Grady-White owner chooses perpetual trust over US$400m sale

Grady-White Boats owner Eddie Smith has transferred control of the company to a perpetual purpose trust, introducing an ownership model designed to protect the boatbuilder’s long-term independence while directing future profits to charitable causes.

The move is believed to be the first of its kind in the recreational marine industry and, according to the company, the largest US purpose trust established since Patagonia adopted a similar structure in 2022.

Smith, who bought Grady-White in 1968 at the age of 26, turned down offers of more than US$400m after deciding that a conventional sale could not guarantee the continuation of the company’s culture and operating principles. Instead, control of the business has been transferred to the newly established Grady-White Boats Perpetual Purpose Trust, while the company’s non-voting shares will be held by a new 501(c)(4) nonprofit organisation.

The purpose trust will oversee the company’s long-term stewardship, ensuring its values remain in place, operations stay in Greenville, North Carolina, and employees, customers, dealers and the local community continue to be supported. The nonprofit plans to distribute company profits that are not reinvested in the business to charitable causes including education, healthcare and conservation.

Smith will become CEO emeritus in a non-operational role, serving as an adviser and brand ambassador, while the existing executive leadership team will continue to run the company. CEO and president Kris Carroll and executive vice president Jonathon Burns joined Smith when the transition was announced to employees.

As part of the ownership change, Grady-White awarded bonuses worth millions of dollars to current employees. Payments were based on length of service and craftsperson level, with more than 350 employees attending the announcement.

“As a company built on strong principles and dedication to our incredible team, we are deeply grateful for Eddie’s leadership, stewardship and commitment to the future of Grady-White Boats,” CEO and president Kris Carroll says. “As we enter this new chapter, our team takes great pride in knowing Grady-White and its people-first culture and community support will continue to thrive for many, many decades to come.”

Smith’s decision followed a reassessment of the company’s future after the deaths of his wife, Jo Allison, in 2020 and his only child, Chris, in 2021. Speaking about the transition, he tells The New York Times: “God has really blessed me to put me in a position to give away the vast majority of my net worth. I don’t need a 200-foot yacht or to spend the winters in the Mediterranean. I’m really happy here in eastern North Carolina.”

He also tells the paper that preserving the company’s culture became the deciding factor after exploring a sale. “I had no confidence that a new owner would keep that kind of culture going. This company has a soul, and I didn’t want to lose that.”

Smith says relationships – with employees, customers and dealers – have been key to Grady-White’s success, and “it’s a core belief of mine that if you’re successful, you really should share that success with your people, who helped you be successful. I had to try to figure out how we transition to the future and take care of our team while retaining the soul of this business.”

The trust will permanently hold the company’s voting shares, preventing Grady-White from being sold in the future. Independent boards, without Smith as a member, will oversee both the trust and the nonprofit organisation. Smith will continue to receive an annual salary in his emeritus role.

Direct inspiration from Patagonia

Smith says he drew direct inspiration from Patagonia founder Yvon Chouinard’s ownership transition in 2022, which used a comparable structure to preserve the company’s long-term mission while directing future profits to charity.

Purpose trusts remain uncommon, although interest in the model is growing. Purpose Owned, the consultancy that advised Grady-White on the transition, says more privately held companies are considering the structure as part of their succession planning.

Natalie Reitman-White of Purpose Owned, who assisted the company through the transition, says: “The transition of Grady-White Boats to a perpetual purpose trust shows that this model is being embraced by all types of companies to protect what they’ve built and what matters most to them. Interest in purpose trust ownership across the US is growing, especially among successful privately held companies with values-driven owners who have built deep relationships with their customers, employees, business partners and communities.”