Employee-owned companies are currently receiving substantial interest from both strategic buyers and private equity. Employees who think like owners are attractive to these buyers and are often rewarded with substantial sales payments for their ESOP shares. We collaborate with the company and its advisors to maximize the net sale proceeds available to the employees who generated the value. Our role often includes some or all of the following:

• Educating the sell-side advisor and buyers as to the nuances in acquiring an employee-owned company.
• Reviewing the Confidential Information Memorandum prepared by the company and sell-side advisor.
• Assisting in the review and negotiation of letters of intent and purchase agreements.
• Overseeing the pass-through voting procedures, when necessary.
• Overseeing the prompt distribution of net sales proceeds to participants and the wind down of the ESOP post-sale.

The scope of on-going trustee services may vary slightly from company to company, but generally include:

• Reviewing and approving the annual valuation of the company stock, and presenting the valuation to management, and when requested, the rank-and-file employees to help every employee better understand how he or she helps enhance company value.
• Attending selected Board meetings [at the Board’s invitation] to monitor Board performance and to share experience of other employee-owned companies.
• Reviewing financial information with management regarding company operating results.
• Monitoring outside investment advisors on the management of other investments held within the ESOP.
• Coordinating with third-party administrators to pay benefits and prepare tax forms and returns.

Employee-owned companies often use “internal” ESOP trustees, who occasionally have conflicts of interest when a major transaction involving either the ESOP or the company is concerned. In these instances, the company may engage an independent or special fiduciary. We have fulfilled that role in numerous engagements, including the evaluation of:

• The sale of an employee-owned company to a third party.
• An acquisition of another company or major capital investment.
• Synthetic equity plans contemplated by company management.
• The redemption of company stock owned by non-ESOP shareholders.
• Transactions between related parties.