“I have really come to appreciate the importance of ensuring the shared ownership model is part of the culture and DNA of an organization,” says Jeff Calhoun, Managing Partner of Tailwind Capital, a lower middle market private equity firm that invests predominantly in services-based businesses.
Tailwind first joined Ownership Works as a Founding Partner in 2022 because of its strongly held belief in the potential of employee ownership. The firm understood how recognizing every full-time employee by awarding ownership is in the best interests of companies, investors, and workers alike. Since then, Tailwind has implemented shared ownership programs at several of its portfolio companies, including National Trench Safety, RANDYS Worldwide, Axis Portable Air, and Banner Solutions.
Ownership Works spoke with Calhoun to learn what it means when an ownership mentality is deeply ingrained within an organization – and why establishing a culture of ownership requires full belief and dedication from a company’s leadership team.
Q. Why did Tailwind Capital decide to share ownership within its portfolio companies?
Calhoun: At Tailwind, we’ve always believed in creating alignment between management and investors as a critical predictor of investment success. With the all-employee equity program, we were able to broaden and deepen that alignment with employees, and we believe that can be a powerful driver within our portfolio companies.
We embrace the all-employee equity model because we fundamentally believe it should help us build better and more valuable businesses. A key element of our companies’ success is directly correlated to the contributions of its employees.
Q. What is it about shared ownership, in particular, that has the potential to drive business results?
Calhoun: We think that sharing that success with the thousands of employees who help drive these companies, day in and day out, will accelerate growth and create more durable businesses, regardless of economic cycles.
The data from Ownership Works has shown – and which we also see in our companies – that employee-owners feel more engaged, respected, and valued, which often translates into higher productivity, engagement, and retention, and improves safety records. All of this leads to greater equity value for our investors and has a positive impact on the broader community.
I’m personally hopeful that the shared ownership model can be a tool to create more valuable businesses for our investors, while at the same time positively impacting the lives of thousands of good, smart, hard-working employees. Tailwind is honored to partner with Ownership Works, and we look forward to continuing to support what we view as a highly worthwhile mission.
Q. What has Tailwind Capital observed and learned in the process of implementing shared ownership within its portfolio?
Calhoun: Implementing shared ownership is so much more than just communication and transparency around the programs. It is not just having collateral or annual shareholder town hall meetings. Success is making sure that shared ownership is ingrained in the culture of the organization. That’s not going to happen if the CEO and the leadership team don’t believe it is part of the culture of the business and a key to success.
I’d say that the other learning is that this is a new concept to many employees, and so it is often met with some level of suspicion and doubt. Those things need to be addressed upfront and consistently. You have to make it clear that this is an opportunity to be an owner and that it does not replace wages or any other benefits, in any way. However, once it’s built into the organization’s culture, people truly appreciate being an owner.
Q. Can you tell me about some of the companies in your portfolio that are in the process of implementing shared ownership programs?
Calhoun: We’ve implemented shared ownership at soon-to-be five portfolio companies. I’ll highlight one business in particular, Axis Portable Air, which is now in its third year of the shared ownership model. David Walling, the CEO of Axis Portable Air, is a firm believer in the benefits of the program.
He takes great pride in it. It’s part of the DNA of the organization. I’ve toured many of their locations, and the employees talk about the program openly. They really have a sense of pride about being an owner in the business. It’s self-fulfilling in the sense that, as the company just continues to grow and scale, employees refer their friends and their family because they see the great opportunities for growth. The business has grown over 100% for two years in a row, and the employee population has tripled since we started the program. It’s a key element of the success and growth within that organization.
Q. What are you personally hopeful for when it comes to the shared ownership movement? What do you think this movement can help achieve?
Calhoun: I believe that the shared ownership model can have a meaningful impact on the lives of many employees by creating increased economic security, both in the form of equity value creation and through job stability and career development.
We’re a small firm, so we can only impact a few businesses, but I do believe that over time, more private equity firms will see the power of the shared ownership model. I think shared ownership will gain increasing momentum, both within the portfolios of those firms that have already started implementing it and have joined Ownership Works, as well as those firms that are still on the sidelines.
I’m personally hopeful that the shared ownership model can be a tool to create more valuable businesses for our investors, while at the same time positively impacting the lives of thousands of good, smart, hard-working employees. Tailwind is honored to partner with Ownership Works, and we look forward to continuing to support what we view as a highly worthwhile mission.
This interview has been lightly edited and condensed.
