EP36 - The Lost Boys - The "Cost" of an ESOP transaction

Hey, everyone, this is the ESOP guy. Thank you so much for joining us today. We are on a journey to an ESOP. One of the things I was talking about. Earlier, a few podcast episodes ago was my birthday. I had a birthday and I asked for what I wanted to get for my birthday was one of those one wheels, because we live at the beach and I always see these people cruising down the beach with their one wheels and I was like, wow, that would be really cool. So anyway, happy birthday to me. I got one for my wife and it was really cool. Um, I haven't totally wiped out yet. Um, I did wipe out a little bit, but, um, so I've got that that's really a lot of fun. And that made me start thinking about, because those things are kind of expensive about cost. And so today, we're going to get into a little bit of ESOP cost 101. I appreciate you guys being in this journey with me and it's been, like I said, a lot of, um, a lot of fun. We've covered a lot of ground. Today, um, for those that are new to the podcast, I just want to say welcome to the podcast and if you have an interest really in any of the other episodes. You can go to our website at journey to an ESOP.com. And uh really what I like about this podcast is that you can go in and look at specific topics that you might want to have more of an interest in, maybe um just learning more about ESOP transaction or how um the warrants work or how a SAR would work. A lot of those have been specifically outlined so that you are equipped with information so that you can really continue on your journey to an ESOP. So, Thank you again for, for, for checking us out today. And so, if you are contemplating an exit plan or a succession plan or thinking about, you know, how that might work with an employee stock ownership plan, you are definitely in the right place. So check this out. Michael and Sam have just moved to Santa Carla, California. They're about to discover its secret. Notice anything unusual about Santa Carla yet? No, it's a pretty cool place. If you're a Martian or a vampire. strange And your brother Sammy, help me. Stay back, stay back. What's happening to me, star? Get yourself a good sharp steak. Drive it right through. You're a vampire, Michael. My own brother, a damn blood sucking vampire. Well, you eat till mom finds out, brother. When a vampire buys it, it's never a pretty sight. Yeah. All right, I just had to play that. That's the whole trailer of the Lost Boys. So, the title of this episode today is The Lost Boys. What does an ESOP cost? All right, so let me just start off with this as I start, as I finish the intro for this episode. Um, the Lost Boys is, um, a movie all about vampires and ultimately, Michael, um, who we'll talk about in a second, pays the ultimate cost for, um for basically falling into a bad group of kids. So anyway, Um, transactionally speaking, what we want to talk about today really is the cost of an ESOP. And I will just say this for, for everybody that's listening. And this podcast is, let me just say this episode itself is so difficult. And I'm just throwing myself out there in this podcast too, by the way, because I think people don't want to talk about cost of ESOPs, um, because there's, there's a lot going on when it comes to that. And I would say that Geographically, within regions, it's definitely gonna matter in terms of, of where you are transacting. I think that the deal size, um, and complexity is gonna matter. So, what I've, I've been waiting to do this episode because I think it's gonna be, it's number one, it's one of the major questions that I always get asked. And I think it's, it's probably one of the most important questions you can ask. Of course, you want to make sure that Whatever you're spending, and whoever you're, you're, or however you're spinning it, you wanna make sure you're spending it with the right people. So that's, that's always gonna be an important um fact for anybody doing it. So, um, But what we want to do today is we want to cover the itemized as much as we can, the itemized expenses of an ESO transaction. So this is not after the transaction, this is just before and getting the transaction done. And as I said, I, I've been waiting and gathering data on this for some time and it, I can say it's still not perfect. And I'm Just gonna say that, you know, of course, this can vary and we're in 2021. We're also at the end of the year, and I'll tell you that matters too, because everybody's super busy and the busier professionals get, the, you know, hey, the more expensive they can get as well. So, um, definitely not gonna be um something that I would say it has, this podcast has a, is, is really has the ability to give you some, some basic ideas of the cost. Um, but hopefully we cover enough information to where you. can ask good questions of the people you're working with and not immediately sign up to something without doing some due diligence. So, so that's a little bit of a long-winded intro, but I wanted to kind of say all those things that I think are important. Um, if you like what you hear, please subscribe, share it with a friend. I have not asked in a while, but I will say, please leave a review if you think that might be helpful. I, I think that there is, um, you know, it's, it's kind of like sometimes just takes time to do a review. So, um, if you think this episode or this podcast in general has been helpful to you, please leave a review. And as I said, the best place that people get this episode or these things anyways is from You referring it over to somebody else, saying, hey, you should probably check this out. All right, so this episode, this or this movie that we're talking about, the Lost Boys. Now, you might, might know by now that I grew up in the 80s because this is totally an 80s movie. Um it has a Halloween feel to it, so I wanted to make this seasonally atmospheric as well. So, Um, so you can kind of take that in and understand, hey, I'm, I'm, I'm trying to connect our episode with really good information, but also, you know, also make it a little bit like, hey, what's happening right now and we are in October. And we're gonna be, um, October is interesting because we hit Halloween and then Thanksgiving and then Christmas and then the rest of the year is gone. And so it goes so fast. The movie, The Lost Boys is really one of those, um, I wouldn't say it's the greatest movie in the world ever, um, is at that time, it had some great music, um, so the soundtrack is pretty good. It, the storyline is, is vampire story. So it is, um, this about these two kids that move and they're teenagers, they moved to a town with their mom into a town called Santa Clara. And unfortunately, the town is infested with vampires, and one of the lead vampires is Kiefer, is played by Kiefer Sutherland. And um they get Jason Patrick, who plays this character Michael in the uh in the story, to hang out with them. So, um, he's kind of hanging out with the wrong kids, but realize that they're really the wrong kids, right? And the next thing you know, he becomes a vampire. There's a lot of lessons here in this, in this movie that I chose, and I would say poetically as a parallel to the world of ESOPs because I believe, and this is putting myself out there a little bit, the ESOP world has its own vampires, um, that are willing to take really more than what they really should. So listen carefully as we go through this podcast and see if you are dealing with a vampire or not. Do What is one of the top questions um that people say as we go through the process? So it's, um, hey, you know, not, not, not just what is the cost, but, um, how do, how do the costs work is important. Like, when you think about the cost of any stuff. Understand this. You're not just gonna go in and hey, here's my check, let me go to the closing. There's a whole bunch of stuff that happens between when you conceptualize the fact that you want to go and help your company by doing an ESOP to actually get to the closing table and signing those documents and having everything be, you know, put together. And I want to start off with this because I think it's an, I think this is where some of the whole presentation of the of the structure and transaction of an ESOP gets, gets put together. And what I want to start with is, I'm very sorry. I got a, a little um cold. I had a cold this week and I'm getting better. I mean, I'm way better, much better than I was a couple of days ago. OK, so, um, I want to start off with what it looks like for, from the perspective of what we call an uh what we call an M&A deal. An M&A deal, M&A stands for merger and acquisition deal, and it typically is referred to a deal where you sell your company to a strategic buyer, could be a private equity group, could be um a venture capitalist, could be a competitor. But the M&A deal has very specific steps in order to, uh, you know, go through the process. And so, so I want to go through that because I think the biggest thing with ESOPs and the cost of ESOPs is because they're often referred to as, hey, this is just like an M&A deal. And I'm gonna, as we go through this, I'm gonna talk a little bit about like, as we go through the M&A deal, then we're going to get into the ESOP transaction because I, I want to compare the two and understand that I think that that is used a little bit more, more from a deceptive realm than it should be because I, I disagree. I think an ESOP transaction um has to be an arm's length transaction. We know that from the Department of Labor. But it differs a lot from an M&A deal. So, but let's go through an M&A deal for a second. First off, when you want to sell your company, you're like, I, I, maybe, maybe you already have a bunch of people calling you, you don't have to do this. But say some people don't have somebody calling them or maybe they do have a lot of people calling them and they need, they need an advisor. So they go and hey, I'm gonna hire an advisor. Now, typically, these advisors are going to be what we call investment bankers. And their job is to help you sell your company, right? Now, very similar to that, that when we go through an ESOP deal, hey, what's your job as an advisor? It's to help them sell their company, right? So on the very, very face of that, that definitely is the same thing. Now, what, what an adviser investment banker does in their process for a straight up M&A deal is that they They put together a pitch book and we call this also a confidential information memo for their client. Now, we also do this on ESOPs, right? But it's different in the sense that they're going to go out to a marketplace. Now, investment bankers, one of the things that they bring to the table in value is, is a buyer group. They connect your business with a potential buyer group. So, clearly and inherently, there's value there. The buyer group within the um ESOP community is the trustee. And going to ESOP conferences or working through, um, you know, the like, You know, at ESOP attorneys and everybody knows ESOP trustees. It's not like uh an investment banker has these buyers or strategic sale that nobody really knew who they were because they put it together. So see, there's going to be a fundamental difference here as we start thinking about the differences between the M&A and the ESAP transaction. Now On the M&A transaction, on behalf of the company, the advisor is gonna gather as many offers as they can get for the client. OK. So, if you're really doing a great job as an investment banker for your client and selling their business, and the business itself is very marketable, OK, maybe, maybe those are 22 truths that have to be combined. They go out and they, hey, I got 10 offers in your company. Let's take the top 3, throw out the rest. Then we do a best and final bid and everybody, you know, you just keep pumping that price up. What's happening, what's happening there is that the business itself has this certain market value. But the investment banking people are, are bringing that value to the highest possible level. Um, it's like this. If I could, if I could sell my house this way, I would get all the buyers in New York, and California to come and look at my house and walk through it maybe virtually and be like, hey, I'm gonna offer this, and then I say, no, I've got 15 other offers and all that. And so you get that, you're gonna get a bigger number, right? And that, and that's what investment bankers do for an M&A deal. So they go through and they help their client determine what's the best offer. So they'll advise them on that. And sometimes that offer might be a huge multiple, but there's a big earnout, maybe it's a lower multiple with less of an earnout. And so there's all these different options that you, that you get into. Then they come in um to, you know, they officially come in with a letter of intent that gets executed by the Um, the seller, and that, of course, gets reviewed by an attorney and everybody else, of course, before you sign it. But primarily that legal letter, letter of intent is going to give the buyer who got selected this right of exclusivity, which just means, hey, the, the now the deal is off, it's there, we're now under contract and we're gonna start our process of doing due diligence. And so, um as we go through that process of due diligence now, um, of course, the advisor is helping, but now you have a buyeright team coming in just similar as we go through the ESOP transaction. Now, again, the difference is, That the investment banking firm for an EAP transaction, instead of going out to a big strategic buyer group and increasing the price by doing that, they go to a trustee group and we interview the trustees, we select a trustee, but every trustee is bound by the Department of Labor. To pay only the fair market value of the company. And so, herein lies the factual difference between an M&A transaction and an ESOP transaction. That the Department of Labor has issued a process agreement that the trustee is going to follow, not only including, hey, this is how we want you to hire your valuation firm, but this is the, this is how we want the transaction protocol to go so that you as the trustee, don't pay more than fair market value for the company. On an M&A transaction. What's going on? They're gonna pay more than they, they, we want them to pay more in fair market value. If you're going to sell your company to a strategic buyer, and they're going to go in and, and take that company and maybe change it all around and do whatever they want with it, they can fire everybody they want, they can do whatever they want with it. It's their company. They're gonna pay a big premium for that. But a financial buyer is paying a financial valuation and a financial fair market value. So, so when I, when I say that, I think it's really important that you understand the difference that you're not getting an investment banking firm to come in and give you a highest bid trustee who's, well, we put all the trustees together and they, this is the one that's going to pay the most for it. And that doesn't work that way. Um. If it does, let's just point out the, the, uh, point of caution to you as selling shareholder. Guess what? The investment banking firm on an ESOC transaction doesn't have any they have no liability. From a fiduciary standpoint, they just put the deal together. And the more they get, the more they get you, the more they get paid. So, um, is it possible that they're gonna put together a deal where there's a trustee that they know that would pay higher multiple? Maybe. But what, what I'm gonna say to you is this, if you're doing an ESOP deal, um, the best thing that you can do in your mind is have an expectation of getting fair market value. Because That's what's right because the Department of Labor wants it that way, because the IRS wants it that way, because it, it's a retirement account and it's, it's, that is what the number is. So if you want to sell your business at a strategic value, um, don't, don't even consider an ESOP, to be honest with you. Do an M&A transaction and go through the whole process that we're going, we're talking about right now. Um, and there's absolutely nothing wrong with it. The problem I'm, I'm, I'm identifying here is that, um, I think the cost of an ESOP is radically high because it's, it's because the idea behind an M&A transaction is being used in the process. And it makes people confused, to be honest with you. So working through the M&A, so then the, um, they select the best deal, they do the due diligence here they come, you know, with the, the buyer's group comes in with their big um audit firm and they go through the due diligence and they, they look at every little nuance. Now that's true with um an ESOP transaction for the most part, you're gonna have, you're gonna have this inspection period where people are looking at, Um, your books and records and they're asking questions and they're on that side from an ESOP transaction, what's happening is they are doing their job to help the trustee to determine what the business is really worth. There's a presentation that's going to happen where they come in and, and they go to the, the business and they ask the questions that they need to ask. Um, so all of this is very, very, I'd say parallel at this point. I'd say that in my experience with M&A transactions, Um, the thoroughness of that is, is a lot, you know, a lot deeper, and, um, as many things as they put on the LOI and the LOI process for an M&A deal is should be very brief because a lot of the meat and the work is done through due diligence and then the documentation preparation. So So we're going through the process of doing the M&A um and this, and the seller selling, OK, and he's like, OK, everything's going great, they get through the due diligence. Um, so then they start the the process of actually doing the legal work. And so the legal work's going to include the um buyer's council, and then you as the seller are going to have your counsel. And I would say you're also gonna have your CPA firm, um, you know, from a tax planning standpoint. So, very similar, um, except though there's probably gonna be a lot more redlining an M&A document than there is in a ESOP transaction. There's gonna be a little bit of that back and forth in the ESOP transaction, but there's, there's a lot more going on with the, with an M&A transaction only because There's a lot of reps and warranties, the different things that, that are a lot more serious in nature because the buyer is, or the seller is not gonna typically stick around. And in an ESOP transaction, the seller is usually taking back a note. And so it's, it's a lot, it's probably just a little bit simpler. So once the documents are completed, And agreed upon, they're executed then by both parties and then the closing and the money is exchanged, um, and then they either buy the assets or the stock. And in the case of an ESOP, of course, you're buying the stock of the company. So all of that, you know, as we, as we walk through it, the M&A transaction is, and is, it sounds complex, it's, and it sounds expensive and it is, and it is, and that's what it takes to do it. Now the invest an investment banker is going to get paid in that transaction based on A percentage of the total. So at closing. Um, whether you've got an earn out or not, whatever the number, the total number is, the investment maker is going to walk away with some percentage of the deal. And that's very customary, and I'm just gonna say they absolutely earn every penny during a strategic sale of a company. They bring a buyer group in, they, they, um, it's the way that they presented the company, all of these things matter in, in the end, um, because they've got a buyer who can pay more than fair market value. And so they should get paid more for that. Um, when you get down to it, the selling shareholders really, um, paying not just for the help to go through the process, but to present the company in the best possible light, um, and find the buyers which are through the investment bankers network. Um, and so, you know, as long as you know that that's what you're getting into, um, that totally makes sense. In in in a minute and in a in a M&A transaction, there's a sense of what I would call success partners, like your, your guys are partners, you with the investment banking firm, it's like, they're gonna, you're going to win, they're going to win, right? And, and that makes sense, right? Because you've just um found the best market you, you found the best buyer in the marketplace, you know, maybe it was a needle in a haystack. I don't know, but you, you share in the rewards of that. Um, the cost, the other fixed costs or the cost of paying legal and tax advisors, um, these are going to definitely depend on the complexity of the transaction, um, and the size of the deal, but generally speaking, um, those should be pretty straightforward in terms of that. So a lot of what we're talking about here is, is understanding that the selling, the selling advisor who's helping the client sell. In an M&A transaction is doing a lot from a company standpoint. Some companies are more marketable than others, so there's certainly some work that has to be done with companies that are less marketable. Um, they're doing a lot to earn their fee. Now we compare that to an ESOP deal. Um, I was thinking about the scene in the movie Lost Boys where Kiefer Sutherland. I, um, whose name is David in the movie, one of, he's one of the head vampires. He asked Jason Patrick to eat the, this rice and, um, so Jason Patrick who's playing Michael, is like, yeah, OK, um, so he eats the rice and then he goes, Michael, hey, what are you eating? You're eating maggots. And then Michael looks down and he's like, what? And maggots roll out of this Chinese box and he's like, oh, gross. I told you this is kind of like our Halloween edition. So, anyway. Um, so it's like that. I think when we make an ESOP transaction look too much like a real M&A deal, we're deceiving people into believing that something is, um, we're deceiving them into believing something that's not really true. And that's kind of where I think that's really the theme of this is from a cost standpoint, when people ask about the cost of the transaction. Um, the bulk of the costs could be primarily in the investment banking side. And I, I'm firmly saying that I think for the most part, for most ESOP transactions, I don't think that that is necessary. And I think part of it is because there's not as many people doing transactions, um, the way that that we do them. And so, and this is really not at all, let me just say this very clearly, I'm not trying to like tell you how I'm doing. Well what I'm doing, I'm using this to really help you understand the cost of a transaction and asking, hopefully, asking the right questions. So, as we go into this, let me, let me just stop and say, let me make a couple of assumptions so you, um, so I can be completely clear. Um, first off, When we think about this, I am. Assuming that the transaction was we go through it and we go through the itemized cost is a leveraged ESOP transaction, which simply just means that a transaction trustee has to be hired to make an offer or to negotiate a purchase price, then there's going to be debt related to that purchase price from senior debt and seller notes to pay for the actual cost. So that's the first assumption. Second assumption is, Is that I'm giving, I'm kind of pointing out, I'm giving my experience on transaction with with, with ESOP transactions from an actual cost, and I'm comparing with data that I've researched in the marketplace. So as I kind of said at the beginning of this whole thing, um, this is, this is for me, a, a very important podcast because it's just pull, I'm pulling together a lot of that research over the last couple of years. And I'm, I'm trying to offer that as, as resources to you to consider, knowing that um there probably is a lot of variability to that. And, you know, again, I think people just want a good idea of, of things, how they cost, or what they cost. So, So again, the purpose of this portion of the podcast is to, uh, is to validate the ESOP deal and help to move from um what you're, what you're really looking to, to understand better. Um, so when we start off with an ESOP transaction, You start off with, hey, I got the concept to the plan itself. I need, I don't know if I necessarily want to do an ESOP transaction yet. So the very first place that you're, you're gonna start is with some advisor that will help you determine whether or not the, the process of going through an ESOP is even feasible. And that word feasibility gets thrown around a lot, a lot. And so is it a feasibility study? Is it a feasibility model? What's it, what's all included in the feasibility? And ultimately, let me just say that I think the most important elements of a feasibility include, and I, and I will breaking this down into two pieces, this is the way I do it, but have to include, what is your company going to transact for, you know, what's the real valuation when you get down to it, the way that um the trustee and their evaluation firm are going to look at it. So that's going to be the first piece of information. The second piece of information is, is what does it look like from the company standpoint? To buy and buy the stock and pay the debt obligation. You know, if it, if it's an S corp, what's the tax benefits of the S corp and how does that work from a cash flow standpoint? And then, what does it look like for the seller to sell that stock? And what is it, what's their cash impact as well, the net cash impact after taxes. And then thirdly, really with the feasibility is what, how does that really work with the IRS codes, specifically 404, 415 and 409P? And is there, is it a good fit with relative to the payroll of the company? And is it a good fit relative to um disqualified persons test and highly compensated people. So, so those are, those are all going to be, and I'm not going to go into too much detail on that because it's just framing it out like that would be the first step, right? Now, I've heard people charging, advisors charging to step into this, you know, something like 500 sometimes to do that first step. Um. You know, so I'm gonna just basically tell you what I charge just so you people understand that, you know, the differences between the two. And, but I, I've heard it, I've heard it be less than 50,000. So it's just, it really is, you know, it's just the first step and I, and I'm gonna tell you whatever the charges are there, if even if it's free, hey, we're just gonna do this free analysis for you, no big deal. Um, what are the total costs, you know, when you get down to it. So let's just assume right now that that's, we're in the first step of the ESOP plan. Um, what I would charge for that portion is, um, based on the size of the transactions, somewhere around 5500 to $6500 for that first valuation model. And then, and I break the feasibility down into two pieces because if the valuation doesn't work, then the other stuff is not gonna work either, right? So let's just get that out of the way. And then the next piece, if we do feasibility would be something between 5500 and 6500. And so, based on those, based on that breakdown, Um, you're anywhere from 11,000 to, um, $13,000 at the front end. So that's, so that's the, that's the very first step and it builds all those things I just talked about. So, um, I think that some, I've heard people do that for around the same amount, depending on, on what region you're in and where you're doing business. Um, so, so kind of just as we, as we start throwing out itemized cost, um, one of the key questions that I would ask at this point is, what is the obligation. That you are making. If say somebody said, hey, I'll do that first step and I won't charge you anything for it. We do ESOP deals all the time. We got, here's our big, you know, ESOP, um, You know, logo, Tombstone, where this is all the transactions we did last year and all that, and, and they're valid. I mean, they, they did the deal, so I'm not saying they're not. But ask the question, if you go forward with them, are you obligated to work with them throughout the whole process? And I think that's a really important question because costs are one thing, so you can get it for free, but if you're obligated to do all of it with them, then I'm gonna say, wow, OK, well, maybe you need to know what else they're gonna charge you, right? So, so after you understand if you have this obligation with them, then you need to also understand obviously what the costs are going to be with the rest of the, of the transactions. So, Now this in their presentation sometimes doesn't get addressed upfront, and this is your job to ask those questions. Um, so going through that, um, as we, as we go, you know, through that whole process from you finish feasibility and you, now you're working through all the different, um, phases of an ESOP transaction. One of the next phases are gonna be um sourcing financing because If you want to have a liquidity event on your ESOP deal, then you're gonna want to have um a bank to finance it. Um, I had done a podcast recently, um, and we were asking a little bit about some complexity with deals, like what makes it more complex and One thing that can make a deal more complex is if you have a capital stack or you have more than one source of source of financing. So you have maybe a seller note, you have senior debt, maybe you have mezzanine financing. So organizing all that and sourcing all that can be, um, can be pretty expensive. And so back to the investment bankers, what they're doing typically is they're gonna take You know, go find financing for the for the transaction, and then they'll charge some type of percentage based on the financing they just got placed above and beyond the normal transaction fee that they're gonna have to do the ESOP transaction. So this could make a transaction really expensive. And I think that it's a matter of, you know, I, I don't have any specific cost to that because then we just have to kind of throw in um deal size and then figure out how much they would charge for that. Um. I will just tell you that, ask the question and, and find out, is it worth it? If you don't have a bank that will finance it, and they're the only ones that will do it, then I guess that's your best choice. Um, the way I do my financing costs as I build it into the budget. So, when I leave the first phase, um, which is the valuation and the feasibility, then the next part of it all becomes a budgeted deal. So I'll budget a cost for the rest of the deal depending on The size of the transaction, if I'm going to help get the, the client financing, but I don't take a percentage of the total fee. Um, I just have a fixed budget. So sometimes my whole fee would be say around 50,000 after I've, I've done the first two steps. And so as a comparative, I've just asked the question like what would it cost them to get, get you financing? Um, how much, how much is that gonna cost in terms of the total financing they're placing? Now, what I want to say about financing is this. Many businesses have spent their whole business career negotiating the bank, negotiating with the bank to get a line of credit, or negotiating with the bank to, to buy some real estate, right? Bank financing for an ESOP transaction isn't that much different. It's still underwriting. Then you're still working with the bank to determine the best terms, you know, and, and the key of it is, is to say, you know, OK, maybe I, maybe I or other investment or advisors, EA advisors have Some sources of financing that will help. And so maybe there's, there's some specifics there that that have and bring value to you. But for the most part, the process of, of asking for a term sheet, working through the trend, working through financing terms is not foreign to most business owners. And that's why I think it's, it's not like some Um, mystical thing that happens and what some, I got some lender to show up, you know, they're gonna make an underwriting decision based on how they see the deal and you're gonna want to get more than one bank, obviously to look at it just because you want to have some options. And now, if you get into some higher level capital stack stuff, I mean, that's different when you're really gonna have some. Real complex, you know, types of structures. But, so I'm not speaking to that. I am speaking to the, to more of what I would say is the middle market type of ESOP deal that's out there. So, and I think that's the bulk of our audience anyway, so hopefully that's helpful. All right, so we're, um, we're gonna now just break down these pieces and say, all right, if I, I take the sell side advisor off the table for a second, which I've been, that's all I've been talking about right now for so, so far. So we're, we're this far, we're this deep into the process. Now we're ready to hire a trust, a transaction trustee and their independent financial advisor and the attorney for our company to do the ESOP documents. And an attorney to the trustee. OK. So, let me just give you on a normal deal that I've seen from a data standpoint. Transaction trustees are gonna range from $25,000. To $50,000. And on average, their independent financial advisors are gonna range from, say, $15,000 on a low to $50,000. Attorney to the company is gonna range from $30,000 to $65,000. An attorney to the trustee is gonna range from 10,000 to $30,000. Now, again, they could be a little bit lower, a little bit higher than this, but this is just a good, what I think is a good range for people to think about. So if that lower range were true, we would have something around an $80,000 base of costs to do any sub transaction, OK? Now, so what that means is, and that's the low range. So, so please hear me now, we're in the middle of the end of the year and trustees are busy and everything, and that those fees are gonna go up. Um, but if it was $80,000 low, and then you put, say my fee on top of it, um, we're about, let's see, 821 140 $150 for a normal ESOP deal, $150,000. If you go On the higher range of all the numbers I just told you, 50 and, you know, then you're at about a 195 base fee plus, again, my fee would be, you're about 250 roughly, um, in, in total fees. So, now that's the way I structure it. Now, if you put an investment banker in the mix, that, that low $80,000 fee, you know, with, with all those parties plus the investment banking fee, you're gonna be anywhere from another You know, $300,000 to 4000 or $500,000 because that, that's the, that's the way they're structuring a transaction fee. Um. So, you know, in this, and I, and I made a lot of notes before I made this man before I created this episode because I want to make sure everybody understands, this is not. Um, to do anything but to really understand that the cost of an ESOP definitely factually will vary and it is much higher if you're going to use an investment banking firm and do it as an M&A like as a classical M&A transaction. We're still gonna have an arm's length transaction. You're still gonna go through once you've hired that team and you're gonna have a budget, you're still gonna go through all the steps of due diligence. You're gonna go through all the steps of negotiating a term sheet with the, with the trustee and a counteroffer and those things go back and forth, doing plan design, creating the ESOP documents with a summary plan description, a trust document. Um, um, an ESOP plan document and all of the, all of the documentation to close the ESOP deal. So all of that is still the same in a normal ESOP transaction. It's just, as I pointed out, I think the differences between why it can be so costly, um, in terms of, of making it more complex than it really needs to be as an M&A transaction or as a classical M&A transaction. So, I really hope that helps. Uh my advice at this at the end here is build your budget during the phase of the trustee trustee interview. So, um, ask the questions about cost early on in the process before you hire your sales site advisor. Re-evaluate what you're doing based on the decisions you've made, um, relative to the ESOP deal and, and go back to, to the principle here is this, that I believe is, is really true. You built your business, you created the value. And you absolutely can share that in a transaction with anybody you want as your advisor if you feel comfortable with them. So whatever you end up doing it, you know, you make the decision. I just want you to make an educated business decision as you go through that process. So, hopefully this helps you. Um, I don't think this will be my last ESOP episode or podcast episode on cost. Um, I think it's a very interesting topic. It's a very difficult one. So hopefully, um, I haven't made anybody mad out there, but at the same time, I think this is just what I've seen. Um, this is my opinion. Um, so, you know, hopefully that helps you. So, so with all of that, you know, thank you guys for listening to the podcast today. If you think it's helpful, please share it with a friend and keep on keeping on, and we'll see you next time on this journey.