How to CASH OUT Without SELLING OUT

Founders of purpose-driven companies are using trusts to protect their values

Sitting outside the Grand Central Bakery in the Beaumont-Wilshire neighborhood of Portland, Oregon, Chief Executive Officer Claire Randall examines her latte. “Ooh, look!” she says, pointing to a rosetta pattern in the foam. She’s still impressed with the barista artistry after almost 30 years with the company.

While Grand Central is known for its coffee and fresh baked goods, its progressive values and commitment to community are equally important to Randall and her five co-owners. For example, its 11 cafes and two production facilities in Portland and Seattle use carbon-neutral milk and avoid imported, water-intensive avocados. The business relies on local and sustainable farms, offers above-average salaries and benefits and donates a portion of sales to social causes.

Grand Central’s socially conscious values have made succession planning more complicated for the owners, who’ve been approached frequently by suitors. “Many investors want an aggressive return, and over time there’s pressure to grow unsustainably,” Randall says. If the owners sold Grand Central, she figures it would be sold again and again, to larger and larger companies. In time, it’s more than likely that the founders’ values would be whittled away.

It’s a dilemma many business owners confront. For Grand Central, a potential solution emerged in late 2018: an ownership model known as a perpetual purpose trust. More mainstream in Europe but little known in the US, a PPT enables entrepreneurs to transfer ownership to a trust that will guide the business based on values they define. “Our immediate reaction was, ‘Wow, this is so cool!’ ” Randall says. “You can have a reasonable return on your life’s work and also leave a positive impact.”