EP34 - Interview with John Burgess - debut of FLCEO new non-profit in Florida to help ESOPs

Welcome back. Thanks for tuning in. I am the ESOP guy and today we are continuing on this journey to an ESOP. So for those that are just tuning in today, I wanted to say thank you and welcome. Um, our podcast has been going for a little while now since February, and we have all of our episodes on our website at journey to an ESOP.com. And for those that have been continuing today will be a very interesting day. We are going to discuss the Florida Center for Employee Ownership. This is a nonprofit that was established to provide information and resources to Florida businesses that are transitioning or really thinking about transitioning to the possibility of an employee ownership model. So to do that today, I am going to be interviewing Florida-based ESOP attorney John Burgess. John is practicing with Shoemaker out of the Tampa, Florida area and he's been there for 3 years. He is responsible, among other things, to establish in terms of his role to establish the Florida CEO as really an employee benefit attorney and his practice in this area has been going on since 2006. He's focused on ESOPs and really, and among other things, setting up plans, general documentation, plan documents, purchase and sale agreements, as well as distribution policies. So with that, I just wanted to welcome John to our podcast today and just say, we really appreciate all the work that you're doing to create this nonprofit Florida Center of Employee ownership. John, could you just kind of give us an overview maybe of your background and your story and how you really got here to wanting to help out and build this and build this nonprofit? Oh thanks. Thanks for having me and you know, like about half the people who live down here in Florida. I grew up in Ohio, always wanted to move down here since we got married down here, my wife and I did back 17 years ago, but I started out actually in accounting. I was working for a little accounting firm called Arthur Anderson back before I went to law school. I decided to go to law school after a few years doing doing the auditing. And I came out as sort of a tax generalist, so I did a lot of corporate work, a lot of partnerships, you know, individual tax, and then a little bit of employee benefits and executive compensation on the side and started to look to expand my horizons. I wasn't sure that I wanted to go into into benefits practice full time, but at that point in time, this was 2006, there were just a ton of opportunities out there. So I wound up moving to DC in 2006. started working for Cypher Shaw, which is a big labor and employment firm with you know, a huge benefits practice. We, you know, that firm has, you know, roughly 45, 50 employee benefits attorneys nationwide, which is a big practice. And but still had that, you know, sort of Florida type of desire to come down here. And, you know, then spring of 2007 was just sort of casually looking around as I had been for a while. And shoemaker popped up on the radar of my recruit recruiter, and it turned out they were looking for someone to handle benefits for their Florida offices. We're between our campus Sarasota offices we're the biggest law firm on the Gulf Coast of Florida, but we didn't have any play benefits during this time. So everything just kind of matched up and was looking, you know, looking to, you know, not only take over some of the work that has been going up to some of our other offices but helping to build something down here and employee ownership is a big part of that. It's been something that I've I've been trying to focus on as much as I can since really 2006 when I got to Sciar and I've just, you know, been working here to expand our presence in The CEO is a big part of it. I think it's a need that we'll talk a little bit more about how there's a great opportunity for employee ownership in our state, and this is something that I think is going to help. Excellent. Well, great, great, great to have you today. I wanted to kind of start off with just the idea of what is the Florida Center of Employee Ownership all about? What are, why, why are we creating it? What, what is it all about? What is it going to do? Sure, well, the state employee ownership center type type of model is nothing new. It's actually been going on for quite a few decades. Ohio, I think, is actually the first one. Ohio and Vermont are definitely the first two, and I know Ohio is been going on for 30 some odd years and like. Like the NCEO and most of the other state agencies, they have an annual conference, and that was actually where I really had my first exposure to ethos was attending the Ohio Center's annual conference back in this was probably 2004, 2005, I think it was. And the keynote speaker there was, I think it was Jim Parker who was running Southwest Airlines at the time, and he talked a lot about, you know, how the airline was struggling to survive back in its early days when it was just flying around Texas and you know, how the employees needed to come up with a Move to essentially keep keep the keep the airline afloat and they did that. And so that really intrigued me. And you know, that that exposure helped, you know, helped me go along my, you know, path towards working with ESOPs and trying to help get them out there. But the the thing is with with state centers, one of the things that the NCEO tells you is that in states where they have centers established, the concentration of EO companies is much greater than it is in states where they're not. So having this You know, Having state senators pretty much in all 50 states now is a goal that the NCEO and a new entity called Employee Ownership Expansion Network called EOX, which was just formed about a year and a half ago to help make this happen. It, it's really something where you've seen in the states where you have states. Out there it works and there's a more local presence to help develop and educate and get the resources out to people who, you know, either they're they're definitely looking at employee ownership or they're just thinking about it and it's a good place for them to turn so that when they do start to start to think about it, they can be put in touch with people who know what they're doing, they have the expertise, they they they understand how things work and what the process is like and they can, you know, get there and Help them understand what's going on and also put them in touch with other ops. Um, one of the things that we, we've always noticed is that the people who tell us the stories of how ESOPs really work and what it's like to be an EO company, the people who tell us best stories are the people who are in. We've seen that just constantly. And so having having that uh that sort of resource. Available to people is going to be a really big help, I think, and it's going to be a really big jumping off point for people who are looking to expand employee ownership. That's great. So I know, I think for us, our practice for ESOPs goes back into 1985, so our CPA firm's been working in ESOPs for a very long time in Florida. And um I know that for us dealing with ESOPs here, there has definitely been a lack of resources. I was just in Ohio last week and working on an ESOP deal up there and, and there really are a lot more local lenders, um, banks that actually understand ESOPs in the Ohio market. And so it kind of just told me that, you know, as you talk about Ohio having this center for, for 30 years, um, I, I don't see that in the local market in Florida as, as much. Of course, there's lenders that understand ESOPs, but there's just not that as many. These were smaller banks too, so that just told me they're, um, they're specializing as a smaller bank in this type of lending. So, um, I do think there's definitely a need in Florida for something like this. So as we start going into a deeper kind of discussion on the Florida Center of Employee Ownership, um, what sort of specific information and resources other than I know existing ESOP companies being part of this is going to be a big, a big factor that you would say would be attractive for, for folks to get involved in and, and check out the Florida Center of Employee Ownership more? Well, we're in the process of building the website out right now, so it's still in a very, you know, sort of basic state, but it's, it's gonna be built out a lot more, so we'll put more information up there. But one of the, the um things that we do have on the website and the website is www.fLCO.org. But we do have a cap here called Talk to an Expert, and we're building out that website so that if you want to talk to somebody about, you know, things like, you know, obviously in my area, legal services, we'll have people there you can refer to appraisals is of course a big thing with the appraisers there who you can talk to and and get some. Ideas as far as what what the process involved with that trustees, you need obviously need a trustee for an ESOP, especially when you're doing an initial transaction, you've got to have somebody who's independent in order to make things look much better for the DOL and also, you know, third party administration and other types of things, you know, obviously accounting and uh feasibility studies are also going to be important, so. The great thing about our our website is that not everybody can just get up on there. We as a board we've been working through essentially what the referral policy where you have to demonstrate and show that you've actually been doing work and you understand what you're doing in order to be put up on here so it's. You know, doing an ESOP is not like doing a 401k plan. I say this all the time because with a 401k plan, you can just go to somebody like Vanguard or Merrill Lynch or or a bank like that, and they're good at doing that, but it's a pretty simple process. There's no, you know, sort of feasibility study involved. You don't have to worry about things like liability or any of the other things that come along with. your company tied up in a plan, so you really want to make sure that you're working with people who understand the risks, understand, you know, how you need to do things, and also importantly how people who understand when an EAP may not be the right answer for you. Just to give you an example, I had a meeting last Friday with a company up in Tampa, you know, a great group of people, they're, you know, they're, they're looking to transition to their ownership of the company to their employees. But they've only got 9 employees in the company and so I had to tell them, hey, you know, look, I love where where your heads are at here, but with 9 people and etop just really is not going to work from a feasibility standpoint. So at that point I started talking about some other ideas with them, but It's also good to have people who are going to be honest with you and say, hey, look, you know, we, we like the fact that you're thinking about this, but the ESOP itself may not be right, but we're at least gonna think about maybe some other ideas to help you get, get to the end of the road that you're looking to go down. Yeah, and I think that partly is to help folks not spend a bunch of money on something that's not going to be a solution for them. Um, and there definitely is a need for good information and, and quality, um, service providers to help in that, in that regard. So as we go, as we go into this a little, a little deeper, um, I know that we're kind of in this place in terms of establishing the organization and Um, can you talk a little bit about the current state of the organization and, and the, and the building process and what, what our goals are? Sure, well, the organization, um, I've been working on this for a couple of years we've been looking at this, went to the NCEO conference back in this was 2018 and at that point in time, the NCEO was kind of in charge of trying to get these state centers off the ground and I I've been working with someone at NTO specifically and then everything just kind of stopped and I, you know, I wrote him just to kind of follow up and say, well, we've got some big developments coming, um, you know, if I essentially if I tell you I'd have to kill you, you know, they're not quite that. But uh but they said just stay tuned and and there'll be something new and exciting coming down the road. And what that turned out to be was the establishment of EOX which I mentioned before, it's called the employee ownership expansion Network. And this is an organization that is specifically geared towards planning these new state centers in um in new states where we don't have state centers. So uh that organization is run by a guy named Steve Dorkin. He's a former GPA with uh um. I can't remember who he worked for, but he's been, you know, in, in the business for decades and so he's leading up this charge and, and sort of guiding us and and helping us get to a place where we can get the state center started. Uh, what, what they found is that Pennsylvania started up their employee ownership center about I think 4 years ago now, and they've got a really good idea, a really good process, a really good playbook in place, and so what we're trying to do is replicate that playbook to other states. And so we're in the process of doing that right now. North Carolina. Probably about a year ahead of us. I know Georgia and Minnesota are both in the process as well as Tennessee, so we've got this thing kind of flourishing and going in other states, and Steve is juggling all those, but eventually we get handed off to on a more local level to, you know, to help out to really make these things independent. But for the time being, you know, what we're looking at is. You know, we've got our organization set up. We're officially established as a nonprofit corporation, uh, born ironically enough on Saint Patrick's Day, the one Saint Patrick's Day when all the bars were closing. And uh, and so we've got a board of directors myself, Jay Van Hyde, who's an attorney up in Orlando, I think it's been on your podcast. And Will Stewart from PCE, but ultimately the goal is to transition the board off into people who are with ESOP companies, you know, either as active employees and participants in ESOP right now, or people who are retired. So eventually we're going to roll off the board. They want to move those people in. And then obviously the other thing we need to do is fundraising because ultimately. We do want to hire at least a part-time executive director to go around and go through the state and talk to people and be somebody who is able to do that on at least part-time or full-time basis, you know, with with us, we've obviously got our day jobs and we've got plenty of other things to do, but we want to have a director in place to help, you know, be able to meet with companies. Do presentations out to business groups and those types of things. Even with cities and counties. That's one area where Pennsylvania have a lot of stuff is going and meeting and having their executive director meet with Philadelphia City Council and Pittsburgh City Council. I know they've told their stories about how they go and they meet with these governmental organizations. And they, they really describe all the benefits that I can bring to the community, even though it's obviously not the city or the county setting up the ESOP, the benefits from it, you know, flow out to all sorts of people throughout the community. So that's our next step is getting a part-time executive director in place and, you know, we're looking to do fundraising, you know, from people who are in the ESOP community and EA company. And so that's really what we're focused on is that and transitioning the board over to uh to people who are um active and retired employees. It's great. So we're making great progress. Now, John had a great idea and I wanted, we're gonna use this episode to kind of disclose that and talk about the um his idea to, to create their, their first podcast um for the Florida Center of Employee Ownership. And so, John, can you talk a little bit about the upcoming podcast? Sure, you know, one of the things that we're looking to do is is get content out there. And so one of my ideas, and actually my wife probably deserves a lot of credit for this because she's been pushing me to do this for quite a while, was setting up a podcast. And so Phil, you know, heard about this idea. He said that that's a great idea. Luckily he actually knows what he's doing as opposed to me. He's got all the technical stuff down. But you know what we're going to do is, is. I do a podcast probably about twice a month. We're still working out on some of the details, working on, you know, getting a good catchy name for it, but you know, really what we're going to be looking at doing is talking to people in EO companies and letting them tell their stories, you know, as I said before, the people who do the The job of communicating how EAPs really work and what it's like are people in those companies and so we're going to be reaching out to people who we work with and you know, other people in the ESA community both here in Florida and elsewhere to help them help them communicate as people and and. You know, there are a lot of great stories out there, um, everything from, you know, the publicers of the world to smaller, you know, 50 employee places where they put an ESO in place and the places just flourished. So those are really great things to hear. People in ESOP companies are always enthusiastic about telling their stories too. They love to talk about it and so we're going to give them that platform and hopefully. That'll be another catalyst for people to look into employee ownership and think, hey, you know, maybe this is the right thing for me to do and this is the right way for us to transition our business. So going to launch it in August, so like I said, working on a few of those details, but I think it's going to be a great great way to further the mission of the FL CEO to get out there. I'm excited about it. I think that will add, if you're listening and you're like listening to somebody that actually has gone. Through the process of becoming an ESOP, um, it's just gonna be super helpful to tune into that and find out their story, and, and I think that'll be great. I think the other, the other aspects of it are too, there, there are things that just need to be understood better. There's, um, John and I talked about this earlier. There's some new proposed legislation by, I believe Senator Johnson, um, in Washington in terms of new ESOP legislation that would really be Helpful to know about and now it's proposed, it's not yet um been voted on. So, but just knowing these types of things that are coming, so those are some, some ways that Florida Center of Employee Ownership can really get out information and, and really be a promoter of what is to me one of the one of the greatest transitions of businesses can go through is to, is to go through an ESOP practice if our process, if it works. So with that, you know, that's the thing, you know, it doesn't work in every situation, but when it does, it works brilliantly and it's, it's really a great thing, so. That's the whole point of the FL CEO is to help help more of that become reality in Florida, and I, you know, I know you get calls all the time for people who are looking to do it. I've gotten a lot of calls recently as well, so that interest is out there. It's just getting that understanding out to people and helping them know what they're doing here, you know, if it works for them, that's really what our mission is. That's it. And there's, you know, as we both know, talking to companies, you know, for multiple years in this space, there's just a lot of questions and that's why we've done the journey to an ESOP podcast to just try to answer a lot of those questions and make it, um, you know, make it very layman's terms, so it's not just very technical. I think there's a lot of very good information out there, but sometimes it's so, it's so technical. So, um, I'm looking forward to that podcast with John. I think it's gonna be an interesting. Um, endeavor to try to really promote and, and support companies in looking at going employee ownership. So with that, I'm gonna just kind of finally say, you know, with, with where we're going with this, I think the state of Florida has a great opportunity to um To, to grow and expand this area of of expertise and bring new resources to the Florida market. I'm excited to, to to be part of the Florida CEO and just see what happens with um using that as a great resource for uh individuals that are looking for ESOP. So I, uh, John had mentioned the website, but I'll mention it again. Um, if you go to the Florida CEO website, go to Florida FLCEO.org and check out all the information there. And with that, John, do you have any final comments? Tell me, I'm looking forward to doing the podcast and, and like I said, getting the word out. People need to understand these things. They frequently don't understand it as an option, but every time I've done a presentation where we've had business owners talking about their companies and and talking about how ethos have really worked for them, they just blow the room away. And so the more we can get that out there, the better, and we're just looking, looking forward to growing this thing and and. Getting more here in our state, I think it'll be a wonderful thing for us. Excellent. So just with that, I want to say thank you, John, for your time today and for the work that you're doing in the FL CEO. Um, we'll look forward to August and our first launch of the podcast. As we close out, I just want to remind you, if you like the podcast, please subscribe and share it with a friend. Have a great day and we'll look forward to next time.