30 Sep Island Employee Cooperative
Island Employee Cooperative
For 43 years, Vern and Sandra Seile owned three retail stores on Deer Isle, an island off the coast of Maine: a large grocery store named Burnt Cove Market, a medium size grocery store called The Galley, a hardware and variety store called V&S Variety, and a fourth business, V&S Pharmacy. The businesses were a staple of the community—they were a major employer on the island and the nearest comparable stores were at least 25 miles away on backcountry roads. Many of the 60 employees of the businesses had been working with the Seiles for several decades—one employee had even been with Burnt Cove Market since it opened in 1973.
Industry: Three retail stores- grocery, gas station, and general store with a pharmacy
Number of employees: 60
Location: Deer Isle, ME
Conversion date: June 11, 2014
About the transition to worker ownership. Vern and Sandra Seile and their three businesses were members of the Independent Retailers Shared Services Cooperative (IRSSC), a marketing cooperative in New England, when they began succession planning. They wanted to sell their businesses and retire, but they and their employees worried that an outside buyer would consolidate operations and cut jobs. The IRSSC’s Mark Sprackland encouraged them to consider selling the businesses to their employees and brought the Cooperative Development Institute (CDI) into the discussion with the Seiles.
Rob Brown, Director of CDI’s Business Ownership Solutions program, which specializes in ownership conversions, helped the Seiles to better understand the worker cooperative business model, and began a conversation with them about how it might work for their businesses. The Seiles decided they wanted to pursue the option and took the idea to key staff at their three stores, who showed interest. After an all-staff presentation by advisors, 80% of the workers signed a non-binding written commitment of interest. A 10-person steering committee was then formed, charged with leading the transition process.
Over the course of the following three months, the steering committee met with Brown and Sprackland for 2-3 hour sessions most weeks to learn about worker-owned businesses, and the steering committee and advisors also held several all-employee meetings. In January of 2014, the new worker-owners and the Seiles signed the purchase and sale agreement. In June of 2014, after procuring financing, the Seiles and the new cooperative closed the deal in a $5.6 million transaction. The entire transition process took a little over a year to complete. Brown notes that selling the businesses to their employees provided the Seiles, the employees, and the community with a “win-win-win.” The Seiles gained a succession plan that would allow them to enjoy a comfortable retirement, employees would have the opportunity to build wealth through ownership, and ownership would stay local, keeping operations and profits on the island.