When Something Is Not Better Than Nothing

We've spent years investing in employee ownership because we believe it's one of the most powerful tools for closing the wealth gap. When workers own their place of employment, they determine who benefits from it. They can decide whether to reinvest profits in the business or support families in times of crisis. Whether to prioritize better healthcare or on-site childcare. Genuine ownership, sharing at least 30% of the company with governance rights and board representation, builds durable, generational wealth. Locally owned businesses return three to five times more wealth to the local economy than chain competitors. They anchor communities in times of shock. And that ownership can be passed down, strengthened over time, and built into strong communities that outlast any single PE holding period.

That is what we are working toward. So when a $4.75 billion deal gets celebrated as a win for employee ownership, we pay attention.

There's a big discussion happening right now about KKR's sale of CoolIT and whether the ~$156M that 650 employees are splitting is that win. Smart, well-meaning people are landing on "at least it's a start." We want to push back on that. Not because we think those workers don't deserve every dollar. They do. But because we need to be clear: are we looking for better crumbs, or are we looking for a seat at the table?

KKR and Mubadala bought CoolIT for roughly $270-300M. They sold it for $4.75B. Employees are splitting about $156M: 3.5% of the value they helped create. Those workers will pay up to ~48% tax in Canada on that income. KKR will pay around 20% on its capital gains. The "ownership" ends the day the deal closes. No governance. No ongoing stake. No voice for any decision that shaped their fate.

A primary question for us is whether this structure makes wealth inequality greater or less. When 96.5% of a $4.5 billion exit flows to investors who will redeploy that capital into more assets, and 3.5% flows to workers as a one-time taxable event, the gap doesn't close. It widens. If PE structures more of these deals in this manner rather than in the models we know work, with much higher ownership stakes and governance rights, wealth inequality will continue to accelerate.

Workers cried tears of joy. We believe that. And we've heard directly from employees in these programs who are genuinely grateful, people who've never gotten anything like this before, who see it as life-changing. We take that seriously. When the system has spent decades telling you that your labor is a cost to be minimized, a $50,000 check feels like a miracle.

But that's exactly the point people aren't saying out loud: those tears tell us more about how broken the system is than about how generous KKR was.

Would we be raising a warning if KKR and Ownership Works called what they do something other than ownership and didn't use tax subsidies to do it? We would celebrate it. These deals are meaningfully better for workers than the usual private equity playbook. 

But they can't stop calling it ownership, because that's the mechanism. Use the label to urge workers to increase the value. Use the ownership tax subsidy to extract from society and prop up the financial returns. Use the media facade of generously sharing the ownership with workers as a marketing tool.

The psychology is the point.

KKR's own 2024 paper, "Creating an Ownership Culture," drawing on research with Ownership Works and Gallup, reveals what actually drives productivity and retention. It's not the payout. It's employees who "feel like an owner." Their research found that 97% of employees who score high on both engagement and ownership feeling plan to stay, compared to 47% of those with high engagement alone. The paper is explicit about the goal: "employees need to believe they are owners." And the bottom line? Across nine exits, KKR averaged a return on invested capital of more than four times. The paper frames this as proof that the approach "works."

Read that again: the feeling of ownership flows to workers. The returns flow to PE.

These firms have figured out that "ownership culture" is a management tool. Give people the language, the identity, the emotional experience of ownership, and they work harder, stay longer, and produce more value. Then capture 96.5% of that value at exit. That's not sharing ownership. That's monetizing a feeling.

"Something is better than nothing" assumes these are the only two options.

The options aren’t no capital sharing or minimal sharing. The options are to build an extractive economy, where wealth is siphoned off to a few, or a generative economy, where wealth stays where it's created. We know what the generative version looks like because it already exists, and it works.

Apis & Heritage Capital Partners finances employee buyouts through mezzanine debt, not equity. One of their portfolio companies, Blooming Nursery, is 93% workers of color, including seasonal agricultural workers who are full ESOP participants. Revenue at Apex Underground is up 120% since their ESOP conversion. A&H just won the 2025 Skoll Award for Social Innovation. And here's the thing: their model uses patient capital. Private capital and genuine employee ownership are not mutually exclusive. They just require the investor to accept debt returns instead of equity extraction. The money is still good. The impact is transformational instead of performative.

What we object to is a specific kind of PE behavior: capturing 96% of value creation, giving workers a terminal bonus that disappears at exit, calling it "employee ownership," and then lobbying for the same tax benefits that real ESOPs get.

That's a Trojan horse.

When we see ownership on a spectrum, with nothing at one end and full community transformation at the other, we might mistake individuals getting a bonus as progress along that line. But what if it's actually preventing us from getting there? A one-time payout during a sale feels like a step toward fairness, but it doesn't change the fact that the PE model is designed to extract value rather than build stable communities.

Here's why "something" actually makes things worse.

It rewrites the definition. When "employee ownership" can mean a one-time 3.5% payout with no governance and no durability, the term loses its meaning. The employee ownership movement spent decades building political goodwill based on what ESOPs and cooperatives actually deliver. The ESOP Association's own report calls these Short Term Equity Plans what they are: schemes that "simply do not meet the definition of an ESOP any more than they meet the definition of a 401k." PE co-opting that language doesn't expand the tent. It hollows it out.

It threatens the tax base. PE firms are actively lobbying to extend ESOP tax benefits to these terminal structures. The Yale Budget Lab estimates the cost at $98.6 billion in the first decade and $524.8 billion in the second. For context, the entire existing ESOP tax expenditure, covering all roughly 6,500 genuine ESOPs serving 14 million workers, runs about $2.2 billion a year. We'd be spending orders of magnitude more to subsidize programs where workers get 3.5% and PE gets 96.5%. That widens wealth inequality with public money.

It crowds out the real thing. Every dollar of policy attention, every headline, every LinkedIn post celebrating KKR's "generosity" is attention not going to the models that actually work. As Nikishka Iyengar has documented, Ownership Works has attracted more philanthropic funding than the three largest, long-standing employee ownership organizations combined. Think about that: philanthropy is subsidizing billionaires to implement market-friendly versions of ideas that have been stripped of their democratic power, while the organizations doing the real work scrape by. Apis & Heritage, Common Trust, Torana Essential Owners, and Project Equity are building genuine ownership with a fraction of the resources and without a PR machine.

It exploits suppressed expectations. Workers whose wages have been stagnant or declining for decades are being told to be grateful for crumbs from a $4.5 billion table. We shouldn't be backslapping a PE firm for returning a fraction of value that workers created. We should be asking why the split is 96/4 in the first place. As Marjorie Kelly says the PE version of employee ownership is a step up on an escalator that's moving rapidly down.

And here's what makes all of this harder to fix with each passing year: every deal structured this way concentrates more wealth and more power in fewer hands, and that concentration makes the next deal even harder to challenge. As Delilah Rothenberg said, “the wealthy are positioned to buy up assets (real estate, equities, etc) which pushes up the valuations for everyone else and increases the barriers to entry to invest.” Then, they lobby for more favorable tax treatment and fund more PR celebrating their generosity. The workers who received 3.5% spend it. The gap compounds. The political power to change the rules tilts further away from the people who need it most. This is how "something" becomes the enemy of "better": not in one deal, but across thousands of them.

The real question isn't "is 3.5% better than 0%?"

Of course it is.

The question is: when we build the institutions, the tax incentives, the policy frameworks, and the cultural narrative around employee ownership, do we build them around a model that delivers a 3.5% one time bonus? Or around models that deliver true lasting ownership?

Because we don't get to do both. When private equity has taken not just the returns but even the very label of ownership, you undermine the possibility of building the kind of durable, democratic, generational wealth that actually eats into inequality. The "something" isn't a stepping stone to the "better." In practice, it's a substitute for it.

And maybe that's the heart of the matter. Others are framing this as a disagreement over details. We think it's a disagreement over values. Of course, we think it's great for individuals to do well. But a one-time check that vanishes at exit isn't the goal, because it's neither sustainable nor generational. Genuine ownership, the kind where workers hold governance rights and build wealth that compounds over decades, transforms communities. A parting gift doesn't.

We learn about new ownership models every day. The innovation in this space is real, and we're constantly discovering people building structures we hadn't imagined. We love that work. But what KKR is building here isn't a new model. It's an old extraction playbook with a new label.

If you want to see what's possible, start with Apis & Heritage, Common Trust, Torana Essential Owners, and Project Equity. The models exist. They work. They're waiting for attention and capital that keep going to the wrong place.

This is existential and urgent. We don't have time to celebrate "wins" that aren't moving us toward the goal line.

This isn’t about what we are against. This is about what we are for. Agency, hope, and transformational change that can fight against the extreme inequality that is eroding our communities and our very democracy.