EP18 - Lifecycles of ESOPs - discussion with James Urbach - ESOP trustee

Welcome back. Thanks for tuning in. I'm the ESOP guy and we are continuing on this journey to an ESOP. And wanted to welcome anybody that has joined the podcast for the very first time today. We are producing this podcast to really help people understand the employee stock ownership plan process and how that might be a good fit for your company if you're thinking about either a, a very viable succession or exit strategy or looking at possibly using the ESOP as possibly a growth strategy. There's a, there's a lot of things you can do with it. The episode, this is gonna be a season 2 of one of our podcast episodes. If you have an interest in other episodes, please go to our website at journey to an ESOP.com. Also, I wanted to make mention of our ESOP Guy live webinar series. We're, we're on our number 3, which is gonna be all about the ESOP feasibility process that we go through. That's gonna be on May 26th at 2 o'clock Eastern time. So you can register on that, you can register for that at the journey to an ESOP.com and as well. So look forward to, to that. Today, we are going to um go into a topic called the life cycle of an ESOP company. And what we're going to explore is really what happens to a company that goes through an ESOP process and, and really how does that future look like from a, from a historical perspective going all the way through, you know, an entire process. But to do that, we, we've got the, the opportunity today to Discussed that interview, uh James Urbach, who's an ESOP trustee. James has worked in the ERISA industry for over 20 years. He is a California licensed attorney and prior to opening his trustee practice, he's, he worked for the Department of Labor as an investigator. And an ESOP focused and ESOP focussed law firms. He has been involved in over 150 ESOP transactions, helping to guide initial transaction installations and working with companies as they have matured um under the ESOP ownership. He has also overseen over 30 ESOPs that have sold completing the ESOP life cycle. So with that, I just wanted to welcome James to the podcast for the first time. Thank you, Phil. It's a pleasure to be here and I appreciate the opportunity to speak to everybody. Awesome. So, so James, we're gonna just jump right into the topic. One of, one of the focuses that we find in the podcast for this podcast has been to look at Um, as the part of the process of being on this journey to an ESOP, this, the phase of transitioning um a company from a non-ESOP to an actual ESOP. So one of the perspectives though, that really does need to be considered, and I think it's got some true true value is what happens down the road. And what we what we call a life cycle of an ESOP company, what we mean is, is this, this process or the long term process of, of beginning an ESOP here and then what happens, you know, long term for the company, for the employees. You have, you know, done this for such a long time. You have a lot of experience in And being there, you know, in a privileged way, really, at the very beginning of creating the ESOP and really at the end as well as you've, you've had 30 of your ESOPs go through the sale process. Can you comment on this perspective? Let's, let's dig into that a little bit. How has it contributed positively or negatively to your, to your viewpoints of an ESOP? Well, I will say that I will stand on the ESO soapbox all day long. I love them. I have worked with Over 100,000 employees across the country helping them and representing them as a trustee in their ESOP. And what I have seen is That an ESOP as a benefit to employees can provide a retirement benefit that for many of these folks they just never would have seen that they could have funded towards their own retirement. So I have truly seen ESOPs change lives both for long term mature ongoing ESOPs as well as ESOPs that go through sort of this life cycle and create a liquidity event where they sell. Um, a second time if you will. No, I think that's to see that, I mean, the, the statistic I had dug up a little bit, a little while ago is, is that the, the, the employees themselves have something like double the amount of retirement um funds than a non-ESOP employee. So I think to see that really in real life is actually an, an awesome um privilege to you. That really does play out. The Department of Labor Statistics would say that the average private employer in this country contributes about 3.5% of annual compensation to pension benefits, whereas in the ESOP world, we see that being somewhere between 8 to 10% as an average. Additionally, ESOP benefits, ESOP companies through employee ownership, the ones that really take it and create part of their culture around that ownership environment tend to outperform even the publicly traded companies. So those stocks by and large do grow at a faster rate than folks with their 401k plans. Yup. So you get both more contribution plus more value created because the value of the, of the stock itself is gonna have more value in the long term. So, so, so going into it like from the employee standpoint, one of the things that that we talked about, you know, earlier on is this idea that there's such a strong win for when you create an ESOP transaction, you have a strong win for the owners and you have a strong win, as we just talked about for the employees, and you have a strong win for the company. So you have this win, win, win. Um, how have you seen this really play out in real life experience in the, in the work that you've done? Sure, so when you look at the philosophy and the drive to initially put an ESOP in place, oftentimes it's primarily driven by an owner who's looking to create a transition plan. Perhaps they've been thinking about it in the back of their mind for years, waking up in the morning and saying, you know, someday I'd like to retire and I need to have a next phase figured out. And an ESOP becomes a pretty well suited tool for the right company in that it lets an owner sort of stage their transition. They get to create a buyer and set up a. transaction that works for them, whether that is all at once or selling pieces to the employees over time. On the employee side, you have folks who are showing up doing their job every day, and now with an ESOP, we're going to tell them, hey, keep doing what you're doing. We love the value you're creating, but as we move forward, That's going to be used to shift equity to your hands, and you're going to get the value of the work that you're doing every day. With the company in the middle, obviously some of the tax benefits are the holy grail of being able to take an S corporation status, get the tax savings from that, but additionally just the ability to sort of minimize the payment cost because the ESOP gets to purchase its stock with after-tax. Or pre-tax dollars rather due to the contribution level. But what we also see is when an ESOP is done correctly and management is thinking about it, it comes down to communication and integrating the ESOP into the structure of the company. And what we see flowing from that is employees initially, it may not take, it takes a few years, but what we will do through communication is employees will step up. They'll start to value the ownership that's being given to them. They'll start to be more involved with their job and so we see a company that Turnover goes down and that's a big figure, you know, we often talk about the war on talent these days and never underestimate how expensive it is to lose a good employee. By giving them this equity ownership, we see a decrease in turnover. We also see increases in productivity as well as a decrease in some of the expenses that the company might have as employees become more cognizant of what drives value and how they can help the company save money and expenses that go out the door and thus drive their own stock value for themselves. So when we talk about owners, company, and employees all being on a boat and rowing in the same direction, it can really make a turbocharged sort of growth in value and how well the company just is seen in its community and performance. Yeah, I would say there's nothing like it in the marketplace because of that. You have, you know, a normal deal, you know, I'd say normal is, you know, I'm selling my company to a strategic. Buyer, there's just this change and, and it's not necessarily a bad thing in some sense, but in some, some sense, the loss sometimes is, is, is, it's going to play out in some different levels. And so with the ESOP, you have all these different, everybody's goals are aligned together. Uh, one of the benefits I was thinking as you were talking to regarding the employees too is, is just simply having a job, you know, when you look, when you think about a strategic buyer coming in. And buying out some of these companies, they don't always stay in that location or they don't necessarily need to. And so that gets rolled up maybe and and some of those jobs go away. So just the simple fact that, you know, there's more jobs available in some of these communities is, is another, you know, I guess win for the employees. Absolutely. One of the primary drivers that I think ESOP should be touted for is because the ESOP is driven off of its W-2 base, it requires that jobs stay in America, stay in the area, and gives the tax incentives to help make that possible. So I love them for the fact that they keep jobs here and when I talk to employees, typically, Their concerns are item one, what happens to my paycheck because I need to feed my family. Item 2, what happens to my benefits because my kids have doctor's appointments. Item 3, now let's talk about the future. And by having an ESOP in place, it really does solidify those jobs. It solidifies most ESOP companies actually provide a higher level of benefit than non-ESOP companies. And it's looking forward to the future and encompassing all of our employees into the fold of saying we value your work, your labor, your input, and we want you to be part of the future going forward. Yeah, I think that's a great point. And here's a, here's another win that I was gonna throw, and I did a podcast on this because I thought it was interesting. I did some research. They, you know, an ESOP company, of course, is going to benefit. And one of the, one of the other beneficial areas is the, is their actual, the company's customers. And the reason I make that point is because You know, the customer, depending on what kind of company it is, of course, um, it could be a construction company that has different, you know, types of customer relationships. But the customer is going to be interacting with um employees that are what we call beneficial owners and people that Um, have a sense of more than just this is their job. And so I think customer service becomes more heightened and so it does benefit the company to have stronger customer relationships, but thinking about even how they deal deal in the community with their own customers, I think there's a benefit that trickles into um those, those relationships. So it's like a win win win, you know, this would be the 4th win. I would strongly agree with that. I have a background in Human resources and industrial relations initially in my undergrad, so I've always been focused on the human aspect of ESOPs along with, yes, there are a lot of hoops and regulations that we have to meet in order to do this correctly, but when we look at the human side of an ESOP, it is about, I don't think in a community that anyone has ever looked at a shirt or a sign or any other type of advertising from a company where it states that it's employee owned and seen that as a negative. On the other hand, what typically that strikes is this idea from You never know who you're advertising to, and when they see employee owned, it does set an expectation that when somebody owns something, they tend to care more about it. So that carries through as almost a halo effect, and it is about getting then employees to follow through on that. You're the voice of this company, you're an owner, now everyone needs to act like it. Yeah, excellent. Well, moving into a little deeper, um, the, so I've done some podcasts and we've looked at the flexibility of ESOPs. So one of the benefits to the employee or the owner in terms of structuring it is there's a lot of ways you can structure it. We kind of touched on that a little bit. Um, when you dig. Deeper to the selling shareholders' objectives and their outcomes or their expected outcomes. What sort of examples can you offer to help the listener think about the way that they might plan out their ESOP in terms of different ways to, to approach the structure side? Sure, and it's almost a rabbit hole because there are such a myriad of ways that I have seen ESOPs put in place to meet different needs. Um, in some companies, it has been, perhaps we have a shareholder. Who is not active in the business, maybe it's a family member or others that they would like to purchase out and getting the financing and doing that, and you may have control issues having the ESOP put in place to purchase out that percentage of stock. Can be an easy tool that meets that need. From an owner's side, a lot of owners are looking at this process and thinking, I'd like to get some of my chips off the table. I will say that most owners who create and grow a business have probably put more blood, sweat, and tears into it than they did their own kids, and it has their DNA stamp fully ingrained all the way through the company. And perhaps they are saying, well, I need to get some of my investment out and start planning for that next stage, but I'm not ready to do that today. But if I sell my company to somebody else, they're not going to want me in here making the decisions anymore. So an ESOP can be structured to buy as little or as much based on lending, bonding, other requirements. But it can transition that ownership piece. At the same time, from a trustee side, I don't run your business. I don't want to make those decisions. I want to not break what's working. So we're looking to typically an owner. To say we need you for the next 5 to 7 years to be just as involved, if not more, than you've been, and during that period we will be building bench strength, second stage management, and transitioning that knowledge, the institutional knowledge, the employee base, and widening out while we improve governance and set the stage to really transition for the next generation. Yeah, I think that's a good, that's a good place to, you know, think about the many, many business owners, they get caught, I think they get caught up in the idea of well I'm gonna sell my company. They don't think a lot about what that post sale looks like. And so if you do sell and you're and you're out, then the business owner has to think, OK, now what do I do with all my time? Most of the time they're people that have, I would say they're, they're just so, they're deeply entrepreneurial. So they just, they, they love to do, you know, investments or different things like that of their time and the things that are gonna grow and build and they get bored easily. And so now they've sold their company. The, the cool thing about what we're talking about with an ESOP is that there's so many ways you can structure having put the post transaction of, of just a really great life where you're, you're able to work less, continue to transition the business, but still be involved in the aspects that, that you want to, assuming you have the succession part of the process done. Um, and I know it's for some people, it maybe it's 100% and they just want to completely get out. But for many people, I know that we've dealt with this. They just like what they do and they like being part of it, but they just don't want to hold all the, the ownership, you know, as much as they, and they really shouldn't honestly, because as you get older, it's just good to diversify that into other things. So I think it's a, it's a neat combination where you don't see that with, with other other opportunities where even if you do a management buyout. The managers are like, hey, look, let's, let's get move on with things. So you can still be around, but we're gonna give you an office somewhere. Um, you know, it doesn't, it doesn't, it's not, uh, to me, it's not as flexible in that sense because sometimes people are like, they own it and it's time for their management style to kick in and you can really gra gradually move into this, this next place of life. So that's one of the aspects that I really like about ESOPs. I agree. I'm working on a transaction with a client right now in the Boston area that husband and wife founded the company and sold 50% of the stock to the ESOP, approximately 50% a few years ago, and the company has paid off that debt and now we are at stage two where we will go 100% ESOP. The wife will transition away. She's looking to go do other things that interest her while the husband will remain on the board and be part of this transaction. Obviously the company will still owe them money for a while, so he has a vested interest there, but nobody's pushing him out the door. We still value all of the experience and the relationships. And that just knowledge that he can bring into the room that we can still rely on. So it's a very friendly process from that front. Yeah, and you're, and you're more, it's a, it's a better company. I mean, because you have all this going on, but you're continually keeping that the value of that person that who had created it and had the innovation to come up with the ideas. And so I think that's a, that's an excellent point. The, um, so if we start, start thinking about this, I literally had a lunch meeting with a with a new client yesterday we're working through the ESOP process on and. And we're really at the beginning steps, but we were thinking about like one of the questions he asked me was like, how, if Jeff Bezos came in the office, you know, a couple of years from now, and he had a big pile of money, what would that look like? So the idea of, of them becoming an ESOP and now being faced with an opportunity to sell at some point to a strategic buyer. Um, first off, before we get into the, like the idea behind that, I think sometimes people are like, is that even possible? If I locked myself in. You know, to the ESOP, and I can never, I can never sell it. And so let's just kind of explore that for a second. What are the rules behind, you know, selling, once you've created an ESOP company, selling to a strategic buyer down the road. Well, at the end of the day, From a legal standpoint, the ESOP is an investor in the company, a passive investor, but owns those shares, and as trustee and representing those employee owners as beneficial owners of the company. There is a duty to look at it as an investment, and I have had ESOPs that have gone to the ESOP process 100% and turned around and sold when the right offer came in the door a year later. On the other hand, I have two clients that have been ESOPs for over 25 years, so we see everything in between, but Recently, with the low interest rates, almost free money that's out there, a lot of private equity firms are out there making offers. If there is a negative in the ESOP world, it's that the annual valuation does tend to be a little bit conservative because we're doing it for administration purposes, not to truly mark what we think a strategic buyer might come in and pay. So most ESOP valuations are going to fall. With normal risk industries in the 5 to 6 times IBEA level, whereas a strategic buyer may come in as a private equity and pay. Recent transactions I've been involved with have ranged anywhere from 7 to 12 times, and when that amount of cash comes calling, the board of directors are left with the duty to decide is this a bona fide offer and something we should look at for the future of the company. So putting in an ESOP by no means locks in that it will always be an ESO. Uh, ultimately, the ESO participants have almost bought a house with no money down. Company's taking on the loan and it's having to be paid off, but if somebody comes along and offers you enough money for your house at the right price, it's for sale. Certainly there are hoops and processes we have to go through to make sure it's done correctly on that sales side, but at the end of the day we pay off the debt and our participants as equity holders. Get the benefit of selling that stock. And of course, we always want to make sure what's going to happen to their job, to their benefits, and then their future. From a management side, I will say that most entrepreneurial senior management who've been running a company probably don't last long going back into a ownership under private equity. I typically see. Over 60% of senior management transition away within 18 months of selling the company, and the shorthand I like to use is it's really hard to go from being the lead dog to having to look up another dog's behind every day. But at the same time, it is a huge liquidity event. I have seen on the top end scale. I had a manufacturing client in Ohio that we went ESOP, paid $21 million for that company in 2008, um, made the company debt free. It grew rapidly under employee ownership with new management and a focus on growth, and in 2019, we would have valued the company at $105 million. We sold it to private equity for $240 million. And there were 138 employees who got to split that money. A truly life changing event on that. Yeah, that's to be so so involved in that. I mean, that is phenomenal. Like, and that's one of the ones, the thing that I like about this episode is just. The idea behind getting involved at the very beginning and see that $21 million dollar company in 2008 and then see it year after year mature into something that's worth $100 and something million dollars and then, and then the actual transaction would be $240 million and have that many employees benefit that way, I mean. You literally saw people be, you know, become millionaires over, you know, that period of time that stuck it out. So, um, I think that's a great example. How, so from a trustee standpoint, you know, you kind of mentioned the board, of course, is gonna have to review the offer, comes in and hey, this is, this is a serious offer. From the trustee's standpoint, you represent the employees. How do you evaluate the offers on their behalf? My duty under ERISA sounds a little coldhearted in that it's supposed to be a balancing of the scale. On one side we have how much cash is the ESOP going to receive. That's cash, net of any escrows, earnouts, etc. because those are all at-risk amounts. And then if I take that cash and invest it conservatively in the market over say the next 7 years, what's it going to be worth? On the other hand, what's the value of the asset that we're holding in the company combined with management's projections of how the company is going to do over the next 5 years, as well as this understanding that a lot of ESOPs have long term, um, debt in place. So knowing that ESOP transactions are normally set up with, I like to Use the analogy of a bank, parent and child. When my child was a teenager, she wanted to buy a car but didn't have money. So I went to the bank and took out a loan to buy a car and sold her the same car. Now I paid off the bank as fast as I could because that was real debt, but on her side, how did she pay for that car? Well, her job was to keep her room clean and keep her grades up. And every semester that she brought me a good report card, I'd hand her $500. She'd hand it right back, and she'd pay off her car that way. It took a lot longer for her to do that than it did for me to pay off the bank, and ESOPs are set up much the same way that the company actually has the ability to fund out and pay off our sellers and other debt. On the other side, the ESOP is designed to be a long term benefit for employees, so it's typically a longer amortization schedule, and we will normally see 20 years or longer of that internal loan releasing stock down to our employee accounts. So when we sell, it really does look at most of the time we're still under this amortization. So we know that employees have a set amount of stock that is going to release to them over the future, and we're asking them to give that up in order to sell the company. So just steps and the way it can be structured, uh, is really from my side looking at which is a better deal. On the other hand, if it's a close deal, that's often up to the board of directors to decide, is this something that's really in the best interest of our employees as people, not just a financial stakeholder. Yeah, and I think that 11 thought, and this is coming out just more from questions that people have always asked me about things in terms of this topic, is the, you know, your objectives as trustee. Um, hopefully they're the same, you know, when you think about the board is trying to accomplish, but they're not always the same. And where would you see, uh, you know, issues where you'd be like, hey, we, as a trustee, I really want to work through this is the, this is the right thing for the employees and maybe the board is seeing something different, like, hey, we have more, more opportunity to build a little more value now if we, if we hold off on the sale. Do you see that as a, as a, as a common issue or something that comes up every once in a while? That's a pretty rare issue. Usually I have found that with open communication and education of the board, they're going to be pretty cognizant. So there have only been a couple of times where there has sort of been that conflict in place and That's normally solved by saying, well, as a board member, you're perhaps also a senior management officer of the company, and you know that if we move into this deal, that your job is likely to go away. Well, that perhaps could be a decision on which hat are you wearing when you think about this deal? Are you wearing your employee hat or are you wearing your officer hat or are you wearing your director hat? And just explaining that. A lot of folks love to be on a board of directors. It sounds like it's a great feather in your cap, you know, just the idea that people recognize that you're special. What most people don't recognize as being on the board of directors comes with state and federal liability and duties that you have to meet and the exposure of if you don't do your job correctly and you don't make sure. who you're thinking of when you're making decisions that you can get in trouble. I like to say as trustee, you should think of me as having your mother-in-law as a shareholder. I don't know your business. I don't want to know the business, and I don't want to make decisions, but I do want to look over your shoulder and ask you, are you taking care of me? I love it. Yeah, that's a great analogy. I mean, probably one that's really, you know, resonates with a lot of people. So, no, I think that, I think what, what I wanted to say too, and, and I, and you said it is, it's not really a major common issue, and it probably is very rare for that to happen. But, you know, it, and it's one of the things I think is very valuable about ESOPs. is that there is a, a, a checks and a check and balance that we all as people, especially Americans understand, you know, that that is very valuable, um, in our government, of course, and in our businesses as well, and the check and balances produce hopefully the best results at the end of the day. Um, you know. Nobody wants conflict for the sake of conflict. But in the sense of, hey, we are gonna be accountable, um, to more than just ourselves, if it's just me trying to keep my job and I want to be accountable to the employees. So I think that actually makes a better situation. But I also think just to, to kind of say that it's not something that I, I think an an owner should be overly concerned about because at the end of the day, I think it's all gonna align, um, having the right people in the right positions. I agree, and when somebody walks into the ESOP transition strategy, approaching it from the understanding that They are going to become an employee along with everybody else that we will have this trust in which everybody gets to participate and putting everybody on the same team. I think the biggest lesson out of an ESOP is that you approach it from that stance and not that. You're not going to get top dollar from an ESOP. It's going to pay you fair market value. If you want top dollar, sell the company and go sit on your porch and fish all day. But if you want to become an ESOP, it does allow an owner to Really take this baby that they've grown and hand it off to the next generation and see that it keeps growing with the values they've instilled in it. So I think the number one lesson is the education for owners transitioning to that next phase and the understanding that it's no longer their personal ATM, that we are responsible to all of our employees and that everybody. Has a unified vision for this. Yeah, well, one and the other side of the, the question that I know we we've we've talked about it when when we go into the topic. As James and I go into the topic of a of a life cycle, you know, of an ESOP company, I don't want to get so geared towards like, hey, you have to sell this, even though that happens, like he said 30, he's happened to him 30 times. But the other side of it is is that, you know, the other clients that you have that continue to move on and they, you know, they're 25 year old ESOP company. Um, what's their future look like and, and what are the important things that they should be thinking about if they're, you know, really just wanting, you know, this company is just gonna continue on and there's not necessarily a Uh, uh, a, a reason you have to sell, you know, unless you get the, the issues that we just talked about. Um, so what's, what's your advice for companies that say, you know, I'm an ESOP company or want to be an ESOP company for 100 years or whatever. Um, is that really attainable? Is that something that is realistic? It is, um, and I think most of my clients really have taken the stance that they're not for sale. They intend to have employee ownership over the long term, and I love this tagline that an ESOP can help create sustainable capitalism. Here in America, we have a tremendous track record of family-owned companies that fail in generation 3 or 4. And that's because you have an entrepreneur that gets in there every day, builds the business from scratch, works 16 hours a day, and grows it. And maybe they have their kids in there sweeping the shop floor, helping to grow it, and those kids want to take the flag and move it further down the field. But somewhere along the line, we find a lot of American companies becoming successful and those parents wanting to share that with their kids, and you have the kid who shows up in high school with a new Corvette. And that child or that generation, we've all known somebody like that, they don't have the drive to continue moving the flag down the field and taking risks. They start to treat that business like a lifestyle stream of income. And just like any relationship, if you're not moving it forward, we find that those companies drop off and start to fail because it's not the right impetus behind it. With an ESOP we're trying to create generation after generation of entrepreneurs that we're bringing up through the business. Now from the company side, we start fairly young in the life cycle of the ESOP, probably by year 3 talking heavily about this idea that stock that we allocate to our employees has to be repurchased as they leave. Some people will lovingly call that the ESOP tax, and it's known as the repurchase obligation, and we have to be planning for it with this idea that a long-term ESOP will have a percentage that we need to fund every year, and we have to be looking for creative ways to build that funding and make sure that we have adequate cash flow. To not only provide stock, which is a piece of paper, but to our employees who've left, we need to be paying them out and providing the promise and really delivering on the promise we made to them. Yeah, I think that that is a very, that's very good advice and wisdom and, and we don't get a ton into on this podcast we purchase obligation, but, but there's definitely some room here for us to dig in deeper on that to really fully. Understand it cause a lot of the audience is just saying, hey, I'm considering an ESOP. And um so, so that's a, that's something to unpack. But I think it's very appropriate for the topic of a long term ESOP because you're gonna have, as you get older and older, you know, in terms of years, you're gonna have more and more of that liability. Um, I love what you said about the sustainable capitalism, um, and the idea of sustainability when it comes to ESOPs is very, is used very frequently. Um, it made me think about this, you know, and I, and I've been doing client like small mid-sized companies in terms of my banking career in the CPA world for over 30 years. And I've seen this, you know, a lot of companies for the next generations coming in. Um, but it made me think of the Creedence Clearwater Revival song, Fortunate Son. I don't know if you ever heard that song, but it's like all about, you know, raised with a silver spoon. And, and I wanna say like, hey, it's not, I mean, it doesn't mean you can't be raised with a silver spoon and not be, you know, taking your, your, your, your parents' company to the next level. It just means that there's this sense of, you know, entitlement that happens and I think that we, we are all good to try to maybe objectively recognize that it's not always gonna happen. The next generation may not always move that. Um, to the next level, but it it does need to. Right. And certainly I think what the ESOP can provide an ESOP is not the right vehicle for every company. There are parameters that have to be talked through. It's not the ideal situation in a company that has really high peaks and valleys and earnings. We're looking for a stable platform with a decent W-2 base that These tax flows can be based off of and the right philosophy and integration into the company. So we're not looking for somebody that's looking to just sell knowing their company is going to crash. So we are looking to come in and create something that is going to be sustainable and will provide benefits for the long term, not with an idea that we're going to turn around and sell it in 2 years. Right, right. I think that, and that sustainability really does require a management group that culturally, philosophically gets it and one that continually recreates that, that concept and, and, and grows that concept of philosophy throughout the organization as time goes on, as they, as they have their own successors take over their positions. I think that's a really critical element of a very long term ESOP. Absolutely, I would agree with that. So I don't want to finish on a bad note, but I kind of wanted to ask you kind of, is there, you know, if you think about ESOP companies that go bad, you know, which is, and I, and I'm asking this question because I think it's important because there's people that do hear horror stories about ESOPs and like that's a, that was a bad experience. Um, first off, you know, when you look at your history and experience with, with the life cycle of ESOP companies, have you, have you had those kind of experiences? And if so, what did you kind of, what did, what went wrong, you know, in, in the process of, you know, either creating the ESOP or working through it? I wish I could say I've never had an ESOP go bad, but given the length of time I've had in the industry and the number of clients I've dealt with, yes, I've had a few that have gone bad. Now, primarily, they were driven by companies that were in dying industries. Um, you know, if you look back at some of the, you know, bad things always make great news. So Chicago Tribune as an ESO, I don't know that you could convince me as a person to invest in a Newspaper. I think it's an industry that has some real challenges, yet an ESOP being put in place there was not probably the right vehicle for the time. I've had companies where either their vendors or suppliers have changed radically on them, and the industry has moved away from them, and they haven't been able to keep up with that. You would say that that was either a lack of failure or just a black swan event where the industry changed. On the other hand, I have been involved in situations where I've come in and tried to assist companies that were going down, and they were Put in place for the wrong purpose again and an owner who was looking to just, they tried to sell the company, it didn't work, so they stuck an ESOP in place and listening to past podcasts, I would say it is vital to get good experienced and credible ESOP advisors. Uh, these are not just a financial tool that you jump into without having a team around you that has experience and good recommendations behind them to help guide you down that road. If there is a negative around the ESOP world, it's that. There are only about 77,500 ESOPs in the country. There aren't a lot of nationwide practitioners that really know what they're doing. And as an attorney, And you know, Phil and from the accounting world, ESOPs are not a pool that you should just dip your toe into. The folks who really are ESOP professionals, that's pretty much all they do, and those are the recommendations of if somebody's thinking about that. I would recommend reach out to somebody that really knows what they're doing. It's far cheaper and more efficient in the long run. Oh yeah, yeah. And like the point is so good, like it's not every company shouldn't be an ESOP. And if you force a round peg through a square hole, it's just not going to work very well. And better to early on understand that before you spend a ton of money on the process and then or get into it and then you're like, this isn't working and it and it goes bad. So. And when it goes bad, I think the issue is, is what's on the table is, you know, unwinding a bad ESOP and the, um the the cost behind all that can be, you know, obviously prohibitive and um the, the morale and, and the cultural issues and all the things that can happen that really damage the, the existing really good, maybe a good business that um that would should never have been an ESO or should never have gone through that process. But, but I think that's a good point on the advisory. Absolutely, yeah, this is, I would just reiterate that this is not a vehicle that fits every company, um, but when it does, it can be a fantastic tool for everybody involved with it. Absolutely. So that, and that's really what as we finish this episode, it's like, I want to end on a high note. I mean, as we go back through it, um, some of the things that James talked about it are the successes and, you know, and the best example he gave was just the company that went from 21 million to 250 million. Um, and I think it was about 38 people, 38 employees. 13, 13, yeah, so 138 people in that transaction and it's just, it's, it's has created a lot of wealth for people and employees and just, and the flexibility behind the owners and the wind that they get the, the wind that the company gets, the wind that customers get. I mean, so there's so many good things to think about when you think about your ESOPs and can kind of bringing that to, um, you know, in some ways just to say that that the life cycle of ESOP company, I think for the most part, is, is really a lot of positive things to look forward to in comparison to not being an ESOP as, as long as those things fit together. So with that, James, anything that you would say is final to kind of to summarize everything? I wish I could, you know, I am a big cheerleader for the ESOP industry. When it's done with the right philosophy and the right fit, I have truly seen these plans change thousands of lives for the positive. So I appreciate being able to work in this industry and to be able to talk to employees and to assist so many. In creating a retirement benefit where normally a lot of these folks, if you'd given them a 401k, they would say that's great, but I've got 30 days a month and 25 days of paycheck and which week do you not want me to eat in if I'm going to have to put in money in my 401k. So the ESOP is a broadly based benefit that everybody gets to participate in. And it is part of ingraining it into the culture of a company when it's done right, and it's a very rewarding industry. So I thank you for allowing me to be part of this podcast today. No, I definitely appreciate your time and I think that one of the things that we wanted to set out doing today and James and I were talking about just educating people about the ESOP. And so I think this has been a really good episode for that and I want to thank you for your time to do that with me today and Um, and as we close out, I wanted to remind everyone to, if you like the podcast, please subscribe, um, share it with a friend if you think it might be helpful. Um, have a great day and we will look forward to our next step on this journey.