Journey to an ESOP & Beyond

The Secure 2.0 Act of 2022 makes some interesting developments in the world of  ESOPs.  John Burgess and I work through categorically how this new legislation will affect ESOPs now and into the future.  We touch on its changes for 1042, tax credits, ESOP education, and ESOP plan design.  Overall this legislation provides more reassurance that ESOPs have bipartisan support and are only becoming a s...

This episode deals with the need all businesses have to build talent in their company.  The topic comes at the beginning of the year as we start to think about building the business for a sustainable ESOP which really does improve the strength of the company from a valuation as well as the long-term value.  Just as important - the business has the benefit of a leadership team to support the transi...

This episode - Adrian Loud - ESOP Buy-Side valuator and I talk through the role of the process that a financial advisor to the ESOP trustee plays in the process of valuing the business specifically for the transaction as well as their role in other aspects of the transaction.  What is helpful is to better understand what they are thinking, how they go about their process as the sell-side estimates...

Does anyone understand what is going on in the Tenet movie…it moves forwards and backwards.  I think sometimes ESOP can be the same. This episode breaks down with clarity the conceptual factors of deciding to do an ESOP and real questions that others have asked to determine if an ESOP right for them.

This is the first episode of season 4 and as such we wanted to jump right into a valuable topic to help folks prepare for their ESOP regarding understanding how warrants are calculated as a potential benefit to the selling shareholders.  Will Rodriguez with Vision Point provides a solid overview of the methodology of estimating the number of synthetic shares of warrants issued at the time of the t...

In this episode we evaluate the issues that selling shareholders will likely run into when considering selling their business to either a private equity, venture capital, or strategic buyer.  This episode is inspired by questions that come up from selling shareholders on the alternatives to selling their business to an ESOP.  It is helpful to determine whether the ESOP is a good direction and can...

This interview is with the President and Owner of a family business that sold 100 percent to a newly created ESOP.  Sandy King took over the business from her parents and focused on company culture, business processes and a strong level of customer service.  She had built an effective leadership group and was ready for transition.  After working through a possible sale to third party, she settled...

This episode focuses on better understanding the role of a “quarterback” in an ESOP transaction on your journey to ESOP.  I often talk to folks about the complexities of an ESOP transaction and one point of discussion is what is the sell-side advisor’s role.  This topic will help solidify in your mind what questions you might ask and be aware of when hiring one of the most important advisors in th...

This podcast helps to outline an organization called ESCA-Employee Owned S-Corporations of America.  We interview Noelle Montano to better understand Esca’s role in helping Employee-owned companies.  We dive into what they do in relation to other ESOP organizations and the value their resources provide.

This episode connects with my very first episode called “enough information to be dangerous” - the premise being that when you go to an ESOP conference there is so much information it can sometimes feel where should I start?  I took some very specific questions and discussed them in detail so that you have some ideas of what to focus on depending on whether you are going to the conference on your...

This episode covers an interview with Wayne Isaacks - ESOP trustee (attorney and CPA) to better understand how an ESOP could be interacting with the Department of Labor.  Wayne and I cover a case study that he was involved with and illuminate some best practices and alleviate DOL concerns for companies heading toward an ESOP or existing ESOP Companies.  There is some wisdom here that I think is so...

This episode we explore the difficulties of the why should I go - the ultimate question to either begin or continue your succession plan.  We explore the reasons why you really should plan to go - and how an ESOP could provide an incredible platform to execute successfully on this strategy.

The ESOP Guy interviews Corey Rosen the founder of the NCEO to discuss Corey’s new book on how ESOPs have the best chance to solve a multitude of issues in the US - notably the wealth gap.  Corey and I discuss the book as we go through the outline of his book “Ownership: Reinventing Companies, Capitalism, and Who Owns What”

This episode provides some insight into how forecasting can influence the approach to an ESOP transaction.  Typically we don't see a lot of forecasts that are overly aggressive as future growth tends to follow historical growth.  However, there are circumstances that justify a strong forecast that are going to have some implications in fair market value.   Happy Gilmore helps bring to light t...

This interview explores the issue of what happens if a company is selling to an ESOP and they have real estate held by the company.  The main issue is that the ESOP has to purchase both the company's operational value and the value of the real estate.  The cash flows have to take into consideration the debt related to each valuation and can create some challenges.  To avoid this it is common...

This episode evaluates the issue of the "Great Resignation" and how ESOPs are a great tool to support employee retention.  We cover some of the top reasons people are leaving their jobs.  Some of the direct benefits of an ESOP company  to improve the overall quality of jobs and how important it is as we move into the future to provide something more for people to build a long-term career...

The economy is difficult to predict but if we have a downturn how will that affect your ESOP? This episode provides a good overview for both companies moving into ESOP and those existing ESOPs as it relates to working through potential issues of a downturn with seasoned expert ESOPs trustee and benefit plans - Michael Miller.

This episode is the finale in a three part series discussing the elements of your CIM - confidential information memorandum - to best support your presentation during the site visit with the trustee and valuation firm.  This podcast highlights the importance of reviewing the financial information both historical and forecast as well as understanding the working capital.  It also delves into discus...

This episode focuses on the general issues of 409(p) as it relates to S-Corp ESOPs and the nuances of how a company's other interests could affect compliance with the anti-abuse test.  Cass Hollis offers a depth of wisdom and experience on the topic to point out to companies on a journey to an esop what to look for and potential solutions to work through the issue.

This is the second part in a series of episodes to go into how the CIM - confidential information memorandum is prepared.  In this episode we discuss how the company overview should be thought out and planned for dealing with the best practices of presenting the company, leadership group, strengths and weaknesses and other critical areas to prepare for on your journey to an ESOP.

On this episode - Katie Hardin and I discuss compliance requirements of brand new ESOPs to help you before you get to closing including booking the ESOP entry, working through the set up of the inside loan, issues that arise with the board of directors and other various areas.

This episode is going to focus on preparing for the Confidential Information Memorandum or CIM - this is the presentation that will provide a thorough overview of the industry and company information to prepare for negotiations of your ESOP.

This episode is truly valuable for companies thinking about an ESOP - as it helps to walk out the ESOP process in a real life experience.  It is especially helpful for general contractors and to go through a Joe Hurt's journey to an ESOP!

In this episode we relate the recent movie Free Guy with dealing in reality of a recession and work through some ideas that might make sense for the possibility of an economic recession.  For companies going through an ESOP - a sustainable ESOP company has to be prepared for good and bad economic times.

This episode is unique as we evaluate a start up company that is planning to roll up veterinary practices all over the United States using an ESOP strategy.  Galaxy Vets has identified a strategic way to leverage the benefits of an ESOP and combine the value of creating a larger holding company structure.