Journey to an ESOP & Beyond Phillip Hayes

 This episode is a general overview of ESOP communication.  Diana Clark and I discuss the importance of communicating an ESOP transition to your employees.  We discuss how to present an ESOP to your company, answering the question: What is in it for the employee? This is a very essential part of the ESOP journey--once the ESOP closes this marks a new beginning for the company. Communication is central to building a highly effective ESOP company, as well as re energizing mature ESOPs. 

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.