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Grant Park Legal Advisors, LLC Blog

Monday, January 14, 2019

New Belgium Brewing’s Unique Succession Plan

New Belgium Brewing makes one of the most popular independent beers in America, and it is sometimes credited with starting the craft brewing craze, so are you surprised that it is also doing things differently when it comes to succession planning? Instead of selling out to a larger brewer, or bringing on investors, New Belgium has gone 100% employee owned

When Kim Jordan and her then-husband Jeff Lebesch first started brewing beer in the late 1980s, it was in their basement. They slowly gained a cult following from beer lovers who couldn’t find similar tasting suds anywhere else. 

In 1992, the company moved out of the basement and into a stand-alone facility. That same year, the couple hired their first employee, and gave him a “10% pot of sweat equity” in the company. So began the company’s first step toward full employee ownership. 

As the company grew, Jordan decided to operate with an open-book management philosophy, teaching employees about financial statements and enlisting their input for annual planning and long-term strategy. She says she soon realized the employees who have a say in how a company is run should also have a stake in it. Going forward, every employee was formally awarded stock in New Belgium upon their first anniversary at the company.

After Jordan and Lebesch divorced and he left the company, New Belgium officially became an employee stock ownership plan (ESOP) business. ESOPs are unique because they allow employees to take over the management of the company they work for without having to grow rapidly to cover the debt that is typically incurred when employees buy out an owner. The company stock is held in trust, and given out to employees only when they exit. That stock is then immediately sold back to the company or voided.  

Jordan says turning the business into an ESOP “represents a conscious effort to fight the wealth gap, avoid cuts and layoffs a buyer might have demanded, and keep her employees involved in the future of the company.”

“It’s not about how much money we will get and it’s not about who will run the company later, it is about the legacy of the company,” she said. “How are we going to make this transition in a way that honors all that we’ve done to get here to date? There an overriding theme of ‘I don’t want this to have all been for not.’”

The ESOP also gives Jordan some liquidity, while allowing her to stay active in the business for as long as she and the rest of New Belgium’s employees think that is a good idea. 

There are many different ways business owners can exit a company without putting it or their own livelihood at risk. Our firm helps business owners who want to make the right choice when it comes time to step away from the company they have worked so hard to build. 




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