Keeping Good Going

A Connecticut firm has transitioned to a Perpetual Purpose Trust

In Brief: Marketing and IT firm The Walker Group has recently made the decision to transition to a perpetual-purpose trust structure. 

The Details: The Walker Group is the first Connecticut firm to use state trust law to establish a perpetual-purpose trust. Former owner and founder Kate Emery donated the company to a trust after thirty seven years at the helm. She maintains a ⅓ preferred share, with the other two thirds equally dedicated to sharing profits with employees and donating to local nonprofits and community organizations. Emery’s donation, however, doesn’t mean that she won’t be compensated for her company. In fact, the trust is structured so that a promissory note will over time pay her for her shares and ensure she has money for retirement. 

Why PPT: Emery highlighted a variety of motivations for choosing a perpetual purpose trust as her exit strategy. In addition to the positive social impacts the structure provides, it also ensures stability for employees and guarantees that the company will not be sold to someone whose values do not align with Emery’s. She noted that the firm considered an ESOP but decided on a purpose trust because “it didn’t afford [me] the ability to prevent the company from being sold by a future owner.” 

Why It Matters: The Walker Group could one day serve as a case study for perpetual purpose trusts. As one of the first companies to adopt such a model, the firm offers an example of structure and success for other interested firms. The group has found that “clients are enthusiastic about the social-good aspect of the company, which gives it a competitive edge,” on top of employees feeling secure now that there is no risk of a future sale and restructuring. 

Go Deeper: Check out the original article here 

Image Credit: Photo by Rusty Watson on Unsplash