As Scott Dunbar and Alan Brawn eyed retirement in recent years, they had to make some serious decisions about the Bangor construction company they started 16 years ago.
They could sell Dunbar and Brawn Construction to a competitor. They could simply close the doors of their headquarters on Hildreth Street and sell off the property.
Or, as a growing number of Maine companies have done, they could sell their operation to the carpenters, crane operators, mechanics and other workers who make their business run.
They chose the third option, which has become an increasingly common approach for business owners who are nearing retirement.
On Friday, more than 60 employees effectively became the owners of Dunbar and Brawn, a company that has led construction and renovation projects across the Bangor region since 2003.
Their work includes the new corporate headquarters of Bangor Savings Bank overlooking the Penobscot River at 24 Hamlin Way and the ongoing conversion of the former Verizon Wireless building on Telcom Drive into a pediatric center for Penobscot Community Health Care.
In fact, the workers did not put up any money to buy the company themselves.
Rather, the founding owners have sold their shares to a separate legal entity that was created for the workers, according to Dunbar, who is still the company’s CEO and plans to retire in a couple years. Brawn retired at the end of last year.
Dunbar and Brawn, who are both 58, loaned some of the money that the entity needed for the sale and arranged for the rest to come through bank financing. The new entity, which is part of a federally regulated arrangement known as an employee stock ownership plan, or an ESOP, will pay back those loans over time.
Going forward, it will also serve as a retirement plan for the workers that’s funded from the company’s revenues, allowing them to cash out their shares when they leave the company. A five-person board of directors will oversee the entity.
“We’ve got a core group of young, working people who are ready to take the reins,” Dunbar said. “Why not just turn it over to them? The reason for going to the ESOP, unlike maybe some other self-serving departure, is because these people are like family to me. It’s a huge change. It’s not only a retirement plan. It’s ownership of the company.”
Dunbar declined to share how much he and Brawn received in the transaction.
Employee stock ownership plans have been around for decades, but they have grown in popularity in recent years.
In Maine, the estimated number of businesses with such plans more than tripled over the past five years, growing from about 15 to 50, according to recent legislative testimony from Mark Adams, the CEO of Sebago Technics, Inc. in South Portland.
Adams, a founding member of the Maine ESOP Group and a past president of the New England chapter of the National ESOP Association, was testifying in support of LD 1520, a bill that would provide incentives for businesses to start employee stock ownership plans. The bill is still under consideration in the Maine Legislature.
He pointed to several prominent Maine businesses that have done so, including the construction companies Cianbro and Sargent Corp., Clark Insurance in Portland, and the solar power developer ReVision Energy.
In an interview, Adams said that recent bump in Maine companies being sold to their employees could be related to several factors, including the nationwide trend of baby boomers retiring, increased publicity around companies that have started employee stock ownership plans, and the growing experience that financial advisers, lawyers and other professionals have in developing them.
Employee ownership can be a convenient option for business owners who may be looking to retire, and they can also inspire workers to be more productive because they have a direct stake in the success of their company, according to Adams.
Construction companies make up about 11 percent of the more than 6,600 nationwide businesses that have started employee stock ownership plans, according to data collected by the National Center for Employee Ownership.
Loren Rodgers, executive director of that group, said that there is a growing expectation among construction workers that their companies should offer some sort of employee-ownership options.
“There is also a really good fit because construction company employees can make an enormous difference in how profitable their business is,” Rodgers said. “A little mistake in construction can be enormously expensive, so it makes sense to align the incentives of the workers with the shareholders.”