NJEDA Partnership to Help Businesses Create ESOPs

On Feb 27, 2025

The New Jersey Economic Development Authority (NJEDA) Board has approved contract agreements with Onyx Partners Group and Lazear Capital Partners to help New Jersey companies create Employee Stock Ownership Plans (ESOP). The ESOP Assistance Program will connect approved applicants with one of the vendors to perform feasibility studies and provide technical assistance, which is often the first step in creating an employee ownership model.

In 2021, Gov. Phil Murphy issued Executive Order No. 262, which established the Wealth Disparity Task Force, which examines the causes of, and creates remedies for, the longstanding wealth disparities that affect Black and Hispanic or Latino New Jerseyans. ESOPs, an employee ownership model in which employees retain interest in shares of a company through holding corporate stock in a trust, can create generational wealth for workers and provide unique succession plans for business owners.

“ESOPs serve as a resource for New Jersey companies that want to craft sustainable business transition plans, create access to economic opportunity for workers and their families, and support the state’s growing, diverse, business ecosystem,” said NJEDA Chief Executive Officer Tim Sullivan. “Through the NJEDA’s upcoming ESOP Assistance Program, the state’s companies will be better able to determine if the ESOP model is feasible, eliminating technical and financial barriers that can be difficult for business owners to navigate.”

In July 2024, the NJEDA entered into an agreement with the Rutgers School of Management and Labor Relations to create educational and informational programming to increase the quantity of New Jersey businesses utilizing an ESOP. New Jersey is home to 88 ESOPs, holding $64.9 billion in plan assets covering 423,429 current employees and retirees, with an average stock account for eligible current employees of $188,868.

“By promoting employee ownership models, especially among people of color, we aim to build generational wealth and reduce economic disparities,” said Michelle Bodden, NJEDA chief diversity, equity, and inclusion officer. “Employee ownership is a powerful solution that extends the promise of the American Dream to workers and business owners across all backgrounds. For Black workers and Black-owned businesses, the impact is particularly meaningful. Converting businesses to employee ownership not only helps preserve Black-owned enterprises but also empowers Black employees to benefit directly from their labor, potentially increasing household income by up to 92%. These transitions have the potential to close racial wealth gaps and uplift entire communities.”

“Rutgers is proud of the opportunity to partner with NJEDA as it develops this assistance program,” said Rutgers Institute for the Study of Employee Ownership and Profit Sharing Associate Director and Rutgers Center of Employee Ownership Executive Director William Castellano. “Together we are continuing our work to promote the many benefits of employee ownership throughout the State; from the business owner who is looking for a sustainable succession plan option, to the worker who stands to gain an added benefit through these opportunities.”

Onyx Partners Group and Lazear Capital Partners were selected following a Request for Proposals for the forthcoming ESOP Assistance Program in September 2024, which solicited proposals from firms experienced in ESOP transitions, including the design and development of feasibility studies and valuations.

The NJEDA’s ESOP Assistance Program is expected to be presented to the NJEDA Board for final approval in March. Following approval, applications are expected to open in early April.

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