Journey to an ESOP & Beyond

This episode highlights ESOP advisors you may run into at the conferences (or really anywhere!)  The topic is to help provide an overview of the ranging roles as it applies to ESOP advisory and how to choose advisors who can best support your personal journey to an ESOP.

 This episode focuses on the role of the ESOP trustee through an interview with Bryce Lenox - an ESOP trustee out of Cincinnati, OH.  Bryce does a great job reviewing the role of an ESOP trustee both on the transaction and ongoing side.   Relating to transaction, Bryce explains the role he plays as a buyer and the steps he takes to conform to the department of labor process agreements.  Once the transaction is complete, he explains his ongoing duties for the retirement plan from a fiduciary standpoint. 

In this podcast episode we use a classic scene from the movie “Pink Panther” which highlights using the “American” French accent to illustrate the strangeness related to an ESOP negotiation.  In ESOP transactions it is important to understand that the purchase price or valuation of shares being sold hinge on the ultimate result of the negotiation with a trustee along with their independent buy-side team.  The strangeness can come from the back and forth with the seller offer/trustee counter offer/seller offer.   

This episode we invite Diana Clark, who specializes as a full-time ESOP communication’s consultant, to provide a framework to understand the power of frequent and effective communication around employee ownership.  If you are brand new to ESOPs or been an employee-owned company for a few years or even many years - the bottom line of communication will improve the bottom line of your business. 

This episode is part 2 of discussing the inside note versus the outside note on an ESOP transaction.  We feature the recently released part 2 of Inside Out - as it is an excellent sequel in the story of how human emotions can play into how we make decisions , in particular how anxiety can cause problems in daily life. The podcast contrasts this to how we deal with the anxiety of the company going into debt for leveraged buyout financing.  The episode focuses on the planning side to provide a sustainable ESOP transaction and helps to provide some terminology for those wanting to better understand and enjoy their journey to an ESOP.

This episode represents the 2nd interview with Joe Hurt of RLH Construction.  Joe discusses some of the challenges and opportunities of an established ESOP.  A few years into their ESOP, RLH Construction has experienced very strong results from the ESOP.  Joe is the CEO of the company and has worked through issues such as leadership transition, retiring a large portion of the initial senior debt, managing bonding issues, as well as a myriad of other specifics.  For Joe and his team, the ESOP has been a tremendously valuable took to strengthen their efforts in the industry and has helped the company reach new heights.

This episode provides clarification to the difference between an inside note and an outside note.  In an ESOP transaction there will be two types of notes created when the transaction occurs.  This episode is part 1 of 2 episodes.  The first part explains the background of the terminology as it relates to why these two types of notes exist.  The majority of this episode deals with the inside note and its use in releasing shares to employees as well as IRS code section 404 and limits applied as well as implications related to related to future repurchase liability.  In addition, this episode covers how the tax benefits get created in the analysis of an ESOP from the structure of the inside note. 

 On the podcast this week, we interview Corey Rosen, the founder of NCEO and a huge contributor to ESOPs discusses the updates and trends relative to ESOP companies. Through our discussion, Corey highlights the expansion of ESOPs as the finance world has begun to leverage this realities and benefits of an ESOP in private equity.  Some of these ideas discussed on this podcast have been highlighted on a recent 60 Minutes program (which can be found on our website at Journeytoanesop.com). 

In this episode we discuss the motivations for selling your business to an ESOP.  The focus of this episode is to help better understand the reasons to choose an ESOP.  The episode was encouraged by the experiences of working through other company’s ESOPs and interacting with diverse personalities and companies, along with their varying goals and objectives.

This episode will be very informative through the long-tenured experience of Renee Jenkins with Holiday Builder’s ESOP.  Renee has been a long-time employee of the company managing the Finance/HR Branch. On this episode of the Podcast, we discuss the issues in a straightforward approach and solutions that she has worked through. This discussion covers possible issues that can arise during the ESOP process which may seem unsolvable, but have reliable solutions. For mature ESOP company’s there might be areas you are currently dealing with including repurchase liability, changes in the economy, and running out of ESOP shares in the trust. This episode covers solutions to these topics!