On January 1, 2017, Arbor Assays (A2) became an employee-owned company through the use of a “perpetual trust.” The owners sold their interests to the employee trust and provided seller financing. Arbor Assays now has 11 employee owners. While a relatively new technique in the United States – because the trust laws of many states limit the time period during which a non-charitable purpose trust can be established – this arrangement is more common in Great Britain where “perpetual trusts” are widely recognized.
Founded in 2007 by Drs. Russell Hart, Nancy Schmidt and Barbara Scheuer, Arbor Assays, a small Ann Arbor company with a global reach, designs, develops, and manufactures detection and immunoassay products for important research biomolecules. Until the end of 2016 Russ Hart and Barb Scheuer each owned 45% of Arbor Assays while Nancy Schmidt owned the other 10%. Bobbi O’Hara, R&D Project Manager at Arbor Assays, led the employee group through the transaction, having been elected as the Employee Representative. Russ, Barb and Bobbi are Directors of the Perpetual Trust that now owns all the stock of Arbor Assays, Inc.
A number of law firms were involved in the transaction. Graeme Nuttall, at Fieldfisher in the UK, dealt with setting up the UK trust and its managing company. Graeme has been intimately involved with drafting the UK government policy and laws governing Employee Ownership. A2 used Bruce Elliott at Conlin, McKenney & Philbrick, and Christopher Moceri at Jaffe, Raitt, Heuer & Weiss to handle US legal work. Ms Deborah Olson, the Executive Director of the Center for Community-Based Enterprise, was hired to represent the employees during this period and to work with Arbor Assays to ensure that the company is run for the benefit of the employees. This method of employee ownership maintains the company perpetually for the benefit of its employees, while eliminating the need for the company to repurchase shares from terminating employees. Financially, the employees will benefit because, in addition to their basic compensation, the trust will annually allocate revenue not needed for company operations or future investment, to participating employees.
Russell Hart, founder and managing partner, said: "We want Arbor Assays to remain an independent and successful business and were impressed by how the perpetual trust model can achieve this. Shares are held in trust permanently for all employees, rather than allocated among staff as happens with ESOPs. This means there are no repurchase obligations that can destabilize a company's ownership. Profits that might otherwise be distributed to investors are available to pay out to staff as bonuses. We hope our adoption of this business model will encourage others in the US to do likewise and for the US tax authorities to consider tax breaks to encourage its take-up, as has happened in the UK."
Bobbi O’Hara said: “Making the decision to transition from private ownership to perpetual trust speaks volumes about the faith in our collective competencies and the importance in taking care of each other, not just as coworkers, but as a community with a common goal. As employees, we are excited to see how we'll shape our shared responsibility and direct this opportunity to have an impact for the benefit of us all."