Journey to an ESOP & Beyond

The show “Band of Brothers” offers a perfect example of leadership from the character of Captain Sobel and provides examples of overcoming obstacles to establish a strong culture. Specifically, the show provides an example of an employee-centric culture: a culture that embodies a solid group of employees ultimately banding together.  This episode covers the 5 c’s of an employee-centric culture: Commitment; Care; Celebration; Communication and Community. The topic might be helpful to assess wherever you are in your journey to an ESOP as you build, improve, or sustain the culture of your business. 

In this episode the podcast discusses the recent uncertainty with the economy and how this effects the ESOP world. Considering this, the podcast interviews senior level banker Chris Cucci with Climate First Bank. Chris’ bank does financing for ESOP deals all over the United States, providing valuable perspective on ESOP financing credit decisions in light of the first quarter of 2025. While the future of recent economic events in unpredictable, the important take away from this episode is to build your ESOP around the ability to flex with any changes in the economy. 

Dive into the fascinating world of Warrants and Stock Appreciation Rights (SARs) in Employee Stock Ownership Plans. Discover how synthetic equity can create a win-win for both shareholders and companies. The podcast cleverly uses the Nicolas Cage film 'Knowing' to illustrate how these financial tools can help predict and shape a company's future. It's all about creating a legacy while rewarding those willing to take risks. Tune in for insights on balancing interests in ESOP transactions!

On this podcast episode we interview Jason Ireland, President of Industrial Supply Company (ISCO), a distributor of manufacturing parts who went 100 percent ESOP last year. Jason explains the step by step process their 100-year-old company went through to transition to an ESOP process.  The company was part union and part non-union, providing some background for some companies dealing with that reality.  There is even a ghost in this story…but he cannot be part of the ESOP (it’s an ERISA thing).  We discuss the consensus building process with multiple shareholders and Jason’s future generation as part of the leadership to steer the company into the future of employee ownership making the employees part of this family. 

The Mad World of ESOPs!  This episode reviews the roles ESOP professionals play and the reality of variance in one transaction to another.  We discuss the differences in costs, approaches to structure, closings, and other areas given the backgrounds, perspectives and objectives in leading the transaction.  This episode is intended to help orient the listener to questions they may want to ask on their journey to an ESOP. 

In some cases an ESOP company can choose to sell to an outside buyer after they transition to an employee-owned company.  In this episode Greg Daugherty, Porter Wright and, I discuss the factors related to selling your company after it has become an employee-owned company.  Greg does a great job of discussing how this process works and what business owners should know as it relates to the board of directors, trustees and, support related to selling the business. 

Arguably one of the best James Bond 007 movies - “Casino Royale” - is it time to get some chips off the table?  This episode focuses on the motivations of why some companies look at doing a partial ESOP which is going to be accompanied by risk/reward decisions.  Not as risky as going all in and hoping for the high hand.  But a partial ESOP can still be the right strategy a lot of companies to determine if an ESOP works in both the short and long term, and for shareholders and employees.  This may be your next step on the journey to an ESOP!    

Journey to an ESOP and Beyond continues to bring perspectives that can challenge conventional thinking and at the least provide the listener with questions for their advisors.  Jeff Forrestall, CPA provides a good overview of the changes in SBA ESOP financing as well as a compelling forward planning model to leverage the C Corp opportunity beyond 1042.

This episode takes advantage of the classic film “Meet Joe Black” starring Brad Pitt and Anthony Hopkins. The podcast uses the movie to demonstrate the two guarantees in life - Death and Taxes.  The nuances of taxes can catch individuals by surprise.  As it relates to an ESOP transaction - most of the time there is a resulting seller note established.  Relative to an S-corp sale - there will be capital gains taxes that need to be estimated.  We usually look to installment sale method but if a company’s transaction is large enough to create a seller note greater than $5 million there will be an additional IRS interest cost known as 453a.  We detail this issue so that listeners do not underestimate the additional cash outflow to the sellers.   This is a very important step in your personal  Journey to an ESOP!

This is the first episode of the new year where we like to cover changes to the podcast.  This kick off message for season 6 focuses on our core value: “It Takes A Team”. This works out well to connect the dots on the old tv show and 2010 movie “The A - Team”.  Some of the changes to the podcast have already been incorporated in our logo change.  This episode covers some of the highlights of 2024.  Looking forward to the new year for 2025 and some of the areas we plan to focus on as well as the open invitation to send your questions to our contact us page on the Journeytoanesop.com website.  Lets get started on our next step on this journey to an ESOP.