STEM education technology maker Vernier Science Education is changing its corporate ownership to one that will ensure its mission and company values continue after its current leadership retires.
The management team announced this week the company will transition to a perpetual purpose trust. It’s an ownership model that removes uncertainty around succession planning and ensures that a company’s values and mission is aligned with ownership.
The company is currently a partner-ownership with several owners including founders David and Christine Vernier, who are both in their 70s and own 43%.
David Vernier said the conversation around company succession and ultimate ownership started when current CEO John Wheeler expressed interest in retiring. Wheeler took over the CEO role from David Vernier in 2015. David and Christine have shared the title of co-presidents ever since.
“What drove the whole thing is the CEO wanted to retire,” said David Vernier. “It shook us up and we said we'd better think about what we are going to do. It started us thinking of options.”
Those options included pursuing an Employee Stock Ownership Program or looking for someone to buy the business who “would be a good partner,” he said. But, the team didn’t find anything.
Locally, the model has been championed by Gresham-based Organically Grown Co. Portland's Grand Central Baking is in the process of trust ownership and Newport’s Local Ocean recently completed the transition.
Vernier had read about what Organically Grown did with its trust ownership and he was familiar with Local Ocean. He contacted the people who worked with both companies through those transitions. Vernier Science Education is working with consulting firms Lumo Group and Purpose Owned.
“This path is attractive to a lot of successful private companies who have always put their mission first and foremost as they have grown their companies,” said Natalie Reitman-White, principal at Purpose Owned. “Perpetual purpose trusts allow companies to ensure their company's stay independent, that the leadership is bound to deliver results to the purpose into the future, and that the profits are used to reinvest in the company and benefit the stakeholders.”
Stakeholders in these kinds of trusts are employees, customers, vendors and the community.
In addition to the ownership stake held by the Verniers, nine other people own the company and are all key employees, according to David Vernier.
“I really think (this transition) is exciting. If things go as we hope the trust will pay off its debt to current owners quickly and then it has no owner or anyone to retire or leave and it will go on forever and the profits will help do employee bonuses, help schools, and donate to charities,” he said. “That is all part of the trust documents we are setting up.”
Perpetual trust transition
The company doesn’t have outside investors or outstanding debt, Vernier said. He has always joked that the company started by accident and neither he nor Christine had ever taken a business class. In fact, he started the company while he was a physics teacher in Hillsboro.
To make this transition the company must first change to a C Corp, a process that Vernier hopes to have finished by the end of the year. He expects that the company will be able to internally fund the trust transition, which involves buying back ownership shares. The Verniers are donating a chunk of their ownership to the trust which will make the financing more manageable, he said.
He hopes to have the whole process done by next spring.
Vernier Education Science has 115 employees. Last year it had $49 million in revenue. The company makes data collection and analysis tools for hands-on STEM education. Wheeler is planning to stay on as CEO while the company conducts a search for a replacement.
“Our decision to reevaluate our business and establish a Perpetual Purpose Trust stems from our unwavering commitment to STEM education and sustaining the values and principles that have defined Vernier for decades. This transformational shift will enable us to secure the future of our employees, reinvest in our business, and continue our mission of creating a STEM-literate society,” said Wheeler in a written statement.
