Claim OwnershipJourney to an ESOP & Beyond
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© 2024 Journey to an ESOP & Beyond
Description
ESOPs are gaining traction. In the "Journey to an ESOP & Beyond” podcast, Phillip Hayes explains the process of the ESOP transaction and addresses ESOPs from a business owner’s perspective. The "ESOP Guy" illuminates the simplicity of ESOPs as he debunks common misconceptions that ESOPs are immensely costly and complicated.
178 Episodes
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Randy Macho Man Savage was a childhood hero who my brothers and I constantly impersonated while watching WWF wrestling. For a time, I didn’t realize it was choreographed fighting and not a real fight. This podcast episode uses this picture of WWF Wrestling to discuss what is called the “bring down” call for an ESOP transaction. This is a call conducted by the independent valuation firm representing the trustee around the final closing call. It is intended to ask about any changes in the business since they did due diligence and after negotiations. The importance of this this episode is to understand how to navigate changes in your ESOP transaction right up to the point of closing.
This podcast episode features Nancy Pratt, CFO of Frederick Derr and Company. They are a construction company out of Sarasota, FL who closed on a 100 percent ESOP transaction at the end of 2023. The episode is our first interview from a CFO perspective. Nancy does a phenomenal job of explaining the ESOP process from the role of the CFO. This episode also compares and contrasts an ESOP transaction vs. a strategic sale.
This podcast is all about designing your ESOP so the company can be successful and avoid any potential pitfalls. Through the episode, we get to celebrate the movie: “Titanic” (Spoiler alert - the ship sinks at the end). One of the aspects of ESOP design is understanding the ESOP process and the importance of cash flow and balancing leverage for the company with the respective tax benefits. As a whole, the ESOP industry often has diverse opinions on what creates a sustainable ESOP deal. This is partly due to the myriad of conflicts of interest often found in deal teams. The goal of this episode is to help you ask the right questions and ensure your company has the correct ESOP design.
This episode we dive into the very essential role of the transaction/ongoing ESOP trustee with Bill Kropkof out of Dallas TX. Bill’s background includes time with the Department of Labor - so he brings a perspective that is very helpful to think about how that affects a transaction as well as ongoing work related to best practices related to trustees.
In this episode, I discuss the tension of making these choices around ESOP - but not just the path of an ESOP. This episode is to discuss some general ideas around what shareholders face when making decisions towards how they go about the transition of their business.
On this episode - Dale Hobbs founder of Hobbs Madison - consulting firm discusses him and his partner (Gary Madison’s) journey to an esop. Dale and I discuss the process that we worked through to sell 100 percent of their stock to a newly formed ESOP.
On this episode I have been re-inspired by this great song to focus on why holistic planning your ESOP should minimize your worry of selling your stock during your journey to an ESOP. As we go through the planning process, there simply are measures taken to balance all of the elements of your ESOP plan to provide a win-win-win…yes a triple win - one for the shareholder - one for the company and one for the employees…and even the key managers so that could be four wins. Check out why this approach will help you to do what Bobby Mcferrin says “Don’t Worry - Be Happy!!!”
I have been talking about EOS for years - so helpful to get to interview Mark O’Donnell, CEO of EOS Worldwide to discuss how Traction has made such an impact with companies executing strategically and implementing innovation at the highest levels. The ESOP is a natural choice for EOS companies given the strong core values, culture, business processes, and most of all people leaving a long-term legacy of abundance for those that have contributed so much to get here and so much more to getting there.
This episode is focused on addressing a super common question with companies going through the ESOP process with their key people. Proactive communication is really the best way to approach your key people - however the question is when should you talk with them and how much can you tell them. This is really difficult to answer as it deeply depends on your company culture. But there is some guidance here based on experience with different clients!
In this episode - I interview Steve Storkan and their approach at EOX, an organization founded out of the NCEO to develop state employee ownership educational resources to support companies considering ESOP as an option. Their approach is in response to research that shows - states with education on ESOPs have a lot more ESOP companies. Steve has an interesting ESOP background and leading the initiative to have more state centers throughout the U.S.
In this episode, we jump right into the expanded version of Season 5 by dealing some factors related to communicating the ESOP to your employees. Jumanji is an ideal movie to explain that there is something that changes after an ESOP that can change the outlook on how employees see themselves - who they are and who they want to be - we want them to move from employees to employee owners on this journey to an ESOP & beyond!
This episode is really meant to get at the heart of what defining employee communication for ESOPs. We interview employees that are volunteering at Smooth Fusion - an ESOP company out of Texas - to participate in a newly formed esop committee. We discuss the roles in the company, their ESOP communication strategy as well as extras that they are aspiring to that align well with company culture. There company is on a journey to an esop & beyond!
This episode officially kicks off the Season 5 and the expansion of the podcast as a direct resource for Employee Stock Ownership Plans. The Journey to an ESOP just became better because we are incorporating “& Beyond” to discuss not only pre-esop topics but go beyond that and deal with post-esop topics and issues that come up. This episode provides a high-level understanding of what is to come and what we have dealt with in the last four seasons. The value of listening will be to grasp some overall ESOP concepts that may be helpful for you to think about whether you are exploring your own journey to an ESOP or thinking about existing ESOP issues that are beyond the ESOP closing.
This episode takes advantage of the opportunity that we have during Christmas to stop and celebrate the reasons why folks decide to go towards ESOP… In this episode, we cover the ghost of Christmas past and thinking about the people that have helped your business get to where you are and how an ESOP can be the perfect way to reward them. The Ghost of Christmas Present reminds us of what is happening right now that includes the current tax benefits of an ESOP and other benefits to reduce the workload and spend more time with the family. The Ghost of Christmas yet to come makes us think of the future legacy of the business and how much better it will en to be an ESOP company. MERRY CHRISTMAS - The ESOP Guy!
In this episode we finish the series we started to help prepare folks for the ESOP site visit. The focus of the episode is to understand in covering first the financial highlights and how they connect to points you will want to make with the trustee and their valuation firm. In addition to the financials - the remaining part of the presentation will be to cover the ESOP deal structure and anything specific to the transaction.
This episode we get to review what is important about third party administration of an ESOP plan. Scott Freund is an absolute expert at the nuances of how benefit testing as it incorporates IRS limitations related to ESOP Plan design. For instance, IRS code section 404 that generally allows for a contribution to the ESOP plan up to 25 percent of the payroll and IRS code section 409(p) related to S-corporation ESOPs to test related to disqualified persons. This is an essential step to understand for planning your ESOP and for staying on top of an existing ESOP plan.
In this episode, we discuss the other parts of the presentation as it relates to the company overview getting into other aspects of the presentation for the trustee and the valuation firm. The value of having a solid presentation, regarding how the company operates, the leadership team, the business processes that are repeatable, and provide a functional mitigation towards the business. This is the one opportunity that we have to put a factual, solid understanding of the way the company operates, including how the strength of the company provide a sustainable long-term ESOP.
This episode we are following up on the August IRS notification entitled “IRS cautions plan sponsors to be alert to compliance issues associated with ESOPs” Allison Wilkerson is a frequent speaker at ESOP conferences and works at McDermott Will and Emery out of Texas. She has a very strong background in working through complex IRS and DOL issues related specifically to ESOPs. She offers some insight into what this notification means as it relates to ESOPs. The highlights of this episode are going to help folks not be overly concerned with this notification by the IRS, however, Allison does point out areas that you should be aware of in putting together your ESOP and possible IRS exposure issues.
In this episode we explore another very important section of the ESOP site visit presentation - “The Customer Overview.” Along the Journey to an ESOP, sell-side advisor with the the company’s team are presenting the company to the trustee and valuation firm.
This episode is helpful to better understand how the banker is thinking about the ESOP deal. Chris Cucci is Chief of Staff at a unique bank - they are a B-Corp that understand the social impact that ESOPs play in many areas - the good that can come from selling your business to an ESOP. Chris is a veteran banker and has used his skillset to direct their efforts to be a strong resource for companies considering ESOPs.
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Just what the doctor ordered if you are considering an ESOP