EP27 - Discussion with Darren Gleeman MBO Ventures from New York - "ESOPs and capitalism"

Welcome everyone. This is the ESOP guy, and we are on a journey to an ESOP. Really appreciate you checking out our podcast today. I wanted to, uh, thank you for, for joining. If you are new to the podcast, I wanted to say welcome. If you have an interest in this podcast, let me explain it. It is a resource that we've put together that provides really just some good information on what employee stock ownership plans are all about. And we've done, this is our set season 2, so we've done many episodes. You can find all the episodes on journey to an ESOP.com. So today, we are going to have the privilege of, of, of really going into a topic I, I think it's going to be quite interesting. And we're going to talk about ESOPs as a capitalistic tool. And to do that, we're going to discuss that with Darren Gleeman, who's a partner at MBO Ventures. And just wanted to say thank you so much for joining us today um on the podcast, Aaron. Oh, absolutely, it's a pleasure to be here. Great. So, so let's get started. So really, um, I, I wanted to start with this question for you, like, you know, really your background is very interesting and if you could give us kind of like a little snapshot of that and then just transition, like, how did you get into the, into the ESOP world? OK, and first of all, by the way, like you're the ESOP guy, in my world, I'm the ESOP guy. People always think, oh, the ESOP guy. I guess just in the world that we're in, there's not many people doing ESOPs. So whoever is doing ESOP is the ESOP guy. I like how you have that in the actual podcast thing. And I, and I copyrighted it, by the way, just recently got my copyright, but it's, you know, because I figured why not. Yeah, why not? I mean that's fantastic. I don't know you could copyright that. Was there a copyright trademark? I think it's a trademark. I don't know. I got my patent attorney to do it and it wasn't very expensive, but so you, so let's just go and kind of what you're doing. So you have a background in um on Wall Street. High frequency trading, yes, right. So, uh, yeah, I'll I'll explain to my background. So uh back in uh in 2000, I was working at a company and myself and two of the guys came up with a uh pattern in the. like an honest to goodness, real pattern, not something where you know you see these books where, oh, the moving average, short-term moving average which high, whatever it is, it's a real pattern, meaning you can literally make money on it if you know the pattern um that day you literally make money on it. Um, so we started trading this pattern. And we have to trade maybe uh you know, 4567 stocks at a time, which is not that much stocks. So I had an idea, but what if we can go out and trade all 7000 stocks and have the computer trade for you. Great idea. Uh, went to the boss and the boss is like, No, I get it, love the idea, but there's just too much risk for this to, to take place. Um, so we left the company and went to a much smaller company, and the much smaller company said, yeah, we'll allow you to use our broker's license. You could be a customer of ours, we're not hiring you, you'll be a customer of ours and we're not backing you, but we'll allow you to do it. You get a programmer they'll work with our programmer. So we said, great. Uh, turns out the best decision we ever made that they were not backing us because that forced us to use our own money. And so we uh we launched our company there three partners. We hired a programmer, worked with their team, and I guess that November, right, a couple of months after 9/11, uh, we launched and uh when we launched, it did, uh, extremely well once you debugged. Pretty quickly, um, to the tune of it was making a lot of money every single day, no losses ever, meaning you have losses trading on say thousands of trades a day, you're losing, but overall every single day you're not making, you're not losing any money, you are literally a casino. Well, what we didn't realize is that this pattern would generate tons of data, and the tons of data enables us to see more patterns, like a lot more patterns, and so we started trading those patterns. We need to hire more programmers, we started to need to hire more quantitative analysts to really go through the data and so those individual patterns and programs, strategies created more data and that's how we. Started to growing and we grew pretty rapidly. Um, it was an exciting time. uh, we needed speed because you're now competitors are coming in, you need a lot of speed and that created a race to get the fastest computers, um, and, uh, again, we, we grew rapidly and by 2018. Doing over 1.5% of the entire US market every single day, um, which is a, uh, it's a crazy amount of stock, um, and it's a crazy amount of stress, uh, because you're putting your life on the line every day hundredfold because you're allowed to borrow a lot of money to actually trade intraday. Um, at that point, uh, we were able to exit from the company and they did OK. And so I'm like, what's my next move? My next move is gonna be like everyone else, so private equity. But I realized pretty quickly that I didn't want to go into private equity because number one, I know when you go into private equity, you know, what you got to do is you, you're buying up a bunch of companies and you got to fire a lot of people. I didn't want to have to do that. It wasn't part of my nature, and we had already done that before. I knew what it was like, um, and then I found out about ESOPs. And here was Eesops was something that was phenomenal. Much better in my point of view than a private equity and you're doing something not only for yourselves but you're truly helping out uh the employees, the workers, and they made a ton of money and you can also make a lot of money. So that's how I got into that world. Yeah, I think the idea that what you're, you know, you meet all these different people with different backgrounds. I think yours is very unique and transitioning from that type of environment. Which I think, you know, in general, it's about making money. To ESOPs where I think it's more for me, at least, it's more of a holistic like there's a lot more parts and pieces to it. Obviously, there's, there is a financial aspect of this for the selling shareholder, for the advisors and all that, but there's, there's a bigger picture to it. And so I think it's kind of interesting and your skill set coming into this. Um, and you've been doing ESOP work for the last 2 years or 3 years? Yeah, um, I guess it's been about 2, 2.5 years that I've been involved. Um, I am the, uh, independent merchant bank for a much larger ESOP investment bank, and what I do is I go out and I try to find private companies and explain to them how ESOPs work, and if they are amenable to doing an ESOP, they. Structure kind of structure CSG partners will structure up and um there are times when I will also invest into the company and uh that's really what I'm looking for is to try to invest in these companies that are structured. So give us an example like what's the typical size of a transaction that makes sense for you guys with what how you're what, what you're putting together and what you're trying to accomplish. Yeah, so for us, the smallest possible uh ESOP that makes sense, it would be a floor of $2.5 million in net income or you know, what we call EIA, um, and 20 employees, and that would be the the really the floor. Our sweet spot is more uh. $5 million to $25 million and that's really what we're looking for and you know there is no limit in terms of how we'll go. Like I said, the floor is about 2.5, which is in our world it's a little low. Sure, absolutely. And what and what kind of specifically because a lot of our listeners are brand new to the ESOP world. So what, what are the what's the value proposition you guys are putting on the table for someone when they're looking at me with, with understanding what ESOPs are, but also just saying what, what do you guys do that really adds value? With an EAP, number one, if you do a comparison, an ESOP is just another way for you as an owner to sell your company, right, or you sell a piece of your company. So you can sell your company to a strategic uh buyer, right, that's like a competitor, um. Or you can sell it to a private equity firm. Those are usually the two methodologies. Well, the third methodology, which no one really knows about is selling it to your employees via the ESOP. And when you go through, um, head to head for each company, you realize that the ESOP is much better, for instance. Just to take a very easy example, easy numbers, uh, let's just say you have a $20 million manufacturing firm making $20 million a year, um, and it's valued at $100 million right, multiple of 5 times your $100 million. Well, when you sell to a private equity firm or strategic, you got to pay your capital gains tax, right? You can't get around that. Um, and capital gains tax right now is about 30% on average throughout the country. It's gonna go up to average about 40%. That's gonna happen very soon. Which means for a $100 million dollar company, you gotta pay $40 million in capital gains tax. That's huge and it's crazy, but that's just the way it is. Well, when you sell your company to your employees, either the ESO $400 million that $40 million capital gains tax is deferred, and if you structure correctly, it's deferred forever. So that is a huge advantage that a business owner just does not know exists. Well, it does exist and it's called ESO. Second thing, when you go out and you sell your company to a private equity firm, what are they gonna do? Private equity firms, they're gonna lever up the company. So in this example, right, it's $100 million they're gonna put $20 million down. They're going to uh take, get a loan for $60 million and they're going to have the owner do a $20 million. earn out that equals $100 million. Well, um, in earnout, by the way, for your listeners, that means that you don't get paid right away. That means as long as the company reaches certain milestones, you then as the owner will get paid, and that's definitely not a guarantee you're gonna get that earnout payment. And ESOP is structured similarly, but it's all debt, OK, there's no equity involved, there's no earnout. Well, OK, if it's all debt, why would someone want to do that? Grandma, why would I want to do that and why would the uh owner one debt? Well, number one, the debt that you have for an ESOP is subsidized by the government. And what does that mean? That means that Remember we said this example is $100 million right? When you take out a $100 million loan with an EA, right, you get to deduct the interest, but you also get to deduct the entire $100 million which is huge, right? There's no other place you can actually do that, deduct the entire purchase price of the company. So that's a huge subsidy. So. The way it works with an ESOP is let's say ESOP, you go out and you borrow the $100 million you go out and you borrow $60 million from the bank. So you have $60 million from the bank, and then you as the owner would take a $40 million for the seller note, which is an IOU from the company to the owner. Well, you as the owner, why would you want to do that? Why would you not want the money right up front? You might, um, but there's an advantage to taking this what's called that IOU, the amount of return you're gonna get for that. The way we structure these deals, I'm again this is like a more of a no deal, but the way we structure it is you get the $60 million upfront from the bank, which you're not going to be paying capital gains tax on that, and the $40 million that you're getting as an IOU you get paid that and let's say year 34 or 5 you get paid that back. What we're gonna get in return for that is an interest rate. Now the interest that you should be getting should be about uh 13, 14%. That's what you should be getting, you as the owner should be getting on that money. Well, that's kind of harsh to lend a company 13, 14%. So we say this, instead of taking 13, 14%, you're gonna get 3% on your money. That's very doable. Well, you're supposed to get 13%, so what about the additional 10% per year that you're supposed to get? In lieu of that, what you're gonna get is you're gonna get the right to buy back a chunk of your company in the future at a predetermined low price. Right? And so that right is called a warrant, and a predetermined price is called a strike price. So that means that in the future, you will always have the right to buy back, let's say 20% or 30% of your company at a very low price, which is a huge second bite of the second bite the apple in the future. So when you put all this together, right, day one, you get $60 million not paying capital gains tax. Well, Your private equity deal, day one, if they give you, let's say $80 million on day one, well, you got to pay 40% of that, which means that you have 60% you're actually getting, that's $48 million on day one that you get from a private equity firm. With the ESOP, you get $60 million. In this example, you get 60 million. Great. And then about 4 years later you start getting paid down that uh you start getting paid back your IOU, that's selling number. So let's say that's year 4, you start getting paid back year 5, year 6, now you're whole at $100 million and you're not paying capital gains tax on it. It's a huge advantage, and now the company, the last thing which we didn't tell you, is that the company, if you sell 100% of that company to an ESOP, the company runs completely tax-free. Zero federal tax, 0 state tax. It's a huge advantage paying no tax. This is why banks are willing to loan that $60 million at the beginning, right? They would not be willing to loan that if they didn't have this specific advantage, knowing that you can actually be a tax-free entity. It's huge it's a it's a huge advantage as you walk through it. Um, you make a lot more money with an ESO as opposed to private equity. Cool. I think that's a good overview like a benefits of an ESOP. Let's let's jump into the topic, um, on ESOP as a capitalistic tool and, and I've talked a lot about in different podcasts. Like the idea of, of, of wealth inequality in the country and different things like that. So when we think about capitalism itself, how do you, how do you bridge into that from what we were just talking about as far as capitalism in America and how ESOP's really an advantage for capitalism. Yeah, because, you know, if you think about it with what we do right now in uh um with the East side, most people like look at it is like, OK, this is great for the workers, the workers deserve it. I, I don't know, you know, I think it's great for the, I know it's great for the workers, but the, the pitch of that they deserve it. That's not really capitalism. That's, that's, that goes more into communism that they deserve it, they should be doing what they want. The way we set this up is that the owners are incentivized significantly to give this amazing gift to the employees. Now, an employee by themselves, an average employee they're making 15 $25.30 dollars an hour, is extremely, extremely difficult to um To build up any type of real net worth in your life because you're living month to month, right? I mean, you're you're not making any money. So you, you do not have enough money to send your kids to college. You do not have enough money um if some horrible event happens some type of an accident, you do not have that money. It's just not there. And ESOP enables these workers to have a significantly greater net worth that they were just working on their own, which is working as workers. Now, again, back to the incentives. Without the incentives of a new sign. It wouldn't happen. Now, I see the business owners all the time. And the business owners I'm talking to, they love the idea of helping their owners, of helping their employees, they love it. But they're not doing it to help their employees. A small subset of people are helping us specifically, are doing it specifically to help their employees, a very small subset, it wouldn't be big enough. Most people are doing it because, wow, this is not a bad idea. This is actually a phenomenal idea, and I can also do what's phenomenal for my employees. That's almost like the cherry on top. Right, because, because they're getting the tax benefits that financially motivates them to jump into something that you're saying probably they wouldn't do if they didn't have that. They wouldn't, they, they definitely wouldn't do it. So Russell Long, who actually was one to put this together in the, uh, the Senate back in the 1970s, right? Um, and he was a people guy. He was for the people, really wanted to help the worker. He was very much for the work. Well, he realized that there's no way that you can be able to help the worker. Without actually giving very large incentives to know, because why would I sell my company to the workers for a lower price, no incentives than for debt when I can go and sell it out to a private equity firm for more money and just walk away from it. So he realized that. So he, along with um Kelso, your listeners probably know who he is, uh, came up with this plan. And the plan is a phenomenal plan. It's based on capitalism. The reason why I'm talking about it as capitalism versus socialism. Because when this plan was initially created, right, and uh Russell Long spoke to this guy Louis Kelso, Louis Kelso was all about capitalism for the workers, especially at that time when you start coming up with this in 19. In the 1950s, there was a whole world of communists versus capitalists. How can we fight? How can we go back? How can we, how can we actually compete? How can they compete with us? And so Lewis tells us like, look, the only way we can compete is if we can get these workers, right, to actually become owners. And so that is how that's the beginning of this. So when it was actually started, it was started. Understanding that we need to help the workers, in order to help the workers, we have to also incentivize the owners. Right. Yeah. Now that's a great point. Um, when I, when I thought about this topic a little bit, I thought about the idea of, you know, what, you know, the main, the main area of, of what are your resources in a company, right? And so you have labor and, and, you know, primarily capital. And so what is, what does an ESOP do really ultimately, it frees up capital. It frees up capital by um the taxes that you're not paying anymore as a business. So we just think about the business itself, what that new capital does is it launches the business in a, in a competitive advantage, um, in the marketplace that really there is no other way to get there in our current economic and tax-based system. And so, um, now if I pay my acquisition debt down with subsidized money from the government, And that's gone. Now I'm, I've got all this new capital then to, to invest and grow. So I think that a combination of what happens to the ownership thinking with the employees, plus the resources of more capital um do now turn up the ability for that company to grow and create more jobs and to become more competitive in the, not just in their geographic marketplace, but also as they expand, you know, internationally. So those are, those are kind of thoughts on You know, partly the way that this, I think the ESOP really is a tool for capitalism. Yeah, incentives work. And that's the bottom line is that the incentives work. The owners of companies that do ESOPs do much better than private equity. That's the bottom line. Yeah, that's, that's a good thing to, I mean, Darren, most people don't think that way, honestly. As soon as I, you know, you talk to clients you're like, yeah, I'm gonna sell private equity. I'm gonna get this big multiple. And they're comparing, they're, they're immediately assuming something there. So I, I do think the, the mindset of the American business person right now is probably that they're going to make more money on private equity. I don't know if you agree with that or not, but I, I think it's worse than that. I think the mindset is, I'm gonna go private equity, that's the most amount of money. They don't even know. That ESOPs exist. You know what I just mentioned to your listeners, most owners don't know that. They don't know that the capital gains is going to be deferred and be deferred forever. They don't know that the company can run tax-free. They don't know that they're gonna have a second bite of the apple and get a piece of the company back in the future. They don't know any of these things. And when you put all of it together and you line it up, you're making a lot more money than private equity. No, my biggest issue in this, uh, in this arena is education. Explaining to not only it's not a business owner. If I speak to, and I do, I speak to accountants and I speak to lawyers um every day. And I always hear the same thing as like, oh yeah, I know about ESOPs. OK, um, and then, and it's always hard for me to explain to them, OK, and then I start talking to them about, well, you know that obviously you know that when you sell to an ESOP, you know, you're not gonna be paying, paying your capital gains tax if you're right. Oh yeah, I kind of forgot that. Oh yeah, and, you know, and you know that if you sell 100%, you're not paying any federal or state tax. Oh, I didn't know that. And the government subsidizes the debt. Oh, I didn't know, yeah, so no one really knows it. They always hear like a certain bad case. Oh, I've heard that ESOPs, you know, I, I think they're not as great. I heard there's issues with ESOPs. OK, like what issues? Well, it's putting a lot of debt on the company is not good. Well, here's the alternative. Two companies, both in one company, your alternative is you sell to private equity or you sell to your ESO. When you sell to private equity, well, what's gonna happen? You're gonna put debt on the books. When you sell to an ESOP you can put down the books, the difference is that an ESOP actually is half as likely to go under than a private equity firm because of all the subsidies, which people don't know that. Everyone always likes to talk about the, um, like kind of like the negatives and you know, it's just people just need to be re-educated. Well, people are afraid of what they don't understand. Number one, I think you do have this, you know, and people, what they don't understand, they gravitate towards the negatives because then they don't have to deal with it. Um, what I guess from if you are, you know, in a perfect world, you know, I, this is why we're doing the podcast, to be honest with you. I mean, we want to, we want to educate people on the value of an ESOP, why it's applicable, at least considering it as an option. Um, what are your ideas as far as the country in terms of educating people about ESOPs, because there's, there's a lot more. To that, I think that has to come into play for, for this to become a stronger viable option for for people to really understand it. Oh, for, for the country. Well, right now in the country, you have uh Jared Bernstein, which is uh President Biden's economic advisor, um, and Jared is a huge proponent of ESOPs. He put a study out um in 2020 that actually talked about ESOPs, and what he said is the biggest problem about ESOPs, the biggest problem. Awareness. People don't know that it exists. They don't know what it is. That was the number one problem. So yeah, it would be great if uh federally they could do something. I know on a state by state basis, they have these various organizations that are trying to help. Um, getting it out there is just, is very difficult. Yeah. I mean, I, I think that, you know, I would just say, you know, and, and this is just discussion. I mean, who knows what will happen in the next 5 to 10 years, but um. I don't know if there's any academic classes in college related to the ESOP. I mean, there's, there's probably certain institutions that do, um, teach it professionally. I mean, the CPA designation, I don't know how has much in terms of the specialty related to what ESOPs are, but I do think, and I agree with you that the professionals I talked to, whether they be other accounting firms, um, bankers, attorneys, um, the advisors themselves need an awareness of what ESOPs are. Um, because they're only hurting their clients at the end of the day by at least by not really taking it that seriously. Oh they have no, they have literally no idea, you know, it's interesting the whole our community, our East Side community. Is it it's different from a different cloth. For some reason, our ESOP community, when they go out and they explain ESOPs, it's much different than private equity. So private equity came to my company, right, and they wanted to buy my company, and so they came in, they said, Look, your company could be worth X, you know, um, it's gonna be great. We're gonna be able to expand it and do all these great things for it. And it was interesting, you know, by the 3rd, 4th meeting and you get to a letter of intent, you start getting more down into the details, but they got you excited, right? And the investment banking firm that you're working with, same thing when it picks you up. And I love it, and they, and it gets you excited in that industry, the private equity and investment banking industry, huge $1 trillion in dry powder and private equity. The ESOP community, we come in and say, oh, you want to do an ESOP? Well, I don't know if you're going to make as much money, but it's really good for the employees, and you know you could have problems, you know, they don't, they don't ever tell you what is good. You automatically go into the problems of the EA. There's problems everything, right, of course, right. Yeah, I think sometimes we, the ESOP community can then kind of steers towards like, these are the, these are the roadblocks or, you know, you've got ESOP governance and you've got, you know, you know, controlling interest issues related to company and who's going to be in charge of whatever, right, right. There's, there's always problems. Um, from your perspective, there are real problems with ESOPs that have happened, um, you know, and I would say. Because of the Department of Labor. I mean, the difference between if I sell my company and I'm just being the like devil's advocate here, so I sell my company to the private equity, I don't have to worry about the Department of Labor ever. Because I don't have to do, I'm not doing a retirement account for my employees at that point. I'm just getting my money and I'm leaving. Um, so, so, so from that perspective, how would you address the concerns that a company would have related to, hey, this is a regulated transaction. If it gets blown, if it blows up, and there are, there are ESA deals that have blown up, and we, we all know that, um. You know, I'm, I'm, I'm talking from the perspective of a, of a company business owner thinking, you know, I don't want to deal with that. Um, how would you address those kind of thoughts or questions or concerns? Oh, absolutely. Um. Every company that I've spoken to and every, and I know a lot of companies in my world, we all deal with litigation all the time. You're dealing with a regulator. You're always being regulated no matter what. And so the larger you are, and the more money you make, the more issues you're gonna have. That's just bottom line. If you have a tiny little company, you'll have tiny little problems. But if you're gonna be a company, if you're a company with like 10 million, 20 million give that. You have issues, you think the end all be all is going public. Right, which you can, I love the idea that you stop going public. That's totally feasible feasible, and it's great, but the moment you go public, the moment you decide to go public, you're going to be hit with 8 lawsuits by the way, right away, you know, so that's just the way it is. So that you're being regulated by the Department of Labor. OK, that's just what it is. If you want, if you want. Play a bigger space, you're going to be regulated. And so that's the Department of Labor regulating you. OK, so is it more of a flame out, a blow out? No, there's so many more flame outs of private equity. Private equity, you're dealing with the GPs and your limited partners, and you're dealing with the SEC. So when you get bought out by an SEC by a private equity, you're now Regulated by the SEC because the private equity firm is unless it's a tiny private equity firm, so now you're right in the middle of it equity firm. Right, they're regulated, they regulated by the SEC. You come in and do a purchase, or was it the correct purchase, they can come in and do anything they want to do. But now the regulation is SEC again, unless it's a smaller company or if it's a family office. Right. So everything is being regulated. Right. Now that's how I would look at it. So yeah, there are issues with the Department of Labor, and I think the amount of audit is what's like 1 or 2% of the companies now are audited by the DOL. Um, so what I would always say to them is, look, you need to prepare, assume you're going to be audited by the DUL. You got to prepare for this because that's just the way it is. That's how, that's, that's how we handle that. You got to be prepared from day one. Yeah, well, it goes back to the side. I mean you need to be prepared for. Um, the potential and you need to be educated as the selling shareholder about your options and who and, and your advisors that you're choosing, and I've done this before, talked about this issue as well, you need to, you need to do your due diligence on your advisors because you're putting, you know, most selling shareholders maybe listening to this podcast or maybe they've gone to a conference, but, but they're going to step into their first transaction on this in ESOP really without being, they're not going to call themselves an expert. So there there is an absolute reliance at that point on the advice that they're getting from people and 1000%, you want to go to the best possible advisor that you can, and it's just like anything else, you know, if you're a manufacturing firm, and you're manufacturing pipes, and you're manufacturing really good pipes, um, and your competitors crappy pipes, you know what? The end user wants to go to the good pipes, the guy that has the really great pipes. Same thing with an ESO. It's not an easy transaction, and you make one mistake, and that can cost you a lot of money cause you problems down the road. That's why with us, we've done over 325 ESOP transactions over the past 20 years, representing way over $20 billion enterprise value. We've structured over 7. billion dollars in the South loans. We know what we're doing. So a lot of shops out there, they'll do, for instance, much smaller deals and great, they focus on the smaller deals and they're amazing at the smaller deals. We just don't focus on that because we know where we fit. Yeah, you know where your sweet spot. So, so what is the average deal size that you guys get into? Like, I know we talked about the small floor, but what would you say your average would be? The, the average I would say, uh, let's say not the average because you got some big ones that can bring up the average let's say the median, the median size would be uh probably. $75 to 100 million dollars size. Yeah. And I think, you know, the stratosphere, when you think about it, and I've thought about this a lot too over the last several years, the stratosphere of of deal sizes is huge, like that kind of size deal. The bigger ones, right? There's even bigger ones than that, of course. Um, I've heard of billion dollar ESOP deals. Um, we're talking about the structure of a company. When you get into the the the topic that we have right now is just talking about. Um, the pathway of not feeling like you're going to jump into something that's super risky, right? And you're, and you're really not doing that because you feel good about the advisors that you've chosen, um, to steer you the right way. And of course, preparing yourself if you did have a DOL issue or whatever. Um, but the complexity of of a company that's a billion dollar valuation or a $100 million dollar valuation or a $10 million valuation, what you find behind the curtain is you, you probably are going to have a different management structure, sophistication at that higher level. versus the the lower level. Um, and so I think that's, you know, in respect to those sophisticated levels, you know, like you said, there, it's a small ESO deals probably not going to even have an issue at all, you know, because it's just not going to be that complex. The higher you go, it's gonna be more complex and you're gonna be dealing with a lot more um uh issues that might relate to, hey, you know, I really do need to protect myself. So I think part of this whole idea is, is understanding where you fit in that equation in terms of um the size of, of the deal with the sophisticated, you know, leadership group that you have internally and then how do you choose your external advisors is, is gonna be a key element of that. Um, but I, I want to make this point, and I think the biggest point here is that I don't believe the Department of Labor should rule your life and make you not choose the ESOP because you're, you're concerned about having a DOL audit. And that's, and that's I think the bottom line. Yeah, and I, I agree 100%. And the, the new, um, Department of Labor secretary Marty Walsh, I think he's very friendly, um, with labor. Um, he wants what's best for, um, best for the workers. Um, he understands, you know, how the process works, and I think he's gonna be extremely good for, um. For ESOPs, you know, he has to just figure it out, but I think it's, uh, I think it's gonna be a huge renaissance in what's going on with the Department of Labor. And there's definitely issues in the past and hopefully, you know, we'll uh we're beyond that. Yeah, I mean, we're talking about the government's role and, and sometimes the issues are just because they, they get um caught up with things. IRS does it all the time too. And, and so you just need to be prepared for, for that as an aspect. And, and I don't want to understate it like it's, hey, it's not a big deal, but I do want to make sure that it's not, it's, it's clear that it's definitely not something that you should, should um look at as an obstacle and not, not really an obstacle, but look at something as not, um, makes your ESOP deal not really uh a certainty that this is definitely something that everybody works through in terms of the normalcy of an ESOP deal. Yeah, it's just it's just part of, it's just part of doing business and that's it you have that out there, but you, when you're a larger company and you have a lot of issues that you're always dealing with. And the bigger you bigger you get, like you said, becomes more complex. We did a deal, um, it was a $500 million ESOP for a 1.2 to $1.3 billion dollar company, and it was extremely complex, a lot of issues, you know, because it's a larger company, um, and we ended up uh structuring that we did a high yield bond offering for that. It was phenomenal. It's great. Everyone did well. Employees now own a nice chunk of the company. The owners get a check for $500 million and not paying any capital gains tax. It just really is, it's huge. But yeah, did they have complex structures? Yes. And did we figure it out? Yes. Do we have other advisors working with us? Yes, it worked out well, right? You did it the right way, right? I mean that. That's the whole point of it all. One thing I'll mention on the Department of Labor, most companies already have a 401k account or 401k set up. They're already dealing with the Department of Labor. And, and there's there's definitely a little more fiduciary relationship with the Department of Labor as an ESOP than a 401k, but there's still fiduciary with a 401k. So, you know, most companies are already dealing with that. And so I kind of just wanted to throw that out there as part of the Um, understanding the whole idea of a 40 exactly. So you're already in it and, and you, you know, maybe not even thinking about it. So, um, so, so let me kind of because we, as we start to close out this, let me ask you kind of, what advice would you have for people that are thinking about ESOPs in terms of the next, you know, couple of years and, and just, you know, in terms of offering them, you know, what you think they should be thinking about. Um, well, if they're already thinking about an ESOP, uh, then they've already crossed the threshold because now they are aware of it. And I believe that once you're already thinking about an ESOP, there's a very large likelihood that you're gonna do it. So I would say, you know, speak to some advisors, speak to a couple of advisors, and keep yourself educated. Sure. And you know, and do not do it, do not try to do it by yourself, even if you're a smaller company, um. You know, you're trying to save money. What they'll do is they'll go to um just like like have one lawyer, like 11 shop, shop, and they kind of know what it is. I'll figure it out. You just don't do that. You know, go to people like you know what you're doing is doing it and you know, really, you know, get, get the advice. Very important. Yeah, I, I totally agree with that and I think sometimes people want to use their, their own advisors and we encourage them to be part of the transaction. In the capacity that they can serve. Like, hey, review the documents from a legal perspective. Um, the ESOP attorney is going to prepare the documents, your ESOP, you know, sell site advisor is gonna help, you know, put the whole thing together, you know, but, but everybody needs to play their respective role so that you can have a really good feeling at the end of the day that you've done it the right way. So I think that's, those are good, good thoughts. Um, I saw you a business owner very quickly. I saw a business owner that didn't need some. And it was a decent sized Aesop and she's talking to me and Telling me she did it herself, you know, with, uh, you know, a smaller firm and her accountant. I'm like, OK, great, you know, and then I started talking about the, uh, you know, warrants in the deal. And she's like, what's a warrant? Oh man, yeah, and we started talking about it and she had no idea no idea. Yeah. You know, she just had no clue and it's just because she didn't get. Yeah, no, I mean, and she could have missed something huge, right, in the process of putting it together. And yeah, and so that's why the podcast is important. I like the Association. I like the NCEO. I like these organizations. I think they're doing, they're doing a great job. Um, I think there needs to be, and there's more state organizations that we talked about. There needs to be more and more of that, um, within the professional realm of, of those different associations so that it's, it's definitely creating more awareness. Um, Yeah, I found that with the with the organizations. My issue, another issue with the organization. My issue is that By the time you get to the organizations you've already done it, you're now already in ESOP. As opposed to the 99% of the other companies that are not part of the organization and not looking at it, you know, how do we go out and educate them? I'm, I'm trying, you know, with my, my LinkedIn, I'm trying to change my LinkedIn. I'm not talking to because we're we're all playing our part just trying to educate people. Darren's LinkedIn is like the best ever. So if you, if you do, you know, get on LinkedIn, check out Darren's stuff. He's always got some really cool ESOP um promotions and different things like that. Um, I always say to people that do ESOPs, tell your friends about it, you know, most people, most business people will listen to their business associates, like if you're doing like in a visage group or a CEO group, roundtables, they're going to listen to those people more than anybody else. So I just say if you, if you know much about ESOPs, just share it with a friend because I think that's Um, gonna take, it's gonna have a lot more impact. So, yeah, awesome. So, so I will just kind of close out with this saying thank you so much, Darren, for your time today. I think it was really fun to talk through um what you're doing and um what's going on in the ESO world, why this is a great tool, and um I appreciate your time. I appreciate it also. Thank you. Thank you very much. Great. So for those that are, are continuing to check out the podcast, uh, thank you so much for, for listening today. Um, we will see you on this, the next step on our journey to an ESOP.