sustainability. The typical approach involves acquiring a company, burdening it with debt, selling off its physical assets, and profiting from the transaction. In many cases, the company is left struggling to survive, trapped in a cycle of financial strain.
To address these challenges, it is time for Slovenia to consider alternative models of business succession. The United States and the United Kingdom have already begun recognizing the pitfalls of the private equity sector and have started embracing a different vision - employee ownership. In the US, around 7,000 companies are structured as ESOPs, with many resulting from ownership succession plans. Likewise, in the UK, over 1,500 businesses have been transferred to employees in the last eight years through Employee Ownership Trusts (EOTs).
Employee ownership offers numerous benefits. Firstly, it provides a more inclusive approach, ensuring that employees become active stakeholders in the company's success. This fosters a sense of ownership, leading to increased commitment, productivity, and loyalty. With employees invested in the long-term success of the business, decision-making becomes more strategic and sustainable.
Moreover, employee ownership promotes stability during periods of turnover. As employees transition within the company, the ownership structure remains intact, preventing abrupt changes that could harm the organisation.
As Slovenia faces this monumental transfer of wealth, it is time to rethink our approach to business ownership. Embracing employee ownership can lead to a more diversified and resilient economy. Implementing policies that encourage and facilitate employee ownership will empower workers and contribute to sustainable economic growth. Let us seize this opportunity to shape a prosperous future for our businesses and our people.
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