There is a simple and generic structure using an LLC in the US and Limited Liability Partnerships ("LLP's") elsewhere (no relation to the US LLP), that opens up new possibilities.

I call this the "Capital Partnership" and it essentially has three or more stakeholder "Members" each of which is governed by its own formal (eg a Corporation) or informal (eg club rules) legal protocol.

The "Founder" or "Trustee" member not only acts as custodian of assets financed and used by the other members, but may also have certain overarching veto/governance rights in terms of safeguarding the Aims and Objectives of the LLC/LLP.

The other Members are:

(a) Investor/ "Capital" member who puts up money or "money's worth" in land, goods, services, whatever;

(b) Operating Member/ Capital User;

and the latter two groups share the production of the asset or the revenues from the sale of this production.

This structure changes the game: it is neither debt nor conventional "equity" but a simple and radical new hybrid.

A Social entrepreneur wishing an "exit" may cease being an active "Operating Member" - responsible for managing the enterprise - but still retain a role in safeguarding its aims and objectives.

The structure also happens to give:

(a) a new way for social enterprises to raise money other than through grants and borrowing;

(b)an optimal financial exit to investors in any type of enterprise, simply by selling quasi units/ proportional "Equity Shares" in the genterprise's GROSS revenues.

It even gives rise to a simple alternative to "privatisation" of public assets.

ie the Community can keep ownership of the asset and share the production with investors. Simply put, why sell the asset when you can sell the revenues or production forward?

Rather than social enterprises learning from "For Profits" I think this actually offers a way for Not for Profits to teach them a thing or two by undercutting them. They may do this through the "Cooperative Advantage" of not having to pay a return to "rentier" investors, and bringing in stakeholder finance from suppliers or customers instead.

Q: As we evaluate these case studies, how do readers from the Social Edge community perceive the gains or losses that such firms made as a result of their exit strategies?

A: Ben & Jerry's is now simply a brand owned by Unilever. Isn't it? I figure that it is Unilever ice cream - admitedly very tasty ice cream - with Unilever ingredients made by Unilever employees. It just happens to carry labels and packaging that says 'Ben & Jerry's'. It is a nonsense but Unilever knows that most people identify B&Js as a luxury product and one with some kind of ethical content/dimension. These qualities command a premium price. This is about money, nothing else. 'Ben & Jerry's' is a label that Unilever puts on some of its ice cream products. Ben Cohen and Jerry Greenfield cash in, Unilever makes money on the deal too but everybody else loses - they could have bought different brand luxury ice cream and had one more genuine ethical company in the world, but Ben and Jerry felt it was time to hang up their boots and chill out on the beach. I am not blaming them, I am just suggesting that the exit strategy, despite making the founders rich, killed the product. Is this is fair synopsis? See here: http://www.csrwire.com/News/8130.html

Hi there. I think these are good comments that touch on a variety of issues. I appreciate Christopher's creative ideas around capital partnerships.

With respect to B&J/Unilever, I am not sure that this is a fair analysis. From all that I have read, Ben Cohen and Jerry Greenfield faced a very difficult decision in terms of the sale to Unilever in 2000. We must keep in mind that Ben & Jerry's was not driven solely by the founders and their wishes. In fact, it was a public company with a board that was pushing for an exit in order to acheive a liquidity event as well as to respond to market pressures. It should be noted that Cohen tried to pull together a group of socially-minded investors to purchase the business rather than submit to the outside offer, but the bid failed and the Unilever acquisition proceeded.

At the end of the day, the purchase fundamentally changed the brand in numerous ways. Leveraging Unilever's marketing and distribution muscle, Ben & Jerry's is now available to a much wider audience through a wide range of retail channels. Some might argue that this alone was a big win. The company still adheres to a number of benevolent policies that the original founders set up such as sourcing brownies from Greyston Bakery, a terrific organization that employs disadvantaged people in NYC.

While they no longer run the business, Cohen and Greenfield remain involved as spokespeople. They continue to attempt to use B&J as a platform for social change. Last year, they launched a campaign called "American Pie” in an effort to persuade consumers to demand a change in US government domestic spending priorities. Their goal was to shift $13 billion from military expenditures in favor of health insurance, schools and other child-focused programs.

At the same time, I have read that it was a painful transition for the organization in many ways. Many employees apparently feel that the brand has strayed from its roots in certain regards. Cohen still publicly laments the deal. As he told Motto Magazine in 2005, 'Although there are some wonderful people with a social conscience inside Unilever, most of what was the soul of Ben & Jerry's has been lost.' Last year, CEO Walt Freese gave a revealing quote to the press:

"There was always the commitment on the part of Ben & Jerry’s and Unilever, post-acquisition, to honor the social mission and to do things that are true to the social mission,” Freese said in an interview. “What got lost over time, initially, was that Ben and Jerry had not just honored the social mission, they had committed themselves to being leaders, had committed themselves to being activists. Ben & Jerry’s was less courageous for a period of time, post-acquisition.”

I think many would say that Gary Hirshberg learned from the B&J example. It seems that he strove for the opposite effect after he sold 80 percent of Stonyfield Farms to Danone. I would invite comments and thoughts about how Gary structured his deal as well as observations/thoughts regarding other recent exampless of social venture M&A from the readers. Any comments on Stonyfield/Danone, Aveda/Loreal, Odwalla/TCCC, Toms/Colgate, Stacey's/Pepsico, etc?

Hi Jonathan:

And thanks for your hosting this event.

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QUOTE: "What got lost over time, initially, was that Ben and Jerry had not just honored the social mission, they had committed themselves to being leaders, had committed themselves to being activists. Ben & Jerry’s was less courageous for a period of time, post-acquisition." :UNQUOTE

I've often thought about the difference between those who begin something out of their own juices, and those who follow in their footsteps. Two examples, if I may:

Tim Gallwey lost match point in the National Junior Tennis Championship while a student at Harvard – and the impact of that one missed point stayed with him. After considerable thought, he cam to the conclusion that it was his own mind, his thought stream, which had interfered with his otherwise excellent tennis playing, and wrote his celebrated, best-selling book, The Inner Game of Tennis as a result. I have watched Tim coach oters who have read and practiced his techniques, and the truth is that while others can gain considerable benefit from them, Tin is still the most astute observer of the form of "mental interference" he describes. Others have added Tim's insights into their repertoire of insights – but for Tim, that body of insights was life or death, the very essence and crux of the moment that changed his life.

Ignatius of Loyola was a dissolute youth given to womanizing, swordplay and gambling – until he was wounded in battle, and had time to think his life over. He came to the conclusion that his life had been based on trivialities and felt revulsion at his own behavior – a revulsion which radically changed his life: he went on to found the Jesuit order. Now, centuries later, young boys can attend Jesuit schools and colleges, find themselves inspired by some priest, decide they have a vocation to join the Jesuits, and do so. The thing is, the virtues they practice spring from their good nature and the innocence of their youth, whereas Ignatius practiced virtues into which he was catapulted by revulsion at his own corruption. His virtue is hard won, theirs may be less so.. Once again, they add something they admire to their existing repertoire, while he did the only thing possible to his tormented soul.

I am not preaching either Tim Gallwey's almost Zen approach, nor the Catholic practices of the Jesuits, here. I am suggesting that what we bring forth because it is the fruit of our own individual necessity will always be more powerful than what others find to admire in us and imitate, copy, replicate, or otherwise take further.

And to the extent that I can find a moral in these stories, it is that those who provide continuity to an idea can at best achieve 95% of faithfulness to it

the last 5% being what distinguishes Everest from another Himalayan peak – whereas those whose work is their own, flowing wholly from their own juices and necessity, can manage that last Himalayan 5%.

To whatever extent is possible, I would re commend shooting for that extra 5%.

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I hope these stories put the Ben & Jerry's comment above in some sort of helpful perspective. I don't think I've added much to the question of how and when to disengage (the question of exit strategies), but perhaps I've illuminated a little what happens during the passing of a torch during what Weber would call the "routinizing" of a "charismatic" effort.

Evaluating the gains and losses from exits of firms like B&J's is always difficult because one can never be sure just what the new owner is following and what has changed, particularily internally. And one must also look at the impact of the exit on employees - did they share in the buy out? In thinking about exit strategies for hybrids, I know that many would not think of them at all. But you are right. So, I ask, can the hybrid's board put into place "health pills" as opposed to poison pills, to insure that exits meet the same standards as the firm/hybrid sought to meet. These could take the form of criteria for the exit and for any firms that are allowed to buy the hybrid. These may limit the options and reduce the monetary gain from a buyout, but that is what triple bottom line is about.

Greg Steltenpohl's follow-up company to Odwalla is called Adina (www.adinaworld.com) and they have an interesting strategy. (Greg publicly laments the Odwalla/Coke deal as well.) My understanding is the cooperatives in developing countries don't just grow and supply products at fair trade prices for Adina that they also have equity within the company itself. (so if in the event they ever do sell the company the developing world suppliers/partners will benefit directly as well). Pretty decent model taking care of those that are close partners that could easily get overlooked in an exit by either the investors or the new owners.

Hello Jonathan Greenblatt,

As for the examples Ben and Jerry's was sold for $350 million to Univer. Also, some other example include Yves Veggie Cuisine, sold to Hain Celestial Group for $34 mil., Tom's of Maine sold to Colgate-Palmolive for $100 mil, The Body Shop sold to L'Oreal SA for 652 million pounds and Burt's Bee's sold to Clorox for $925 mil.

All these companies above wanted to grow and to maintain their social mission, but they were under pressure to expand and to get bigger, so they can compete with larger companies with more financial resources.

Since, there is no infrastructure to support social businesses, more and more small green companies will continue to be bought out by larger non-green companies.

We are setting-up such a infrastructure to support green businesses, which will help them maintain their independence.

We are setting up North America's first social stock exchange connected to a green social network, called the Green Stock Exchange (GREENSX) at: http://greensx.com, which will be launched in the Summer of 2008 to begin trading.

The GREENSX provides opportunities for small green Issuers to access public equity capital efficiently, while providing early stage investors, angel investors, and venture capitalists with greater liquidity.

It will trade shares in social businesses. A social business is a business that makes a profit, but benefits society as well. We have a triple bottom line (economic + social + environmental).

Since all the listed companies on the exchange are pre-screened, evaluated, and audited according to social and sustainable guidelines set by the exchange, it will make it much easier for green investors to find and support social businesses.

The Green Stock Exchange will provide the socially responsible investments (SRI) funds, which represent USD $3 trillion in assets, a place to park their investments. Furthermore, the Green Stock Exchange (GREENSX) also provides over 1,000,000 charitable organizations in the United States (with $1.76-Trillion in assets) with an opportunity to get involved in social investments.

It is now in the beta stage testing. Check it out at: http://greensx.com.

We hope to provide a quicker exit for green investors.