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Case Studies

Case Study 1: The co-founders of a successful media company wanted to transition ownership to a 99.9% ESOP in a manner that maximized their sales price without burdening the Company and ESOP participants with excessive debt post transaction .

The Approach – Working with the Company, co-founders and respective legal counsels, we developed a transaction that included:

  1. the ESOP acquiring shares using bank debt, borrowed through the Company,
  2. the Company redeeming a significant number of shares for subordinated debt, and
  3. certain concessions on rent charged to the Company by the co-founders on buildings they owned.

The Result – The selling participants received proceeds in excess of their expectations. The Company maintained a strong post transaction balance sheet. The post transaction share price was not significantly diluted and is expected to surpass the price paid to the co-founders over the next several years.

Case Study 2: The president and minority owner of a successful manufacturer wanted to retire in two years and wanted to have the ESOP redeem his shares at which time the Company would become 100% employee owned.

The Approach – We proposed a redemption agreement to provide an earn-out component to incentivize the president to:

  1.  transition the leadership role and
  2.  attain specific cash flow targets.

The Result – The Company is now 100% employee owned. A new president has been identified and is being mentored by the current president. The Company will attain its cash flow targets and the retiring president will receive 100% of the proposed earn-out. The current share price is higher than the price paid to the retiring president.

Case Study 3: A successful manufacturer’s majority owners desired to redeem the 22% interest held by the ESOP. The ESOP trustee was the Company’s CFO. Realizing that a conflict of interest existed, the Company engaged us as an independent trustee to represent the selling ESOP participants.

The Approach – Working with the independent appraiser, we quickly became familiar with the Company and its prospects. We evaluated management’s projections and successfully negotiated a selling price for the ESOP that was in the upper end of the range suggested by the appraiser.

The Result – The transaction was successfully completed in a timely manner with the Company having to pay modest professional fees. The ESOP participants receive immediate diversification as the sales proceeds


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