EP44 - Who is in control of my ESOP - Interview with ESOP trustee - Neil Brozen, Minneapolis, Minnesota

Good day everyone. This is the ESOP guy, and we are continuing on this journey to an ESOP. So this podcast is for those that are thinking they might want to consider an employee stock ownership plan as a strategy in their business, either to help the company grow, either for a succession plan or even an exit plan. If you are new to this podcast, I wanted to say welcome and thank you for joining. If you have an interest in any other episodes, please go to our website at journey to an ESOP.com. One of the things that I have loved about doing this podcast is I get to meet and interview ESOP professionals really from all over the country. And, and I wanna say that politically correct because we're all doing it so safely now because we're doing everything over the phone and um on Zoom meetings and so, but with that, it's been an exciting um education for me as well and not only to learn more, but just to get to meet new people um in this profession and What I'm reminded of is that, you know, the ESOP, the ESOP world is full of professionals, but they're all very cordial, they're all very willing to help and take their time to, um, you know, give us information that we need when we're, we're thinking about this as a strategy. So, so today, what we're gonna do this, this podcast is going to be entitled Who runs an ESOP Company. And we're gonna be answering one of the common questions. I get this question all the time. And I have discussions with clients all the time because the concern that they have is if I sell my company to an ESOP, what is the control look like? What is the governance look like after the fact? And to do that, we're going to have the opportunity to interview Neil Brozen, who's ESOP trustee of Ventura ESOP Services. Neil's background includes being in the ESOP trustee services since 2005, where he worked with two different institutional trustee firms that had national practices. In the summer of 2016, him and his wife started the Ventura firm in order to meet the needs that were created in the gap between very large trustee firms, national institutional trustee firms, and trustee firms that were just really one person. Neil is a licensed CPA in the state of Minnesota. He started his career with the IRS, then worked in the big 8 accounting firms, then went on to work for one of his largest clients, which was a family that owned community banks, and then turned his career towards becoming an ESOP trustee. With that, I wanted to say, uh, Neil, it's an honor to have you on our podcast today and uh thank you for joining me. Oh, thank you, Bill. I'm pleased to participate in your podcast, which I've enjoyed listening to them, and I'm thrilled to be on one of them now. Well, great. Well, so being uh an ESOP trustee, can you kind of give us a, a, a kind of an overview? I gave a little bit of your background, but just kind of an overview of how you got here and, and what Ventura is all about. Yeah, I'm happy to do that though. You know, if I looked at my background, I could not have planned the career that I've had, but it seemed like a lot of things that I've done in the past have given me a background that's I think qualified me to do the work as a trustee. And I started doing the work literally almost by accident in 2005 when I worked for BNC National Bank, and we had a trust department that I was helping to run, even though that wasn't my true background and when when the bank hired someone to truly run and go to the department, um Tom Welch, who was that person. came into my office one day in April of 2005 and asked me to start offering ESO trustee services, which I thought was interesting since I didn't have that background, but Tom knew that you know the CPA I understood financial issues. I had understood valuations. I had done M&A type work before and was very good at business development. And ironically, the bank was a trustee, provided the trustee service for everything but ESOs. And so Tom helped introduce me to some of the ESOP professionals in Minneapolis, which is a hotbed of ESOP professionals in Minnesota is a very strong state in terms of having employee owned companies, and that's where the journey began. It turned out that I loved doing the work. I love being involved with employee owned companies, and that's taking me on a path that has continued ever since 2005. That's awesome. 11 thing that you said, I just wanted to kind of hint to your question or, or really ask the question, you said Minneapolis in Minnesota as a hotbed for ESOPs. And I've noticed in my, um, being out of Florida, um, there are states that are more um ESOP centric, I guess, and there's other states that just don't have as many. Um, can you kind of comment on why you think that is? Sure, I think there is no single reason, but for Minnesota in particular, I think it started after ERISA came into being in 1974 that a number of the Lawyers in town decided that this was a great opportunity to create um ESOPs in terms of talking to their clients and other business owners and really made it a huge part of their practice. And so from Minnesota, I think a lot of that energy started there with a number of attorneys that really said, OK, this is a great opportunity for business owners and we're going to aggressively pursue it. I think that having a strong professional community. Whether that is the CPA firms, the law firms in particular, or having valuation firms, I think that's a key element in terms of why certain states are more uh lean towards ESOPs of strong cultures than other states. I think another factor, and again, I'm not going to say I'm a sociologist, but uh I've heard that some people have said that, you know, with the Scandinavian background. Uh, that, that a lot of Minnesota business owners historically have been, that they really are not looking to sell their business, maximize the dollars that they get, and not care about what happens to their employees and their legacy. And so I think you've seen, we've seen that historically, and I'm not just saying it's Scandinavians, but I think a lot of cultures, you know, they want to have a transition of their business if they're no longer to be involved, that will reward the employees, that will keep the legacy, will keep the business in the community. I think that's a factor. And I think a third element is the nature of the businesses. So, for example, you know, in Nevada, where you have so many businesses that are tied into the hospitality entertainment industry, you know, that may not be a good fit for employee ownership simply because the revenue and profitability may not be I lost you there. Oh, the, the profitability and the Uh, of those businesses in the hospitality and entertainment industries may not be consistent, which is important, I think, for company, especially when the company borrows money to have the ownership transition. Yeah, because the consistency of cash flow is going to be critical. And I think one of the things that you just said, I think it's very important is the professionals really need to be aware and understand ESOPs. And if you get that part of it, the element, I think that's one of the reasons I wanted to do this. podcast is, I think in our own state, we are, there, there are definitely people that get ESOPs, but as attorneys, CPAs, bankers, I think there's a lot that, that still have, you know, a lot of um education to do to, to understand it and be able to uh apply it to solutions for their clients. So with that, that's I think one of the greatest, I'm sorry for interrupting, but that's one of the greatest obstacles in terms of why there aren't more ESOP companies. I mean, there are only 6600 or so, which is an incredibly small number, and I think one of the biggest barriers. have been professionals, attorneys, bankers, CPAs who don't understand how ESOPs work, and actually giving their clients bad information about what's not true if they sell to ESOP. And that's a huge obstacle that has to be overcome. Yeah, I, I agree. So that's what we're doing today, aren't we, Neil? We're gonna help educate the world on it. Um, let's jump into our topic. So we, we talked a little bit at the front end of, of, you know, the idea of I got a client who's thinking about going through an ESOP process. Their concern is who is in control of the company after they sell to an ESOP. Um, can you kind of address, you know, what kind of the over, you know, the concept behind controlling the company, um, and how that really works. In a. I'd be happy to. I mean, let's put it in perspective. If you own the company, you are the sole shareholder. You may be the only board member, you're the CEO. You have absolute control. Now, you may certainly get information and advice from people to help you make decisions, but it's your decision. In an ESOP, number one, you will have typically a board of directors that the trustee in negotiating the purchase of the company on behalf of the trust will negotiate to have at least some minimum number of independent directors. It doesn't have to be a majority of independent directors, but certainly there needs to be some. So for example, if you have A 3-person board, I personally would negotiate to end up with at least 1 independent director. If you have a 5-person board, I would negotiate to have ultimately end up with at least 2 independent directors. So that's a different environment than the business owners used to. Now, that doesn't mean they lose control, but they have to have a different, different attitude in terms of listening to people. And um having those independent directors make perhaps decisions that relates to compensation going forward, or other elements that typically the business owner has totally been in charge of. And now you also add to that mix, the trustee as a shareholder, if the, you know, hopefully the trustee is independent, which is best practice, the trustee is discretionary, and I think the business owner has this fear that, oh my gosh, the Truste could fire me. Well, why would that happen? I understand the fear. But that doesn't happen just because the trustee can do it. And quite frankly, in 15 years of doing this work, I have only until 6 months ago, I would have said I've never removed a board member, but I did um In the past several months, we removed a director who had been the CEO of his family had owned the company, but it was for cause, and the specifics aren't the issue, but he, he was acting outside of the best interest of the company. And so I actually just called him and talked to him about it. He acknowledged that that's what happened and accepted it. But my point is, unless, unless there's a reason to remove. A director, you know, let's say it's the former owner, it's not going to happen. They have to do something that's inappropriate, but it's a real fear, and I understand that. But in terms of, you know, who's in, who's in charge, I mean, let's go back to the basics. Number one, you know, that business owner that we're talking about, let's say the business owner's name is Phil. So Phil, you know, you own the company, you were the sole director, you were the CEO. Great, now you're still the CEO. You still probably are the chairman of the board. You're just not the shareholder. Oh, by the way, you're also the largest creditor because you finance some of the, of the transaction price. Now, as a CEO, you're still running the company, and the board is providing oversight and as one member of the board, then you still have input. And if you look at the role of the trustee, even though the trustee, let's say I'm the trustee, I don't run the company. I don't tell you what to do in managing the business. I don't tell the board what to do. And if myself or any other trustee does that, you should terminate the arrangement because my contract, like I think most trustees, has a provision that you can terminate that trustee relationship with 30 day notice. And again, going back to a fundamental issue, I forgot to mention the board is the The entity that engages the trustee and also can terminate the relationship. So the control is really, I think, no single entity. The CEO is not in control, although he certainly manages day to day. The board has a role, and if they're doing their job, are they in control? No, they're providing oversight and the trustee has very well defined responsibilities, does not and is not truly control the company in that sense. And I, and I, I think that's a very good point. Um, if I go into a little bit deeper, I wanted to, I wanted to mention that when we talk about control versus non-control, um, when a selling shareholder sells a controlling interest, which means that say it's 51% or more of the company. Uh, they're going to have in the evaluation, they're going to get paid for that controlling interest. Um, if they sell a non-controlling interest or a minority interest, then there's going to be a discount for that, and there's going to be a difference in the evaluation. So, um, one of the things, one of the aspects of this is understanding as you sell your ESOP. Some companies go into it and they only do a partial ESOP, and they're not selling a controlling interest. And that's a different environment than a, you know, when you actually sell a controlling interest to the ESOP. So now you have an ESOP partner, um, that's not a controlling partner, um, in that, in that type of atmosphere, Neil, talk a little bit about a partial ESOP that's not a controlling interest in how the, how this governance works. Sure, that's that's a really great question, Phil. Um, if the ESOP is purchasing a minority interest, like you said, first of all, the valuation will reflect a lack of control discount. And so that's one application. But in addition to which, you know, I'm not going to, I will request that the board, if it doesn't already have an independent director, I'll request an independent director because I think it's absolutely best practice, but it's not an absolute requirement. And so that's different, but the EA is simply a minority shareholder, and you know, minority shareholder can't control the outcome of decisions of the board because that is the, you know, decision of the majority shareholder. And as my dog and mascot, Max is barking there, he also agrees with me. Your dogs. That's good. As long as he keeps agreeing with us, we're going to be good. Um I think so yeah, awesome. So. So going and Neil did a great presentation on this and he's, he's done this presentation, you know, to our ESOP associations and, and CEO and all that. But going to that presentation, Neil, what you described is there's a balance of power between the, the board and the trustee. Can you go into more detail on what you mean in the balance of power? Sure. I think that, you know, corporate governance, which is a fancy term, which is simply that the management, the board, and the trustee of the shareholder each understand their respective roles, and they all work together, because everyone is doing their job in the best interest of the company and ultimately the shareholder and ultimately the employees as the owners of the company in terms of increasing shareholder value. So again, everyone knows their job, and we, we clearly, you know, stay within our lane, so to speak. And what I like to describe it as in particular is that I I'd like to have a partnership with the board. You know, we each know our respective roles, but we're working together for the good of the company. And we, you know, talk together, we communicate on issues. Um, and give an example of that, you know, we had a client on the ongoing trustee, the board had promised management to put a stock appreciation rights plan in for several years, which is a synthetic equity, and whether it's an incentive and or reward to management for doing, you know, a great job, you can choose one or the other or both, but they hadn't put it in by the time that I was engaged as a successor trustee. Well, the independent board members had taken the initiative and said, OK, we need to put this new plan in place. They did their analysis. They're very smart people, and they sent us, they sent us their proposed plans. And Chris Ham, one of my relationship managers, myself and Chris primarily took the lead. He reviewed that, he analyzed it, he had some concerns, and he has a, you know, 8 year background in business evaluation and ESA evaluation. So he understood the issue quite well. And we also worked with the evaluation firm to look at how would this plan work in terms of How what's the potential rewards that the participants could get. And it seemed like it was, I think I would describe this way too generous. And so we looked at that and we we provided some input to the independent directors that we're working with. We made some suggestions. They considered what we said, and they did, they did change it so that we were much more comfortable with that. And we being myself as trustee now. Going back to corporate governance, that's a compensation issue that the board has full jurisdiction. They don't need me to approve the plan, but they also, and I think this is true in many cases, they, they want my support. Uh, they don't want me to disagree with it because boy, that's, you know, when you, you don't want to be in that environment where your trustee disagrees with something the board's doing because it's not a good path to follow. But we worked together to develop a plan that ultimately achieved the goals that the board had for their leadership team. So I think that's a good example of how we, you know, as a partner, we work with, with our clients and the board to get the kind of solution and solve the problem that they were trying to solve. And, and, you know, underneath all of that is I think this concept that you know, when more people have input into a solution, you should get a better solution and I think that's partly a um as a business owner selling into an ESOP, you kind of want to embrace that concept and I, I think there are personalities that maybe don't want to have input, and I think that could be an issue when you go into it and I think that's why. It's always good to talk about at the very front end, what this looks like for a company going into an ESOP because I think it's, it's important that they understand the, the balance there and the, and the partnership that you're, that you're referring to. Yes, I'm to give another example which also fits into the control element. So if I'm engaged as a discretionary trustee, and because of the nature of my business that does not include managing investments, the cash assets of the trust, but discretionary with regard to voting. And in particular that's the element I was looking at and discretionary with regard to evaluation, of course, but the voting issue and typically is voting for the board members, so I have the legal right to appoint a director and let's say with the new ESOP, you know, they are required to the negotiation that we've had to add two independent directors, one within 6 months and the second within 12 months, because we never expect the company to put that. You know, find an independent director and put them on before closing or right after, so we give them time. OK, now it's my decision, but I'm not going to take the lead to identify candidates. I'm not going to vet the candidates. I'm not going to ultimately, you know, select one. I want the board, the existing board, which at that point is probably just the CEO and maybe. One or two key executives. I want them to take that lead and do that. I just want to make sure that there's an appropriate process involved and that they've come up with the best candidate by going through that process. I also think it's really important that they identify. You know, what they want in terms of skill set from that director because it's not just a matter of finding someone who is not an employee, not a relative, and doesn't have a financial relationship with the former owner of the company. It's like, what do you want that person to create in terms of benefits that they can bring to this position? You know, do you want someone who has got a marketing background? Do they want someone who is Been a CEO in a similar type company. Do they want someone who's an M&A expert? I mean, those are not my decisions. That's what I want the board to look at and think about as a I am. That's good. Let's, so let's go into specifics, and I know people ask me these questions too, so I'm asking you. There are definitely responsibilities of board of directors and so we're talking, we're gonna talk a little bit just about the board right now, um, and then we'll go into the trustee side. Um, first off, who would, you know, when you look at your board of directors, we talked about, you know, having an, an odd, already an odd number, um, and you talked about having like some people like you might want to have more expertise. Um, what are the responsibilities specifically to the board if they were, if they're, if you were hiring a board member and you're telling them what they're gonna be doing, what would you say? I'd say first of all, I would break down those responsibilities into general, which is the same responsibilities that a director of any company, ESOP or otherwise would have. And then there's some very specific responsibilities that they have related to ESOP. So in terms of the general responsibilities, you know, there could be 10 or 15 items, but let me just identify a couple that I think are the more important ones. I think that number one is truly focused on growing shareholder value. That is the goal of the company, and I think that's the most important responsibility for the board. I think that another key element would be to, whether it's just evaluate the CEO performance, I mean, it may just be the leadership team, but it's evaluating the performance of the CEO and I would say account hold them accountable. So for example, you know, they're not monitor the board is not looking at You know, daily reports, weekly, not even monthly, they're looking at the bigger picture, so they're reviewing, you know, the performance of the company on a quarterly basis and comparing it to budget. Now, we're not talking about minor, you know, variances in the budget, but if there are trends, or not just one quarter, but two quarters that have the company underperforming significantly compared to that budget. I think the board clearly needs to hold management accountable and ask them and understand why the performance is off and more importantly, what course correction are they going to make. And make sure that that course correction is implemented. I mean, no one knows if that's going to answer and solve the problem, but they have to do something, and the board truly has to hold that CEO accountable. So I think that's a huge issue. When I look at, you know, the list of items and other responsibilities, I think succession planning. Now this may seem odd if your CEO is 50 years old, but gee, it's not just the CEO, it's the other key leaders of the team. And the board should be taking the lead to identify, you know, when they anticipate that the key leaders of their management team are going to retire and then try to make sure that the succession plan is in place again. The board doesn't have to do the work themselves. They just need to make sure the process is in place for anyone but the CEO. The board is responsible for succession planning for the CEO, because what happens is that if they, if there's no succession plan in place, then if the CEO retires and they don't have someone capable to step up, that could lead to the sale of the company or certainly a performance that is uncertain going forward. Yeah, so kind of, I'd say summary, you know, you're responsible for a healthy company and um those are all part of it and there are things that happen in a company that that a board member needs to be, they need to be aware of and be involved in. Um, with the, with the responsibility they take on, I get this question as well as, should I pay my board of directors, and I always say yes, and then the question is, well, how much should I pay them? And then so can we talk a little bit about like the compensation a board of director might get for that role? Sure, it's a great question. And again, yes, independent directors, and most people that I know that serve as an independent director, they're not doing it for the money but need to be compensated for their time and efforts. And the NCEO does a study every, I think, 2 years as part of their corporate governance survey in which they ask to do a survey of the board member compensation. And so that's one guideline that it's available because they also break down the board compensation for different size companies, which is truly important. To answer, I would say that the range of compensation for an average size company could be $200 to $30,000 per year. There's certainly got clients that paid less than that, and I've got some clients that pay more than that. But the 10 to 20,000 I think is a reasonable range. And I don't, and I think people that serve as a board won't be insulted by that. Again, paying them nothing that I don't think that's appropriate, but paying them something that's fair and reasonable is appropriate. Now, I'll also share with you that I served in the board of one of my former clients where I was a trustee and served on the board and their compensation was 3 times that, but the company had 2000 employees. The value of the company was $400 million. So I mean, you get a sense that the 10 to 20,000 really didn't fit that size company in terms of its complexity and size. Yeah, so you're, you know, it's relative to the size of the company and the valuation and then how many times are you guys meeting on, on, is it quarterly or is it more than that? Typically it's quarterly. I mean, we have some, you know, banks always have monthly board meetings. I think it's the nature of their industry, but most, most of my clients, they're meeting quarterly, some maybe 3 times a month. I think quarterly is a really good target. Yeah, at least frequently enough to actually have an impact and be able to know what's happening. Absolutely. So as we go to the trustee side, which is of course where you're, where you're, you know, practicing, um, who should the trustee, you know, when you look at the trustee being independent or not independent, which just basically means um a company has an ability to have an internal trustee. Um, what is a trustee specifically responsible to do? Sure, before I answer that, let me go back one second because I don't think we addressed the board responsibility for the ESOP, which won't take long, that's a good point. Sure, I think the interesting thing in terms of what the board is responsible for EP is number one, as I mentioned earlier, the board is responsible not only for appointing the ESOP trustee but monitoring the ESOP trustee. And, and I You skipped out there and you know, hold on, say, say that again. The board is responsible for adopting uh the ESOP plan, amending it if it needs to, and ultimately, if it needs to be terminated, the board makes those decisions. The board also, you know, determines the amount of the ESOP contributions. And um the board should really look at any kind of future repurchase liability. So I just want to go back and touch those few points before I talk about the trustee duties. And in terms of the trustee duties, I would say that You know, the most important thing that the trustee does for an ongoing basis determine the fair market value of the shares owned by the ESOP on the last day of the plan year. Now, in doing that, the trustee will engage an experienced independent evaluation firm to prepare the lengthy report, but the trustee is responsible for reviewing that report. very on a very significant basis to making sure the conclusion is reasonable, making sure that the assumptions are reasonable, and in the end, signing off on that draft report, um, to have the annual share price update, which is what goes on to the participant statements, and what also is used then to pay out distributions. So that bear market value is really important. And I'm sorry, my, my mascot here is going a little crazy on me. I'm trying to find a space where I can hide, hide it from him and not having any luck. Oh, that's all right. um, so that's the valuation. Yeah, for sure, uh, the other thing, the other thing the trustee does is monitor the board and monitoring the board is more than just reading board reports. It's attending board meetings. It is seeing how the board members act. Are they actively involved? Are they actively participating and just making sure they're doing what they're supposed to be doing. So that monitoring the board is important. Um, we also are the custodian of the trust assets, which for the most part really is the fact it's not a big job. Um, we will have the ownership of the checking account or the bank account for the trust. So when contributions, distributions, or dividends are paid, they go into that account. And then if the company or the ESOP is leveraged, um, which most new ESOPs are, then we're responsible for making the loan payments. Now, not a responsibility, but something that we certainly always do and we like doing is helping to educate the employees participants on what it means to be an employee owner. And so we typically will do that type of meeting after they get their statements. Not every client wants us to do that, but we're happy to do that. Yeah, so the trustee would go do an employee meeting and and talk to the employees about what this means to them. Yeah, help educated and educate them on what an ESOP really is, what their benefits are, what they're entitled to get, what they're not entitled to get, because it's difficult. I mean, ESOP is a retirement plan, and it's difficult for people to know what that really means. And I think it's also difficult to understand, you know, the term beneficial owner, which is what the uh Participants are, they are, they're not the legal owner, they're the beneficial owner and make sure they understand what that means. And also the owner, that means that you're in and you tell the CEO what to do. I don't think so. No, we want to make sure they understand those distinctions. Right. Yeah, being a beneficial owner is much different. Do you ever get anybody that's um an employee that actually calls you directly with a question? Um, rarely, you know, we, we are, um, clearly available if that happens. They can call us. I mean, my name, and I probably believe my phone number is listed in the plan document or in the uh summary plan document because it needs to be. But and then also in those meetings that we have with employees, we clearly tell them, look, if you have questions we are available, let's start with the HR manager, the person at the company who is responsible. If you don't like their answer, you can call me. I suspect the answer might be the same, but you're welcome to call me. For sure. Well, that's good. That's very interesting. So now if you go now you're an independent trustee and a company that has decides to say, you know, I'm gonna have an internal trustee. Um, first off, I, I know that you've already said that's not best practices and, and we can talk about why, but also, you know, um, the, the same role that they would have, they would still be responsible for all the things you just described. Oh, absolutely, Phil. I mean, whether someone's an internal trustee, an independent trustee, we have the absolutely same responsibility. And when you get to the responsibility, and I've done, I've done, you know, a little bit of fiduciary or trustee training just for my own practice to make sure I know kind of what the roles are, but there's the fiduciary responsibility for a trustee is, is the highest level of responsibility you have and, and that, that, you know, when you go, when you go into that, you know, from what you're doing for a client, talk a little bit about what the reality of that is because I don't know if people understand. Um, you know, if there's a problem with this ESOP, you know, let's just say it got overvalued or, you know, something happened and the trustee was at fault. What, what really happens from the Department of Labor standpoint then towards the trustee? Sure, that that is the biggest risk that any trustee who is like you said, every trustee is a fiduciary, the biggest risk is that there is a lawsuit brought either by the Department of Labor. Or by a plaintiff law firm, and the trustee is always the one that's going to be identified as the defendant and the suit is brought against them. And you know, most litigation matters in ESOPs really come out of that initial ESOP transaction. And like you said, the challenge usually is the ESOP paid too much. And so the lawsuits, you know, from whatever source, Department of Labor, private litigators, they, they may also include other, you know, the former owner, they may include the board members in that suit, but the trustee is the person that's got the bull's eye on their back. And you know, as you said, the issue is the claim that the ESO, the trustee paid too much. Now, as an ongoing trustee, The risk, I think, is that if there's a significant drop in the stock price in a given year, and if let's look back to what happened in 2008, you know, when there was what you want to say it was a recession or depression, certainly most these sub companies along with every publicly traded company, had a lower stock price at December 3108 compared to 07. And that, you know, was that the fault of the trustee. Um, I don't think so. I mean, there was a recession and companies were performing at a lower level than they were before. And now, no one likes to see a decline in the price. But if you are a participant and you're entitled to your distribution from either You know, you're, you're getting a diversification distribution because you're 55 years old and you've been a participant for 10 years and you have the right to sell some of the shares back to the trust, or you simply have left the company and you're entitled to distribution in 2009. Well, gee, you're expecting that that value would not go down, and you're not happy. And I can empathize with that, but whose fault is that? And so, you know, at that point, that participant might You know, contact the Department of Labor, they might hire their own attorney to bring some action. Who's responsible for that decline, the economy. But the point is that if I'm the trustee of a company when that happens, and whether I'm the internal trustee or independent trustee, I'm going to get The one that's going to be named in a lawsuit. Now, the greater risk for the internal trustees is they have personal liability potentially. Now again, yes, they have an indemnification from the company and hopefully there's insurance, but it's a potential personal liability if they didn't do what they're supposed to have done, right? If they are found to be negligent, right? Yes, sir, or breach their fiduciary duty, right, yeah, technically breached the fiduciary duty and then they would be liable. Um, so, so kind of as we, as we close out, I wanted to kind of talk a little bit, just some of the things I heard that you said from a final comments standpoint, um, and then let, let you do that as well. And, and just kind of overall, there, I think it's very important and, and the reason we did this episode was because there's, there's, there is some level of confusion sometimes about what the board does, what the trustee does. I think there's an unhealthy fear as well about the the control that I want, I want, I hope to displace by doing this episode. And for what Neil's talking about, what, what we're talking about in this, to me is a logical um approach to the specific roles that um really still give everybody, they're still doing the same jobs they were doing before. They're just working. Through these specific roles and making sure they follow, you know, the best practices. And so with that, I just wanted to try to hopefully, um, ease people's uncertainty when it comes to if I sell my company to an ESOP, you know, I, I could feel more comfortable about the way governance works. Yeah, and I think I would like to, you know, add in kind of conclusion that I think most clients are surprised that, you know, what, what happens in the first year after they've sold to Nissa. It's like, OK, we're not, we're not there every day, we're not having calls with them every month. We don't require any additional special reporting. Um, you know, we participate in at least one board meeting a year, and we participate as a guest and observer. And we're not there making decisions or telling the board what to do. So I think most people are pleasantly surprised that, oh, You're not, you're not telling me what to do, which is like, yeah, that's what we told you, uh, and they're running. You said I spent too much money on office supplies or, you know, it's like, yeah, it's crazy. That's not what's gonna happen and you know, and they run the company the way they always have and they do a great job because again keep in mind that most. I mean they want the company to do well because gee, they still want to get paid on their seller notes and they they typically will get interest only until the bank is paid. Well, they want the company to do well so that everyone gets paid as they're supposed to. Yeah, it's all about everybody's goals are aligned and everybody's. You know, working towards the same goal at the end of the day. So, very much so. Well, well, Neil, thank you so much for your time today and your perspective as an ESOP trustee. I think it's very, very helpful to help understand the way that control of the company works. Well, thank you, Phil, and I appreciate you doing this podcasts to help educate business owners on the reality of selling to new sub company. They're not, it's not for everyone, but it's a much better option than people realize when they understand the truth of what happens. Actually, absolutely. Well, again, um, if you like this podcast, please subscribe and share it with a friend. Have a great day and we look forward to you, uh, the next step on this journey to.