When Tom Avinelis began farming in California’s San Joaquin Valley in the early 1990s, his story would mirror that seen in many founder-driven business models. He did much of the work himself and hired as he could to do what he couldn't achieve by himself.
Nearly three decades later Tom's son, Gunnar, explains how a new chapter in an enterprise was developed from a common vision between his parents and another local farming family Avinelis would eventually partner with.
AgriCare was formed in 1993 as a farm management company by Tom and Karen Avinelis. Today the company grows and oversees farming operations in California and Oregon that includes blueberries, citrus, and hazelnuts in both states, according to Gunnar Avinelis, chief executive officer of AgriCare.
Homegrown Organic Farms is a sister company of sorts, formed by John and Cindy France. Homegrown Organic Farms is a sales and marketing company of organic produce that in 2013 joined with AgriCare to merge ownership in a stock holding entity named AgriVision. It is from this new enterprise that the shared vision of the Avinelis and France families paved the way for their employees to own the business.
Over time, employees of the two companies gain ownership in an agricultural enterprise that grows, manages, and sells conventional and organic crops grown in California's Central Valley and Oregon's Willamette Valley. Already Gunnar says he sees the benefits of vesting ownership in the company with the employees.
In just a few months under the program, Avinelis says senior leadership – including Scott Mabs, CEO of Homegrown Organic Farms – is seeing an "amazing enthusiasm and synergy emerging as employees at all levels are thinking like owners."
"We are tremendously excited for the future as our amazing employees will in a more significant way receive the value they continue to create each day," Avinelis said.
About 15 years ago AgriCare seeded a company 401k plan. Over time that transitioned to one with employee contributions and an employer match as employees saw how a little money, saved consistently over time, could build wealth.
The 401k program was the start to a new idea that would help employees build wealth, save for retirement, and encourage them along the way to be part of something larger than themselves in their day-to-day concerns. Along the way, AgriCare developed a scholarship program for employees to encourage higher education for themselves and their children.
“The conversation began a couple years ago about what if we looked at a transition to employee ownership so that the employees who were driving the value and growth of our company had the ability to really receive that,” Avinelis said.
“So, we went through about a year long process, working with consultants and experts to see if this would be the best route for the founders of the company to kind of hand things over to the employees,” he continued.
How it works
The process of forming the employee stock ownership plan began with a financial valuation of the AgriVision companies and the engagement of an experienced trustee to work on behalf of the employees. This valuation became the basis for the purchase of 100% of the AgriVision stock by the companies from the Avinelis and France families, who elected for the payment of the purchase price to be made over time to minimize any financial strain on the companies that would limit their future growth and success. Each year the employees’ percentage of ownership will grow as payments are made, resulting in the employees owning 100% the company and its new value when the transaction is complete.
Much like a 401k plan, employees receive annual reports on the value of their stock in the ESOP.
“They will get to see that stock grow over time,” Avinelis said.
Future employees will also have access to the plan and an ability to benefit from it.
Unlike a traditional 401k program, where employees add pre- or post-tax payroll and perhaps enjoy an employer match, there is no payroll deduction for the ESOP.
“In a sense it’s free stock that they are receiving,” he continued. “It's purely being done by the company itself making payments to pay off the note and then continue to build and grow.”
New employees will be fully vested after about six years with the company. Under the new program, employees who have been with the company for a length of time will become fully vested ahead of the six-year vesting period, based on their years of service.
While the program gives employees ownership in the company, Avinelis says it does not turn the company into a pure democracy, with all employees voting on every decision. What it does do is create an incentive for employees to ensure the company remains profitable. There is still an executive leadership team and board of directors to make and oversee company decisions. As chief executives of AgriCare and Homegrown Organic Farms, Avinelis and Mabs share in the executive decisions of the companies.
About a decade after Tom Avinelis formed AgriCare he saw a growing demand for organic blueberries. By the early 2000s Avinelis was adding blueberries to the farming operation’s portfolio. At the same time Tom and Karen Avinelis began working closely with John and Cindy France, owners, and founders of Homegrown Organic Farms.
Together with a common faith-based foundation, deep care for their employees and a desire to exceed customer expectations, the two families merged ownership of their companies in 2013 to form the AgriVision stock holding enterprise where they would share ownership.
Steady growth in both companies saw employee numbers grow to nearly 300 by 2020. The companies are currently based in Porterville, Calif.
“This exciting move to employee ownership only seemed fitting when looking back on the legacy of each company and the core values upon which they were established.” Avinelis said.
“As employee driven companies, we now begin this new season where our stakeholders are not just members of a few select families, but employees desiring to receive great value for the expertise and effort they bring to work each day,” he continued. “This move to employee ownership can greatly impact hundreds of families and hopefully allow both AgriCare and Homegrown to attract additional team members to help further company growth and future success.”