EP49 - Interview with Renee Lewis - ESOP attorney with Holland & Knight from Chicago, IL

Thanks for tuning in. I'm the ESOP guy and we are on this journey to an ESOP. Just so you know that this podcast is for those that are thinking they may want to consider an ESOP as a potential strategy for their business, that could be they want to sell part of their business to an ESOP and and look at as a growth strategy that might be that they want to use it um for a succession planning or even an exit plan. Um, so with that, we have done a lot of different um episodes on Journey to an ESOP. If you have an interest in any of those episodes, please go to our website at journey to an ESOP.com. So, today's episode is going to be entitled Roadmap to Closing an ESOP Transaction. We're going to discuss the timeline and really the typical documents a company can expect to see in a normal ESOP transaction. And to do that, we're going to have the opportunity to interview Renee Lewis with Holland and Knight out of Chicago, Illinois. Renee is a partner in Holland and Is Chicago office and a member of their firm's ESOP team. Renee, I just wanted to welcome you to our podcast and thank you for joining us today. Oh, thank you for having me. So I'm excited to talk to you today. Awesome. Well, well, great to have you here today as an ESOP attorney, Renee, um, you've dealt with this for a good number of years. Can you give us a good overview of your background in working in ESOPs? Oh, sure, I'd be, I'd be happy to. Um, I've been practicing law in the ESO space for, um, pretty much 20 years. Uh, my background is in financial services as well as mergers and acquisitions. Um, so with that background, I'm able to represent companies, lenders, trustees, or selling shareholders in an ESOP transaction, including the sale of ESOP companies. Uh, at Holland and Night, uh, where I work, we have taken a multidisciplinary team approach within our AA group. So what we do is we have members of our ASA team, um, attorneys who specialize in financial services, mergers and acquisitions, tax, employee benefits, and litigation. Awesome. So you guys have a, a well-rounded team and a lot of breadth of experience. So how many people on the team in the, in your group? Uh, in, in the Chicago office we have, uh, that are primarily dedicated, um, to ESOs are 4, we also have about, I think 4 in Philadelphia as well, um, but then throughout the country, we have, um, members of our ESOP team that, that kind of specialize in these certain areas like tax and litigation that, um, they are go to people we're able to uh reach out to them. On our transactions, they're familiar with these stocks, um, and with respect to the litigation, they're always really helpful in terms of, um, drafting, you know, uh, documents so that we can, we can run questions past them so we can avoid some of the, you know, any litigation. Um, but so we have folks throughout the country that are, um, part of our EO team that we meet on a regular basis, and, and they'll join in as well so that they're familiar with what's kind of on topic and, and what we're seeing. So just to kind of a, a, a different question to, just wanted to throw out to you. So on a normal transaction, how many attorneys would you have on a typical ESOP transaction? Just curious, and know if it was 1 or 5 or Oh well, it will depend on, it depends on the size of the transaction as well as timing, I think. 4th quarter tends to be a busy time of the year for transactions to close, so, um, we may have, um, more people on a deal depending on, you know, if everyone's really busy, right? So we can, um, easily, our team approach, we've all, a lot of us have worked together for more of the 20 years I've worked with a lot of these people my entire career. So we're really easily able to um jump in on deals if, if someone gets pulled on something else, um. How many, you know, you typically would have uh one to maybe two partners on a transaction, and then there'll also be um uh an associate, uh, one or more depending on how much diligence is involved in the transaction, um, and then again, depending on a transaction on what issues there may be, um, to the extent you have some, uh. A lot of restructuring going on, a lot of tax issues, you know, we may have a tax partner that's on the transaction that, you know, the entire time or just for part of it, uh, or if we have any, um, specific diligence question, you know, issues that come up with respect to litigation or maybe there's an employee um employee labor and employment matter, um, that, that is key to that, uh, company, then we may have to pull in specialized, um, uh. Uh, folks to help with that. Mhm. Which is really kind of the value of being a firm as opposed to being a single person or maybe one or two partners in a firm and that just does that. So that's definitely, definitely, I mean it it definitely helps, right? We have um we have so much, so much knowledge based right with our. With our attorneys that we work with that we can um we can reach out to them all over the country if there's a specific issue that comes up. So it does help significantly. Yeah, and, and not to get too, too deep on this, but I, I just, Renee and I worked on something recently and she was able to help me with the transaction and working with one another one of her attorneys that was on the bank side, which was very helpful and, you know, so just kind of seeing that play out recently. I just, I know that there's a lot of value there. Um, so when it, as we go into the, the, the questions, I wanted to ask you kind of looking at an ESOP transaction, and there's all these different steps in the process and, and what we try to do is make it as clear as we can for clients in terms of how those steps work and working through that. Um, can you on your side share a timeline that makes sense for most in, you know, typical ESOP transactions? Um, sure, and, and you're not, uh, this would be surprising too, but of course the timeline depends, right? Each transaction is a little bit different, um, but I would say that if you're assuming kind of a straightforward transaction, you know, the timeline may look kind of as follows. The first thing that um the company, the selling owner is going to do is, is one get familiar with the ESO, um. There's still, I think, is not as much education on EAP, it's growing, but there's still a lot of folks that don't know about ESOPs, so when they first hear it, it does take them some time to digest the material, understand it, um, so that, that's really your first step is understanding the EAP, um, and getting comfortable with the, all right, is this something that maybe will work for, for, um, me and the company. Um, and then what often happens is a financial advisor is engaged to do a feasibility study, and that feasibility study, um, will typically take about 6 weeks at a minimum, and, uh, or, yeah, about 45 to 60 days, I guess is the feasibility study. Um, so at a minimum that the kind of, uh, engaging the owner to determine whether or not this is. It is viable, probably takes a minimum of 6 weeks. And so that feasibility study will allow the company and the owner to see what a preliminary evaluation is like what the stock might be worth, what the structure might look look like, and whether or not the ESOP really is a viable option for the, for the company and the selling owner. Um, now on deals, um, there may not be a feasibility study. They may. not go out and hire a financial advisor to do that full-blown study. But in that, those cases, I would say typically then the owner does have, um, like a recent valuation, because you really do need somewhere to start to know what, um, what the company is worth and what the selling owner wants to, um, obtain, like what the objectives are. Excellent. And then, and then, and then once that feasibility study is done, and if the determination has been made by the selling owner that um they wanna move forward, I would say the transaction typically will take about 8 to 12 weeks to close, uh, provided the timeline isn't disrupted, which we can talk about um some things that are disruptive, um, later on if you'd like, but um. So in that 8 to 12 weeks, one of the first things that the company is going to do is they're going to select a trustee. So how this works is that the company usually will interview approximately 3 trustees, and, and then they'll select one of the 3, and then that trustee will engage its own counsel and financial advisor. Uh, now, at this point in the transaction timeline, uh, engagement letters need to be signed up and negotiated with the trustee and its counsel and financial advisor. And even though the trustee is is engaging independent financial advisor and counsel, the company does bear the cost of that, so the company will uh sign those engagement letters. So once those engagement letters are signed up, um, The company may also be thinking about senior financing, and at this point they may be talking to a number of lenders to see um if they're interested in in lending into um this transaction for purposes of the ECF transaction. So that may be going on um pretty much simultaneously with, with the trustee meetings. Once that trustee is engaged, one of the first really key steps is going to be a management presentation. So the company and its financial advisor are going to prepare a presentation for the trustee and its advisor, its advisors, and what that presentation includes is it's gonna. Be an overview of the company, it's gonna have financials projection, it's gonna projections, it's gonna identify any risks that the management thinks that the company may have. It's also gonna identify the growth opportunities and um it's gonna explain to the trustee why. Uh, the company and management feel that the ESA structure is viable and, and why it was selected. Um, during this presentation, you also, we also may see the transaction structure that's being proposed, as well as the financing term. Um, this, this is just a key step. It, it really allows the trustee to ask questions of management. Um, it's where the trustee is gonna learn, you know, it's their customer concentration, you know, are all their, you know, are more than 50% of their revenue coming from one customer. Well, if that's the case, the trustee's gonna really wanna dig into that and understand more of that relationship, and, and this gives the trustee an opportunity to, to ask management some of those questions. Um, if there's certain growth op port un ities that the company is counting on, um, they're gonna talk about that during that presentation, and again, the trustee is gonna be able to ask questions, the advisors are gonna be able to ask questions, um, and this helps with, um, follow-up questions afterwards as well, right? If certain projections were made, um, the trustee's gonna, you know, ask further diligence on that during, um, the presentation or after. It's, it's a key step in the transaction process. Um, so once the, the management presentation, that's kind of a kickoff meeting, often it's called as well, um. And, and then the diligence will start and, and this is, um, part of the transaction process I would say most people don't particularly enjoy. It, it's lengthy. You're asking, you're asking, um, the trustees council will have a, a diligence request, um, delivered to the company's financial advisor and, uh, and or the council will work with the company on that request, um. And, and then all this information typically is downloaded into a data room so that the trustee and its advisors can review it. Um, diligence is ongoing from that point really until closing, um. You know, I think everyone tries to finish it earlier as soon as possible. Uh, it's just there's always follow-up questions. There's always additional information that's being requested. It is really an important part of the process, but I do think, um, it's probably the most disliked part of the process by a lot of people because it's um it's a lot of work for the company to pull together the information. Um, and they, they have day jobs as well, right? So they're, they're doing this on top of, um, their day jobs. So I think the company often can be frustrated with the diligence process, but I think, um, If they're, if they're kind of uh explained early on, um, and, and they get assistance, it, it can definitely run smoothly, but it, it, this is where the information, certain things are are typical intelligence, corporate, labor and employment, tax matters, um, any litigation, um, those are all questions that are gonna be pretty typical, but if you are um an IT company, you know, there may be more digging in further into um. Into the IP, right? If you're a government contractor, there'll be additional questions on, on those government contracts and the relationship with the government. So, so the diligence will be tailored to the transaction and, and what really um is needed for the trustee to do its process. And I think it's really important to understand that the, the diligence is part of the trustee's process and, and that is in the. Interests of everybody and all the parties that the trustee is able to conduct its diligence and and and and complete it and have everything resolved. And any issues that do come up in diligence, um, those can impact negotiations of the term sheet and um and any issues do need to be resolved, um, so they are gonna have to be resolved prior to closing. Yeah, so, yeah, as we, and we kind of, you know, you're gonna go through some more as we go through the next steps and, but I wanted to kind of highlight some things in the, in the first part of what you were talking about. The first thing is, is just how important it is, as Renee had said, in order for you to get started in the education and it's a bit of a shameless plug, but whether it's an an ESOP podcast that you're gonna want to listen to. Um, and CEO, ESOP Association, I mean, if you just Google ESOPs, you're gonna find a ton of information and more than you probably need. But my advice, my advice is get as much education as you can, um, and do your homework, and as you talk to people, it'll make a lot more sense when you're, when you're engaging with advisors and, and asking questions to determine. Um, whether or not you even want to work with some of these advisors, cause that's definitely gonna be um a question mark for you, who you should be working with in terms of your team. I think that those are all very important. Um, and the, and the thing on the diligent side that I'm going to highlight as well as, as Renee's kind of alluded to it, it is a long, it can be a very difficult process if you're not prepared upfront for due diligence before you even start hiring the trustee, then I think that's an area you could, you could create, um, and, and invest in some time to make that more efficient. So already kind of populating a data room. already asking the questions, um, they are going to be important. And, and one of the things I always do is when we interview the trustee, I'm always kind of floating out before we even do the management presentation. Some of the key issues that I think that they're gonna be wanting to know about because as an advisor, you kind of know that hey, there's a concentration of customer issue or hey, the forecast is very, very bullish and Is that really possible? And so, you know, if you do that, then the trustee can ask questions very in the front end, and you can kind of gauge whether or not you feel like you can really work with that trustee through the transaction or if it's going to be, you know, a very difficult process in the negotiation, you want to really highlight those before you get there. So there's a couple of comments I had as we go back to the, again, we're working through this whole roadmap concept. Yeah, I agree on that. Well, I agree on both of it, education is key and um and that's really, that is the first step. I mean, that is, and that, that step could take, you know, uh, 6 weeks or it could take a year, right? It, it, it really is gonna depend on the owner and, and, and what his comfort level is and when he gets comfortable with that in terms of educating himself on ASAP or herself on ASOPs and, and getting comfortable, um, moving forward, um, and on the diligence side, um. If you, I agree. Everything's gonna come out, right? So if there is something that the company is aware of, right, and whether it's concentration on on certain customers or if there's a, you know, they're gonna lose a big customer or, you know, they wanna acquire something in the future and they know all of these, it's probably coming out during diligence and to the extent you can. Address it upfront and be prepared and ready for it, that's going to make that process um 100 times easier and less frustrating, I think, for everybody. Yes, nobody likes the pain of it. So, no one does, no matter how much I prepare for it. It's just, it's, it, it is a um a necessary part of the deal, but yes, there's, I haven't met anyone that's like, yay diligence, let's do it, uh, so there's just nobody, nobody wants to do it, but it is really important. It's a very important part, um. Of this process, but then while the diligence is going on, the term sheet is um being negotiated. So it is kind of a, a dual track, which does help, right? So it isn't that everyone's doing diligence and then they're gonna wait and then start the term sheet. So um those tracks are are pretty much moving at the same time, right? So you're starting diligence and um. Let's say uh uh we're we're reviewing diligence. I have associates reviewing the diligence, and I may be then helping negotiate the term sheets, right? Um, and so that's kind of happening at the same time. Now the term sheet will be subject to completion of the diligence, right? Because something could come up that may impact the term sheet, but um, but the term sheet is starting to be negotiated and what typically will happen is that the company would circulate an initial offer to the trustee. And that offer's gonna set forth really the substantive terms, the purchase price, how many shares are gonna be purchased, um, uh, if there's any seller financing, what that might look like, um, the terms of the loan between the company and the ESOP, um, and then any management incentive plan, um, the terms of that would be set forth in there, any working capital adjustment, if there's any corporate governance requirements. Um, indemnification, which is key, uh, point of the stock purchase agreement, that's gonna be in your term sheet, and then also any event protection clawbacks, um, now those are probably coming from the trustee and a counteroffer, but that's what the term sheet will, will set forth, those substantive terms. And the trustee reviews the term sheet and um with its counsel and its Financial advisor and then it makes a counteroffer. Now this kind of goes back and forth for a few weeks, um, and it could be, I don't know, anywhere really from, I would say maybe 4 to 8 weeks. It really kind of depends on how, um, smooth the negotiations go, how responsive the parties are, um, what issues are being kind of. Um, discovered while we're going through this, right? Are we really far off on prices? Are we really far off on, on what kind of management incentive plan, um, is happening, in which case maybe the, you know, financial advisors are asking for additional information, um, to kind of, um, to kind of see where, you know, where, where the parties are at, um, but those, that term sheet negotiation does kind of take place at the same time as, as the diligence is taking place. Um, and then, and then after the negotiations are are final, um, the term sheet is final, um, documents will start to be prepared and um those are gonna be all of your, um, there are a number of documents that will need to be prepared. The main one is your stock purchase agreement. Um, which that will contain most of your negotiated significant terms are in your term sheet, so that helps in preparing the stock purchase agreement, but there's still gonna be a number of turns on that because there's um representations and warranties about the company. And about the seller's ownership and their shares that the sellers and the company are making to the trustee, and those are, are, are definitely heavily negotiated uh terms as well. So there will be some terms of the stock purchase agreement, but a final term sheet um does make that draft a little bit um. Easier in terms of kind of some of the key indemnification, uh, terms that that have been negotiated already. And then there's also gonna be a number of ancillary documents that need to be drafted at this time. Uh, there's gonna be stock certificates, there's gonna be board resolutions, there's gonna be the um seller notes that there's seller financing, there's gonna be an the ESP loan documentation. All of these items are are taking place during this phase of the uh of the timeline. As well as any, if there's any insurance that needs to be um obtained, maybe there's fiduciary coverage insurance or D&O insurance, um, the Fidelity bonds for the ESOP, that'll need to be obtained during this time. So, so, so there's still a lot that's happening during that documentation and kind of closing period, um. Uh, that is done, and it's important to keep in mind that the trustee again is going through a process and it needs to, um, it needs to do this, it needs to document its process. It, it, it has a process in place, often that requires, um, commit. Meetings before the closing and that the valuation and the legal diligence that its advisers are doing that that's being delivered to the trustee a certain amount of days prior to its committee meetings so that the trustee can review. The final valuation report from its adviser, the final diligence report from its counsel. And so it is important to kind of keep in mind the logistics that those dates have to be kind of planned in when you're planning your closing date. Keep in mind that the trustee, um, has to meet with their committee, uh, potentially, and, and, uh, and there's some time constraints there. Right then. OK. Um, I'm sorry, did you? No, no, I think I was just gonna say, you know, that's close to closing at that point I'm guessing that you know as you move on to the next. Yeah, it can't, well, and that could move a closing date if you don't, if all of a sudden you're like, OK, we're ready to close, and then the trustee says, hey, I have to, we have to, we need 3 days prior to. You know, to our committee meeting to review items. So it's just trying to keep that in mind, right? Um, because as towards the end of the closing, you know, everyone's working really hard to get everything done. Everyone's working towards the closing, um, that certain things sometimes get lost, but that is an important aspect. You don't wanna lose sight of that because that could change your, your timing. And then once the the deal does close, the next step, I think that's an important step of a transaction is really the post closing is kind of for that company to build that culture, um, to ensure that, um, it's a successful EO owned company. And that's really, um, that's a post closing item, but that's. is an important step for, I think the company to keep in mind that they then now need to, you know, educate their employees on and kind of build that culture of employee ownership. Yeah, so yeah, right, so it's like time now to roll out the ESOP and get everybody now up to speed on what what they're doing and bring your employees in. That's an exciting part of the whole process, to be honest, it's like one of the most fun parts of it. It it is, it is, I mean, the, the, the, the clo and the stories are always great, right, on how some companies tell their employees, um, you know, I know there was one where they, they gave all the employees kind of a mirror and then they opened it up and they said we've sold the company and look in the mirror, that's who we sold it to and you know, so I mean some companies have done some like really. On, uh, ways to surprise their employees that they're now owners and, um, and yeah, it, it, it, it is the fun part, I think. Yeah, for sure. So going through all of that, I know we kind of hit, we hit all basically the, the real kind of the depth of each of each piece of the roadmap. There's obviously things that that will come up that will disrupt that timeline. Um, and in your experience, Renee, what sort of things should we be aware of or think of thinking about to avoid? Sure. Well, there's some, you know, unfortunately, there, there, you know, there's a lot of reasons that a timeline can be disrupted. I think there's a few common reasons though, and I think we can be avoided if, if. It planned kind of properly. I think project management, I, I think it's just key in my opinion, and one of the main reasons that um the lack of project management is the main reason that a uh a timeline is disrupted. I feel, um, the roles and responsibilities of the, of the parties really should be set out in the beginning. There's a lot of players in a Eco transaction. Um, you have the trustee, and the trustee has its financial advisor and counsel. The company has a potentially a financial advisor as well as counsel. You have the owners, and they may actually have separate council. You then have um lenders potentially and lenders council. So there's a lot of moving parts and there's a lot of players. So um there really needs to be someone who's moving the transaction along and as we say, kind of quarterbacking the deal. And, and this may mean making certain that, um, you know, checklists are updated, that there's weekly status calls. I've been on deals where, you know, we get closer to daily status calls just to make sure everybody is, is doing what they kind of need to do. Sending out punch lists and as I said, updating the closing checklist. Um, you know, I, I just think it's, it's just really important that everyone knows the role and does their job, and, um, I see the checklist is like one of the most important documents. Unfortunately, I think not everybody sees that as such, so I know I have, what I've done is I've started to do punch lists. Um, on my ideals, and so, um, really, no matter who I represent, I end up sending out punch lists because it, it, I think it's super helpful, and it just keeps everyone focused on kind of the bigger items that, you know, company and company council needs to be focused on these 5 things and the lenders' council's doing this and trustees council's doing this, and so that we all kind of are. On the same page and we get it to close. So, um, you know, I've been on a, on a number of deals where nobody's really driving the closing, um, or there's they, they don't drive it until right before clo you know, maybe a few weeks before and they're like, OK, are we all ready to close? And, and, and that just doesn't work. You really need someone managing that. Transaction from day one, and often it's the company financial advisor if they have one or company counsel. Um, but if, but if company council isn't familiar with ESOPs, um, I think project management sometimes isn't on the top of the list, right, because they're trying to get up to speed on ESOPs. So, um, yeah, so which then kind of leads me to my next kind of big disruption, which is familiar familiarity with ESOPs. Um, if, if, if you, if you have advisors on a deal that aren't familiar with these tops, that will, um, that will disrupt the timeline and it will increase these. So, um, it, it, it's just really important when, um, you're, uh, interviewing your advisors that they, that they are familiar with these stops that they have experienced that, that, um, they've done this, they have, um. They're familiar with what, you know, they're working in the E sub space, their community, they, they, um, it's just really helpful. If you don't have that experience, somebody in the deal is going to have to Um, kind of make that up, right, and help educate the other party, and that that's time consuming and taking kind of away from the deal, you know, doing the work that they may need to do, um, and there's potential for errors there. So I, we often hear from companies, they want to use the corporate council they've always used. They, you know, maybe local council, know them, they, they worked with them for years and. We think that's fine and that's great, but then, you know, have um us or someone else be special counsel for the company to make sure that um the deal is, is gonna be structured correctly and that it closes um because that will increase your fees really is. And the and the selling shareholders really need need to be represented, you know, by the right people. And have the experience to protect them and to make sure that the deal is structured correctly. My, my, my experience with this um disruption is sometimes the people involved, they may have tons of experience, but they got so many deals going on that just getting them to commit to a schedule is difficult, or they commit to it and they're like, and then they have these deals concentrate. So the trustee has so many deals and their attorney has so many deals and so I think that's my, my, one of my questions for them is, hey, how many deals do you have? and are you able to do this closing date based on the timeline that we're, you know, we're creating with the client? Well, that, and that's important because the responsiveness, which kind of goes back to like the, the timeline on the term sheet, it, it's key is how responsive, right, the parties are. So that could take 4 to 8 weeks depending on how responsive everyone is. So, right, if you have a trustee who's very responsive, whether it's because, you know, they're really busy or is it because they haven't received the diligent, you know, all of their information, right? Uh, it could be a multitude of reasons, but right, responsiveness is key, so. Um, so there is that if they, they could be very familiar with these but be too busy to be to really meet the timeline that that the owners in the company want. Um, you know, another one that, that, and then we kind of talked about it a little bit when we were talking about diligence, but, um, being prepared for diligence is, is, is really important because that will disrupt the timeline. Um, so you did talk about how kind of um populating the data room or being prepared, um, it's The company does need to be prepared by its advisors for the legal and the financial diligence that's going to be required. So, you know, the, the trustees purchasing shares of a company just like any other third party would be purchasing your company, they need to do diligence. Um, and so I think sometimes they, they think, oh, it's, you know, I'm just selling it to the employees, right? But, but the trustee needs to do like any other third party, they're gonna review. All of your, you know, corporate documents, your tax, your litigation, your insurance, your leases, any, uh, employee benefits, and, and it can be definitely overwhelming for companies. And if you're not prepared for that, um, that delay in the diligence is gonna delay the closing and the negotiations on finalizing it. So, um, uh, it's, I've been on deals where. The company just wasn't ready for it, you know, they should have waited to start the deal until their stock, you know, you go in the data room and they're not complete or they're redacted or, you know, it just takes them weeks to get something because they haven't, they don't know where it is and so that's um. Yeah, one of the questions I ask clients is, do you have a good internal accounting department? Can you, can you generate reports, you know, and, and, and are they going to be accurate? I mean. And that if they say that, you know, they're not there, we're, they're like, look, we got to work on. I know that sounds silly, but we're gonna work on that before we get to even starting this process because it's gonna be a problem. And it's gonna cost you a lot more in the, in the end because you're not prepared, not just in fees, but also in the way that you go about due diligence. If it's not clean, it's not gonna go well on the negotiations as well as it could be. So it could cost you perfect. Right, and, and remember that there's a a diligent readout to the trustee and, and to the extent they have a committee meeting their committee, and that, that's one of the biggest questions, right? Like, how did it look, right? How was the diligence? Was it clean or, you know, was it super messy and, and, and again, you're, you're gonna have so many follow-up questions and, and it's important, I think that the company has someone that might be. Kind of the, the contact person at the company to kind of run through the diligence questions. um, and, and it's, it is overwhelming because they do have a day job and, and there's going to be a lot of emails on diligence and a lot of, and, and I know when we're on the trustee side, we try to, no, we try to minimize that, we'll try to send like maybe an email, um, you know, the follow-up questions in one email so that there's not multiple of emails, but it can get, um, it can get overwhelming um. And especially as you're trying to to finalize things um where there's a lot of back and forth on the diligence, but it, but it can be um avoided if it's, if it's just advisors are working with the company in the beginning to make sure that that that's set up. Yeah, preparing them. Yeah, for preparing them. Um, the next, I, I think another disruption though could be the bank financing, often, um, If, if it's an existing bank, like you have an existing bank, um, and you may be doing a seller financing, sometimes the bank's an afterthought, right? Because you're not using any of their financing, but you really do need to check the credit agreements and documents because the consent may be needed. Uh, for a change of control, and also the covenants, you know, your financial covenants, um, they're gonna look different when it's an ESOP company. So, um, so it's important to reach out to your bank and let them know, even if you're not using the seller or or you're not using senior financing, um, to make sure they're aware or to check your, your credit agreement, and then. Uh, because that could delay, you know, that could delay your timing because you, it was an afterthought, and then the bank says, hey, you can't do this, we need consent, we need to amend our document. Um, and then also if you're using the bank financing, you know, it's good to keep the bank and its counsel in the loop on the transaction timing, um, because the, the bank council, um, they're gonna wanna review all those transaction documents, and they're gonna need time to do this. So I have seen closings get pushed due to bank financing not being ready and in many cases, it's just a matter of keeping the bank. Kind of in the loop and not uh oh I forgot to send, you know, oh jeez, I guess now we got to call them and send them everything. So, so I think keeping the bank folks in the loop on the deal, we'll make sure that that isn't a disruption to your timeline. Mhm. Yeah, I think that's key. I and sometimes people just start thinking about it, but I do think that's the advisor's job to pull to ask the question. And I would add to that, if the company has a bonding relationship, um, the bonding company, and if you're like a contractor, you're going to have bonds and stuff. The bonding company needs to know what you're doing. You can't jeopardize your major credit relationships in the, in the event of doing this, you know, you're fully leveraging the balance sheet, so it's, you know, it's gonna be an impact to credit creditors for sure. So those are good, good comments, yeah. Agree it's the advisors really should be, you know, because the company, I mean, this is new to them, the advisors have been or this is their job, you know, they do it on transactions all the time, um, and the company, this is their first transaction, you know, and, and for some, this may be their first senior finance, you know, first credit agreement, you know, um, a lot of these these companies, you know, they didn't have any, uh, or they may have had, had just a small line of credit. So, so that whole process with the bank is um. Maybe be new to them, so the advisors can really um help, I think the company get through that process um and so that it's not a disruption um and then my last point I think which we did kind of touch on was like prolonged negotiation, so you know that. If there, if the negotiations are prolonged, that's gonna push a closing date, and really they, everyone needs to be responsive, which is what we talked about it, uh, that's with respect to everything with respect to diligence, with respect to, you know, responding back on the term sheets and um. And also like financial information that the advisors might need, you know, all of that's gonna play into your timing, um, as to when you can close, because all of those steps need to be taken. So if everyone can, can meet that, the, the proposed timeline, you know, this can get done in your 8 to 12 weeks once you've decided to do it, but um. But everyone has to do their part. Yeah, I, I love your idea on the daily status report and then I know for me, I do like a weekly update and I, I'll send it to everybody involved and here's what everybody's supposed to be doing and I try to like end every week with, hey, this is what we're doing next week and that you do have to have somebody that's gonna, you know, Move the timeline forward. And I think it's the financial advisor, it could be the attorney, it could be, you know, whoever, but somebody's got to step up to the plate to do that because you could make it, make it, you know, so much better by getting this staying on the right timeline and keeping, um, you know, your client informed and, and I think that's the right thing to do at the end of the day. Yeah, I think it's the number one reason that, um, timelines aren't met, that expectations aren't met, um, it's because somebody isn't really doing their job, um, and, uh, or doesn't know what they need to do, you know, so it, it, it's just, it's, it's just key to make sure that someone's moving it. So with the amount of time we have left, I'm gonna have one final question and then we'll kind of move to some final comments. And, and I have to ask it because of all the craziness of 2020, um, what are you seeing in terms of like the, the results of the election, with COVID this year, um, you know, you and I were just talking about a storm that just came through Florida recently. We've had, we've had 2020 has been the weirdest, most weirdest year ever. What do you see that happening or or affecting um ESOP deals from where you're looking at? Uh, well, it's been such a really unusual year, um, crazy year, um, but I, I would say things were, they were really slow in March and April when things first shut down, um. There were not really any deals, you know, nobody was doing anything. Um, I think we closed a few deals, but those tended to be like they were far enough along in the process. Um, that they wanted to continue, um, and that they weren't significantly impacted, uh, by COVID, so we did have some deals closed kind of in that March and April time frame, um, but then it was pretty slow, and then things started to pick up a bit, um, during the summer, interest in the ESOPs and, um, some deals they started to pick up and those again were primarily though in industries. That had done well, um, in COVID, um, and not uh significantly impacted, um, and I knew that there are a number of transactions that are closing in the 4th quarter, um, so I mean that's all positive. Um, I think the election, you know, I think the, the concern there, what I heard of was um. Potentially change in the tax rate um with Biden winning and, and prior to knowing if he had won, you know, that was the concern, but, but that isn't and, and the flip side, that isn't gonna happen on day one, so I don't think that drove a bunch of the any kind of, I didn't see any big. Uh, influx in everyone wanting to close by December 31st because of a, a scare in the tax rate. I mean, the, the Biden administration has an awful lot they have to handle on day one. So I mean the tax rates, I think are likely to change, but it isn't gonna be a, I think a day one, issue. So I would expect we may see more transactions in early 2021 because of that. Yep, yep. And I think too, some of the fatigue that people have after COVID and their business issues that they've had, like, I've had people say, you know, I, I went through 0809 recession and, you know, here's COVID and another potential recession and, you know, and it's, it's, so I think sometimes people are like, you know what, that's kind of the trigger for me and I'm ready to, to um go ahead and move forward on this ESOP because of all those, you know, going through those difficult times again. So, but, and, and a lot of, I mean, a lot of people have, you know, um. A lot of industries have done OK, you know, have done OK that is very true too. I mean, it's a very different field than the recession in, you know, in. Some of them, yeah, like, some of them have boomed honestly and, and just had the best year ever, which is, you know, so, so yeah, definitely it will be interesting to see what what 2021 brings. So, so with that, I'll just kind of throw out some of my final comments, um, just, you know, and what Rene was talking about, I think what I heard and what I would just kind of highlight is the value of doing your homework and really educating yourself will definitely be a plus as you go through and, and like I said, not just in your knowledge of ESOPs, but also in an understanding who the right advisors are to help you, support you through the process. And then going through it, just really understanding the, the key, you know, pieces of the timeline that your company has to get prepared for this before you get there. And, and I always throw out a five-year planning process for everybody just because it's a, you know, not that you can't do it in a year, but having a 5-year forecast of saying, you know, this. This is how I want this to go. It's helpful because there are things that you get into that you want to maybe change around a little bit before you get into your, your management presentation and and this really display, for instance, your, your management team and, and your succession plan and who's taking on these roles, you know, that takes time to develop. So those are my highlights. Um, what about you, Renee? Um, well, I agree with you on the, on your, on the homework. I think that, um, the main takeaway is, is to Uh, make sure that, um, there's good communication with your advisors, that every that somebody is, um, managing the transaction and, and making sure that this is, um, kind of leading all the parties to closing. I mean, that's really key. That's going to be key that everybody has their role and everyone does their job. Um, I think to make sure that there's as little disruption in your timeline as as possible. Yeah, and definitely you can avoid all that, so. But, but I just want to stop and say thank you for your time today, Renee, and, and, you know, for just adding to what we would hope is in this, in this podcast is a good educational resource for anybody that's thinking they might want to go through an ESOP. And I think you've been very helpful and certainly with all the experience you've had, I think you've added a lot to our podcast. So thank you for that. Thanks for having me. Excellent. So, and with that, I just want to remind you, you know, you all to um subscribe to the podcast if you think it's helpful, give it to a friend. Um, have a great day. We look forward to our next step on this journey.