Aaron Schroeder’s company, Brightspot Climate, attracted constant offers despite not being on the market. Over the years, the Vancouver-based climate engineer received numerous unsolicited bids, particularly from larger companies and hedge funds in the United States. When Schroeder made the decision to sell Brightspot Climate, he opted to create a special trust to make all 40 of his staff owners, allowing them to participate without any upfront financial commitment.
Introduced in 2024, an employee ownership trust (EOT) was added to Canada’s existing employee ownership options. Since then, four companies, including Brightspot, have transitioned to this new ownership model. This shift comes at a crucial time in Canada as many baby boomer entrepreneurs are nearing retirement, and there is a focus on bolstering the national economy amid trade tensions with the U.S.
Schroeder emphasized his desire to reward the employees who contributed to building the business and avoid potential job losses and cultural erosion that could result from a sale to a foreign entity. EOTs operate through a trust that holds company shares on behalf of employees, with profits used to repay the owner over time. The government offers a tax break for owners selling to employees, but this incentive is set to expire at the end of the year, creating uncertainty for the future of EOTs in Canada.
Notably, the federal government introduced a $10-million capital gains tax exemption to make EOTs more attractive to owners who have dedicated years to developing their businesses. Despite challenges such as financial literacy and relinquishing control, EOTs provide advantages like shared ownership and alignment among staff. The potential extension of the tax incentive is eagerly awaited by industry advocates, with hopes to encourage more businesses to keep operations local and strengthen the national economy.
As more companies explore EOT conversions, there is a growing recognition of the benefits of employee ownership, with success stories like Brightspot Climate demonstrating improved staff retention, attraction, and a burgeoning entrepreneurial spirit within the company.