EP23 - Interview with Joseph Sophia - First Financial Bank, Columbus OH

Welcome back. Thanks for tuning in. I'm the ESOP guy and we are continuing on this journey to an ESOP. So for those that are tuning in to the ESOP podcast, this is for those individuals that are thinking they might want to take their company towards an ESOP. And sometimes that's for multiple reasons, sometimes it's for a growth strategy, sometimes it's for a succession strategy, it can be for um exiting your company, but there's a lot of different reasons to consider ESOPs. If this is the first time you're tuning into this podcast for this episode, I wanted to encourage you to go to our website, journey to an ESOP.com and find all of the podcast episodes. Today, I have the uh unique privilege to interview a commercial banker. We're going to dig into the details behind ESOP financing. And uh today we're gonna, we're going to be interviewing Joseph Sofia from Columbus, Ohio. And he, Joseph's background includes, he's been a commercial banker for the last 18 years. Um, he's had a wide ranging role from being a credit analyst to a relationship manager. To even chief commercial banking officer. He has worked at very small one branch banks up to the 5th largest bank in the country. Under his current role, he would really describe himself as a generalist, but has over time developed a specialty in ownership transition financing. Um, currently, Joseph works with First Financial Bank, which is a regional bank with over 15 billion in assets. So with that, Joseph, thanks for joining us today. I really appreciate you taking the time with us today and um to help us really better understand um ESOP financing and ease up transaction financing for ESOPs. Yeah, well, thanks for having me. Good to be here. Great. So, um, one of the things that, uh, uh, Joseph and I were talking about recently is he's closed a recent ESOP transaction. Um, so if we start off with that, just how, how'd that deal go for you guys? Good question. I guess I would start by saying with COVID-19 that added a lot of complexity to closing any kind of loan, let alone an ESOP. So this deal closed in about 3 weeks. We were brought in via an investment bank at the tail end, and it literally was right. COVID-19 started, so we had met with the sellers and then we had decided to finish the process electronically, essentially without meeting. What was what was difficult was our bank in certain days of the week we were having people get up at midnight so that they could go enter. Eran numbers into the SBA system and this included credit and loan closing people and so you can imagine how busy everybody was. So what was great was the bank was able to prioritize this request and we did get it closed, but I would say it was it was kind of a hairy experience but we got it done. Now that's actually just incredibly impressive considering too. I know a lot of the, the banking, uh, the banking people have been coming off the PPP um loan process, which is, I think has been literally just so exhausting and jumping into something like this and getting it done that quickly is, is just really, uh, it's unbelievable, it's awesome. Um, and kind of with that, I would just say, you know, let's, let's talk a little bit about, and I think this is going to be helpful for people that are looking at ESOP transactions because I get a lot of questions from clients as we go through the ESOP feasibility process. About financing and how the financing works. And so with your background, I think you're just going to be really helpful to help us better understand the underwriting process that you go through, um, going through an ESOP deal. How would you describe that? So the ESOP deal underwriting process really should be similar for any kind of loan. I think the detail and some of the information you get is a little bit different, and you're probably wanting a little bit more detail, but essentially the way the process is supposed to work and having worked at a few different banks, I'd say it's it's fairly similar. This is kind of a best practice. It should take about 2 weeks. The deal that we discussed a moment ago that was actually approved in 4 days, so that's very, very fast for a loan approval. What happens is most banks will use a signature process, which is kind of a fancy way of saying the loan officer, maybe a senior manager on the sales side, and then credit. Whoever else off the chain and credit needs to will sign off on the loan and so it's really imperative that the loan officer, which is my role, understands the deal, and I put together what we would call an officer memo, and that details cash flows and kind of why we think the credit's good and hopefully we identify some of the weaknesses and then you get that into the credit department and typically at a bank, that's how it works at our bank, a credit analyst will put something together. And that's what we use to approve the loan, and I think for your audience, the one thing I want to impress on them is that's really like our legal documents. So when you're buying real estate, you have a contract and it's difficult to go back and modify the contract. You can, but it's difficult. That's our internal legal document, that loan approval. So it's really important that it's correct and through the life of the loan, that's going to be the document that Governs what we do. So it's sometimes that's why it can take a little bit longer to get a loan officially approved because it's really our internal document. But there is a discussion process and on an ESOP there's certain things that we look for, but overall it's a pretty smooth process and it should be a lot of the work should be done on the front end by the loan officer. Yeah. Which, which is one of the thing I think that distinguishes you, um, and I know other bankers too, but the idea that you, when you have some underwriting background, and you talk about your, your background at the very front end, being a credit analyst, and you know, my, my background a long, long time ago was I started out my entire career as a credit analyst, but being able to underwrite something as a banker is so important, and especially when you're trying to give advice to a client. Um, is really important. And you said the underwriting process is similar for every, every loan that you do. But when you get into this kind of work, you know, you really have to look at issues related to ESOP companies. Um, and I think that part is, is pretty impressive that you have that background, you know, the ability to underwrite and give advice to the process. Um, and that didn't come up easily, obviously, we look at your, your career, you've been doing this for a long time. Um, how important do you think that is, you know, when you, when, and I know the audience has, everybody has their own commercial banker, and, and it's not to say anything negative about any of the bankers, um, but how important is it for, for a client to have a banker that really understands if they're going to try to go towards ESOP, that really understands the ESOP transaction. I think it's, I think it's critical, and I think for those of you that have bank officers. I think he hit the nail on the head and, you know, full disclosure, obviously knew that Philip had been in banking and was very, you know, he was humble, was very successful as a loan officer because you understood credit. I what I will say is for those bankers that don't understand credit, if they acknowledge that they don't and they make sure that they either get their credit department involved early or they get an expert, you know, it could be their manager. It depends how banks are set up. That that can be helpful, but when you have somebody that probably doesn't really understand credit and they kind of move the thing along and you have a lot of conversations and at the end you can't get the deal done, that can really cause a lot of expense, heartache and frustration, and ESOPs, you know, as we continue the conversation, you'll see there's a lot of planning that goes on. So, you know, it'd be 6 to 9 months into something and then you find out that it's it's not something that's going to be able to get done. That's not an efficient use of time. So that's that's the danger, and I think on the credit side, I do have, you know, a credit background, but I work well. I value what the credit department brings to the table, and I think they appreciate that. So it's really more of a partnership. So I think what the customer gets is their requests. Maybe they're not always done exactly the way they want, but they get, they typically get done pretty efficiently and you know where you stand. I think that's important. Absolutely. So, so as we bring it closer to, you know, trying to get into some of the details regarding the uh the underwriting that you're doing, um, what, what, what we're looking at advising clients and looking at specific ratios, because a lot of underwriting is, is dealing with what your company is creating within these ratios. Um, can you go into some of those specific to ESOP transactions and how you, um, apply those ratios to underwrite and better understand whether you can do the deal or not, or how, what level you can actually finance? Good question. So I think it's not unique to ESOPs, but let's call what we would call, I guess, using some banking jargon as a structured deal, structured finance deal. So that's where we're really a bank is typically in an acquisition and an ESOP is considered a sale. Those kinds of deals are going to be a lot more reliant on that are reliant on cash flow loans where there's no collateral. The bank is going to rely heavily on what we call senior funded debt. So in general, a bank is always going to look at a fixed charge coverage ratio. So we'll get into that in a minute, but that's almost secondary, so. What I mean by that is you could have an opportunity where the fixed charge coverage ratio is sufficient. It meets the bank's standards, but that senior funded debt, the IBETA is too high. So that that's what we consider to be leverage. And so how you how you come about that is you're going to establish your IBETA, which is your earnings before interest depreciation and amortization. And then the senior funded debt is any term loan that's outstanding. And for lines of credit, if you don't project there's going to be a balance, so put it simply, if you have a $2 million line of credit and you think it'll have a zero balance, you wouldn't add that. Into the senior funded debt, but if you thought maybe it would have about a million dollars balance, you would add the million dollars, and I think anytime you're doing a loan, it's more of an art than a science, but a good starting point to develop how risky the deal is from the bank's perspective is the term loan used to purchase the or to fund the EAP. A good starting point is to have that be a 2 times or or a little bit less. So I guess to keep it simple, maybe hopefully like get some numbers so people can visualize that. Um, if, if the EIA was $2 million and it's being sold for $5 so it's a $10 million transaction, a bank would probably try to come in at about $4 million. That's where we would start and then you look at a few different factors. Um, so that's, um, that's pre-COVID. Um, with COVID going on, even for really good customers, we're advising people to take on a little less debt, and, and the main reason is not just for ourselves. I think there's a lot of unknowns out there and as you'll find when you're doing an ESOP, it doesn't it doesn't need to be a very a super risky. I think that's one of the misconceptions is that it's a risky transaction. It doesn't need to be. So until we know more about what's going to happen in the economy, a lot of times we're seeing people take on less debt. I don't know if that, and then you always want to have a 1 to what we would call a fixed charge coverage ratio. So. It's a little bit of a detailed discussion, and what's even more confusing, Philip, is some banks actually have different definitions of it, so that makes it a little bit ambiguous for customers. I think a good way to look at it at a high level, which is what I think we want to do today, is you normally want to have a 1.2% coverage ratio, and I would look at say you want to be at 120%. Of your fixed expenses, which would be your debt service and potentially a bank would include leases, but overall it's just your general debt service on an EAP it's better to be at 140%. And as a side note, a lot of times the company is going to get from 1.2% up to a 1.4% simply by becoming an ESOP because they're going to be able to remove taxes. Right, which is, it's gonna be that part of the ESOP is very unique, obviously to under your underwriting and as you, as you build that into your models, it's gonna be important. Um, so kind of the, you know, we talked a lot what you just talked about was great and I get people when they start listening to Ebita ratios, um, it can become pretty confusing, but I wanted to kind of glean in and it's really just your, if you can talk about it, but it's your, it's your cash flow. When we talk about cash flow. Um, for us, when we do a, the process of going through feasibility very at the front end, um, one of the, one of the steps that we're going to take is going to, to help the client build a very what I'd say well constructed financial forecast and the forecast itself is going To, after you've worked with your advisor on it, it should be the financial story of your business plan for what should happen in the next couple of years. It shouldn't be, um, that, you know, that you're gonna have this, this big sales growth plan and we're gonna try to represent that. It's gonna be a realistic, you know, picture. Um, when you look at the reality of debt being paid in the future, it's not ever going to be paid by cash flows that happened, you know, a year ago or 2 years ago. Um, so when we're looking at the forecast, and this is why I want to make sure that this is part, it's part of like, it's definitely part of our equation, but When we look at that, it's gonna be critical because that's the, that's what we're gonna use to model the forecast or to model the ESOP strategy and build back in these tax benefits to determine how much cash flow do we really have to service that. And, and I've had deals where actually we forecasted a downturn instead of saying everything's gonna go up, we had a, a company that wanted to go through and reduce its reliance on one of the, the major customers. And so we, we looked at a revenue downturn and Um, and so that mean her, the, the cash flow that company was gonna come down. So in looking at, I know like with my banking background too, in underwriting, typically what happens is the banks are going to be a much, much more focused and put way more credence on historical cash flow to support the loan. And so one piece of advice here is if your historical cash flow doesn't, doesn't really step in line with your financial forecast. Then the question is gonna have to be answered, you know, why is this, why is this, if it's stepping up, your forecast has a lot more cash flow, even with the, with tax benefits, um, that needs to be answered. So when you come across that issue, Joseph, for your, what you're underwriting, um, how, how do you, uh, kind of, how do you guys look at it from, I know historical is gonna be pretty heavy, heavy-weighted, um, how do you consider the financial forecast in your planning? Well, I sort of say this with a chuckle because you're dead on. If it was my money, frankly, I always say, you know, use this phrase if I owned the bank and I was making all the loan decisions, I am going to be a lot more interested in what happened historically and I think the main reason why is we're not an equity person. You know, player, right, so if the company does a lot better, I've never had a company come in and say we're going to charge them, let's say 4% interest to keep it simple, and they had a great year and they come in and they say, I tell you what, we're going to pay you 6% interest. So there's no upside for a bank. There's only downsides. So that's probably the same for a bondholder. So that's typically why you're going to look historically. And sort of why I chuckle is you're dead on with an ESOP is projections for a bank typically are of limited value for an ESOP. There's a lot of nuance there and and I think you've done a good job of describing kind of why projections are important. So we do recognize that the projections are important and we do look at them. Oftentimes what I've seen where projections are significantly better than the current performance or the historical performance, hopefully. What we call interim statements are a good indicators. So we're about 5 months into the year. So if somebody was coming to me right now and their EBIA or their earnings or their projections were it's going to be much better, hopefully like the 1st 5 months of this year are better than when you compare like the 1st 5 months of 19. So we would respect that. We would say, you know, maybe the company's brought on 2 or 3 customers, but like anything else. We just want to see a little more information as to what's driving those projections, but I, I would say you're correct. We're, we're probably going to focus a little bit more on the historicals and um But when we do, when we do a few, when we, when we officially do our offer for the loan, we do look at the projections and again, to be clear, we look at projections for an ESOP a lot more than we would if somebody was coming in for an equipment loan. Right, I think that's a good, that's a great point because, you know, the EAP, some of the other ESOP professional partners like the trustee and the evaluation firms. That evaluate it. We're looking at the forecast because it is going to be your primary evaluation method of a discounted cash flow. So, so that kind of like, but, but, but that's one of the reasons as we go to the next question is going to be, um, where I think it's really important where we get to this episode is like, how we include, when we look at the process of doing an ESOP, how we include the banking advisory into the process, because there's definitely different ways to look at the information. Um, and that needs to be what I like about like, doing a deal when you were working with a bank in that front in the process, it's much, much easier because you're getting their perspective on it. Um, so when, when you do that, like, let me just say like, what is your, um, where do you think the bank, you know, where do they come, I guess the question is, where do they come typically in the process and where should they come into the process is, is the question. Good question, Philip. I think. Um, the ideal scenario, I think, for any customer is that they have a fantastic banker that is constantly and an accountant and a lawyer, and everybody's talking to each other and working with the ownership team and saying, you know, are you thinking about a transition of ownership, you know, i.e., are you thinking about selling or what's going on? And so it would be the incumbent banker, right? So in layman's terms it would be my client and I would say let's consider an ESA. So then I'm actually the driving. Force that's that's a really good scenario, and I think kind of what your question was hinting at or what you're driving at is in that scenario, everybody that's getting involved from day one has a pretty good idea that the bank is interested, that the bank can do the transaction, and maybe the numbers change, right? Maybe the bank is only going to lend $7 million instead of 8, but you know from the get-go. So that's a great scenario where everyone's working together. I think the other part of your question is. Um, there's a client that's going to do an ESOP or a business that's going to do an ESOP, and their current bank is either not interested or doesn't understand ESOPs or they just don't do them, and maybe the transaction is being driven by a third party. So this could be the accounting firm, it could be the investment bank. I do think it's ideal to get a bank involved. We have had a lot more success. I think the clients have been a lot happier. Now it would work here. We actually have an ESOP vertical, so there's two gentlemen that all they do are ESOPs. So when I have an ESOP, I bring them in. They help. They make sure everything's done correctly. They make sure the process is consistent. That's the best case scenario. Um, because we're not driving the train on that one, we're happy to get involved at any stage, but the deal that we talked about at the beginning, Philip, we were brought in at the very end, and we're It's not my first rodeo, so I've been brought in at the end where a lot of information is not available where people didn't contemplate that the bank would need it, and frankly they had to redo some documents. I think the end result is the client, the ultimate client, which is the seller, feels a little bit rushed, and I think. To your point, they look back and think, gosh, if we needed to close, shouldn't we have brought in the vendor that's funding this thing a little bit earlier. So that's probably maybe what I would label as a best practice is to bring a bank in early, but We're happy to get in at any time. Does that answer your question? Absolutely. I think that, you know, and I get like, you know, the important thing is getting the deal done. I mean, I think that's really important. One of the, um, one of the goals I always have because an ESOP is a restricted or regulated transaction by the Department of Labor is to really help the client better understand because they have fiduciary responsibility. And the better you can equip them with understanding the transaction. The better they are off in understanding what their real responsibility here is in, in doing this. That's what's pretty unique about ESOPs are unique because you get tax benefits, but they're unique too because they're restricted transactions and they're regulated with a DOL process agreement. So the, the more they can understand from how the financing is going to work at the front end, um, and the best way to do that is having the banker be part of that, the better it is for them. And I think there's a, there's a combination of things that happen. In the deals that get made, where some of it obviously, they're concerned about cost. And so there's a, there's this potential RFP process where an investment banker might come in and Try to get the best deal for the selling shareholders, which is going to be important, no, no doubt. But I think you're gonna have to do an a question like cost benefit, what's better off? Do I, do I help, has my banker helped me get this thing done or do I go out and try to get the low, the lowest interest cost on the transaction? And, and I feel, I still think you can probably do both at the same time. Um, so that's really, I think that's where we're both Joseph and I are going. It's just best practices would be definitely try to get your banker involved earlier than later. Um, shifting over to back to underwriting a little bit, and this is something that I would say is an issue with anything in underwriting. So it's when you're looking at collateral, the question is, you know, when banks underwrite, typically they look at collateral as the secondary repayment source. So my primary repayment source is cash flow. My secondary payment source is whatever collateral will help pay back the shortfall in, in any debt obligation that you have. Um, how do you address if you have a shortfall in collateral on a, on a, on when you guys are underwriting an ESOP deal? Good question. Um, actually, before I address that, I, I think what I would throw out just for people to really understand. The unique underwriting of an ESOP is you're dead on the primary source. Let's say it's a term loan, the primary which an ESOP loan will be. You're right, the primary source is cash flows. The secondary source is collateral, and then often a bank is going to have personal guarantees or a recourse loan. So the tertiary source is going to be a personal guarantee or it could be a guarantee of another firm, like if there's a parent company. So you actually Really don't have collateral and very rarely do you have personal guarantees. So it's it's a why would a bank do this or you know, how do banks get comfortable. The best process, I think, is having a department within a bank that all that they do are ESOP loans because ESOP loans are just a little bit different than other kind of bank loans and the rationale there is then they don't um choke on the deal, right? They they because almost every deal. is lacking collateral and in some cases there's no collateral. So what, what do I mean for, you know, you're a business owner and you're listening to this podcast. If you have like an engineering firm, you probably, you know, your desks or your computers, that's not really valuable collateral and once it's been depreciated and even after the sale as it changes hands, if you're going to borrow $8 million that That's not going to cover that loan, whereas if you were maybe like a general contractor, you might have some heavy machine and equipment, but at the end of the day, that's not going to cover the loan either because you're paying by the nature of the sale, right, you're paying a premium on the assets. That's that's the whole, so there's always going to be the shortfall. So I think banks really start to focus on the cash flow. Of the future as you put the future projected cash flows and how stable they are. And then if once we can figure out how stable they are, hopefully they're fairly stable, then we can kind of modify the debt so that it's easily able to be serviced and That's really how we get to get comfortable, but to kind of summarize again, I think it works best when you're dealing with a bank that has a unit that that's all they look at. In First Financial, that's how we're set up. So these people, all they look at are they essentially are experts, so they don't get as uncomfortable. Yeah, I think that's a, that's a great point. I think that's the, that's really kind of the central point to the whole theme of this I think is just finding. Um, expertise in the industry, um, when you're looking at an ESOP and, and having that gives you a little bit of, of better understanding when a bank doesn't really understand them, then they're really gonna maybe have a more difficult time getting over this uh potential shortfall in collateral. So, um, one que as we deal with COVID-19 right now, what, what, what are some of the things that you're seeing that affect the way you're looking at potential ESOP deals? You kind of talked about this a little bit earlier, but. So, um, I think if you cascade out to any business, you know, the first step, if they're coming in, if they have outstanding credit, right, outstanding loans is how are they being impacted? So here are a couple of examples as food for thought. Well, you know, if you have a, you know, 50 unit. Quick service restaurant, you know, maybe in Central Florida, that's going to be tough, right? I think it's going to be probably an impossibility for that firm to project the because they just don't know. And so doing the feasibility study, doing the evaluation, figuring out how much money you're going to lend, it's it's it's just going to be all over the place. Then there's the other end of the spectrum. Maybe you are a PPE manufacturer, so you make like face masks and all that stuff, and you can't get enough people in, like the business is going crazy. That's a good problem to have, um but probably figuring out a evaluation can be tough, but it can be done. So you really as a bank, you want to establish how is the company being impacted, and then there's probably the people that are in the middle that are surviving, people are able to work remotely, and they've seen no drop off in the business stable. So that's probably, that's really how you deal with any loan request. And then as you get into the. It's just really, really important because there's some regulatory things, so it really needs to be done correctly, as you mentioned earlier, you get a feasibility study and and you do some other, other things um and uh you want to take care of the employees, but I, I think really establishing how the company is going to perform in the future, um. Is your number one goal and then we touched on it briefly. We are typically not every time, every loan request is unique. It really is. But we're probably just simply looking at any kind of loan request with a little bit less leverage. So if you were going to buy a building. We still may do 80% loan value, but maybe we might be looking for a little more down on an ESOP. It's the same scenario. So we were going to use this leverage ratio of 2 times that. So maybe we try to get in a little bit less at 1.5, so there's either there's more equity. The translation, Phillip is, as you know. The seller would hold back more paper, so that's probably. How we get there. It sounds simple, um, but that's one of the things that's great about an ESOP is we don't feel like it's a zero-sum game, you know, so I'm sure you've had some experience where the seller just holds back a little bit more. Yeah, and that's, and I think that's, that's a great point, and I think that's going to be, that was probably a question on people's minds like, OK, well, now what do I do? I have a gap of, of financing, um, and, and it really isn't as big of an issue because some deals that I do are 100% seller financed and And because, because the owner was like, I, I'm fine holding it. It's my company and, and so that really doesn't create a major problem, but it's really good to understand that the, the pulse and what's happening in, in the, the financing of it from a banker standpoint. So, so going into the next thing real quick and we're, we're gonna kind of finish is the idea between um ESOP company and a non-ESOP company and the pros and cons from a banker's perspective. What would you, how would you describe that when you, and again, you have the, the benefit of being uh you know, understanding ESOPs. So what, what would you say in general to the audience related to, to pros and cons for ESOPs versus non-ESOPs? There's been a fairly robust research done that EAP companies perform better in a downturn. And as I mentioned earlier, banks, the only thing that can happen is negative, right? Somebody's not able to pay us. They're never going to pay us a higher interest rate. So and we're getting ready to go into a downturn. I'm not an economist, but I think the signs are there. So that's, that's #1. Number 2, when we're financing um acquisition or a change of ownership, and let's let's kind of imagine that it's a non-ESOP transaction, so maybe it's a private equity firm or maybe it's a leveraged by management buyout, um. There's often sort of this zero-sum game where if the price gets lower, somebody feels like they're they're at a disadvantage or if they have to put a few more of the seller note they're at a disadvantage with with an ESOP. collegial is probably not the right word, but I think everybody feels really good about the transaction. The sellers getting liquidity, the employees are getting ownership, and you're able to modify the risk profile because the parties sort of have one main goal when you're working with the buyer and seller, the only thing they have in common is somebody's trying to buy the firm and And somebody's trying to sell it, but other than that, I'm not sure that they're everything is aligned with the ESOP. I think they're a lot more closely aligned. That's my thought. I'd be interested to hear what you think. That's a great, that's a great point. I think that as much as you look at an arm's length transaction and protect independence in the in the buyer seller category, um, there definitely isn't, you know, this, everybody's on the same team, but there is a sense for everybody at the end of the day. wants this to be a successful transaction. We, we all want it to be, I'd say, I'd use the word sustainable, a sustainable ESOP that benefits the employees. Um, and a lot of that work that we do at the front end is to, is to make sure the owner's mindset is in the right place. So, the owner's mindset is like, I want to get the most money out of this transaction and I really don't care as much about the future of the company with the employees. Then I'm going to say to them, not, not anything negative, but that's probably not the best strategy for you to do in ESOP. And so, um, by making sure the expectations are in the right area, I'd say you do have a spirit of this is the right thing to do on both sides, the sell side and the buy side. Um, once that's in place, I feel like there, there is a very successful combination and those companies as ESOPs do as, as Joseph alluded to, do outperform other companies because the right All the, the equation works and the right elements are there, and it's, and it's a powerful thing. And that's what it gets me honestly so excited about doing this up work cause it's, you, when you see that work, and you see people, everybody wins at the end, um, then it's, it's a pretty cool thing to be part of. So, um, so that, that would be how I answer. With that, I'd say, you know, my final comments today would be, first off, just thank you so much. I, You know, go through the steps that Joseph went through, I think are very helpful. Um, and you might want to relisten to this because it was just really helpful to see the clear perspective that, that, um, you know, a banker would have in underwriting it. Um, so with that, Joseph, any final comments from you? Yeah, I would say I think ESOPs. There's a lot of news out there and people think that they're complicated. They're while they're not simple, there's a lot of people like Philip out there that can help demystify. There's a lot of misconceptions, so I think it should often I've seen ESOPs be seen as like a last resort. That should never be the case. If you own a business. And you're talking to your advisors, your lawyer, your accountant, hopefully your banker, whomever, ESOP should be an ownership transition, that that should be not necessarily the number one choice, but it, it should be at the front of the discussion, not the end. I think as you're hopefully finding out today, they're they're easier than you think. There there is a market for banks to finance them or you can finance them yourself, but it's not as difficult as the journey to an ESO is. You are going up the hill, but it's not insurmountable. Awesome. Again, thank you for your time today, Joseph, and the insight that you brought from a lender's perspective. Um, as we close, I just want to remind you, if you like the podcast, please subscribe and share it with a friend. And uh uh have a great day and we look forward to joining you, uh have you join us next time. Thank you so much.