Succession planning and the employee ownership solution (Tucson)

hello everyone good morning um I'm super excited to be presenting to you all today for our morning webinar on behalf of project Equity um and we will be talking about succession planning and exploring the employee ownership solution um in your succession planning um we are so gracious and thankful to be partnered with the City of Tucson and Connect Tucson to be able to bring to you all our business support services um and and this includes employee ownership so without further Ado I'll go ahead and get started for our presentation today so my name is Annie Palacios I am a business engagement and partnership manager at project Equity um and I will be your presenter for today so before um I get started I wanted to give you all just a brief overview of what we will cover in our agenda today um so we will go through succession planning and the importance of succession planning um and talk to you about your options that include employee ownership we will Define what employee ownership is and all of the great benefits that it can bring to you we will go through the employee ownership models and I'll share with you all some um business case studies of employee-owned businesses we will go through the transition process that we do at project equity and and touch on how it works in practice um and then I will go ahead and segue to our guest host that we have here who will provide you a brief testimonial um on what it's like to be part of an employee owned business in Tucson and then finally I will wrap up the Q a session at the end so first and foremost I'd like to share with you all a little bit more about what project Equity is and our work that we do so essentially we are our national nonprofit organization we are headquartered in the Bay area of California and our specialty lies in employee ownership transitions of existing businesses we have a lot of different Partnerships with municipalities across the states to really help us drive this work and we see a lot of reasons why employee ownership is is advantageous so it provides a fair sell price to business owners and it keeps businesses rooted locally and retains quality jobs for workers so with succession planning employee ownership we really want this to be on the menu of your options that you should consider um it's a quickly becoming a very popular choice that many business owners are considering when they're planning their exit strategy and a lot of municipalities are seeing this as a way to preserve their local businesses and keep them going on for the Long Haul so again super excited to be able to partner with the City of Tucson and to support your local Regional businesses in the area so in addition to a fair sale price for business owners um I've mentioned the quality jobs that workers are able to have through employee ownership and also there's some additional benefits of increased worker productivity um incentivization and the strengthening of local economies so employee ownership you know this all sounds like a really great concept right but what exactly in is it by definition so employee ownership um in a nutshell it's a sale of a business so the sale of a business is assets or the sale of the businesses stock to a new entity whereby the employees are now the owners of that business so again really driving this home here that with employee ownership owners can receive a fair sale price for their business and in addition to that workers can also have some asset building through having an employee ownership stake other benefits include less Workforce volatility and more financial stability for the business itself so with this particular slide I wanted to highlight um some some key points here about employee ownership so when we first started our work at project Equity we were primarily focused on the silver tsunami crisis and that really is a term that we used to identify all of the droves and droves of retiring baby boomer owners um whereby through their retirement they were putting their businesses at risk of closing up um and then in navigating that through employee ownership we saw okay employee ownership can really address that particular crisis we got hit unfortunately with another crisis that we had to deal with which was the covid-19 pandemic and you know so we figured out that employee ownership could be not only a good exit strategy tool for businesses but it could be a you know economic strategy for businesses to increase their stability and also to um really um really work as a Workforce retention tool as well so employee ownership it's good for businesses all across the country for various sectors of industry and including it's very good for Arizona so and with these next slides I'd like to share with you all how employee ownership can benefit your businesses in in Tucson in particular so at project Equity what we do when we have our Partnerships with with different municipalities is we do a lot of data studies and with our data studies we're able to find out you know how many businesses have been around for 20 30 40 years how much revenue is generated through these businesses and you know how many employees are employed at those businesses as well so we gauge if you will the impact of these Legacy businesses and how employee ownership can benefit them so here I'd like to highlight that through our data study we found that 2 000 businesses have at least 10 or more employees those businesses have been in operation for 20 or more years in Tucson now these businesses generate 16 billion with the b in revenue and they employ 60 000 workers in Tucson alone so you can see that keeping these businesses thriving and operating you know successfully is very important to the region and we see employee ownership as a way to preserve a lot of these businesses so a part of my role at project Equity is I speak to a lot of different business owners um and you know we often hear that you know oh well you know when I'm looking to exit my business I can put it on the market and you know it'll sell it'll sell pretty quickly maybe you know just like that um and in reality the the data that exists doesn't really show that it shows that really only 20 of businesses that are put on the market to sell in reality actually end up selling and even less than that so about 15 of these businesses transition intergenerationally among family members and one in five businesses are already at risk of closure so as you can see the odds are stacked against you um when it comes to just selling your business really quickly and having that as an option and employee ownership could be the way to find a buyer in the form of your employees who have been there with you since the beginning now of course um part of succession planning in our education and project Equity we want you to be aware of all of your options um and as you can see there you might be aware of some of the more you know traditional ones that have been out there for a while like selling to family um being acquired by an outside buyer and while some of those options May provide one or two benefits we see employee ownership as you know taking off all of the right boxes for you so your legacy of the business is preserved you receive as a selling owner a market value for your business you can Avail yourself of some tax benefits depending on how these models are structured and you can retain that important Workforce thank you so I also want to highlight all of the other great advantages that employee ownership can bring to your business and to your Workforce so employee ownership it creates stronger businesses and it also creates stronger economies now the data has shown that profit margins are in fact 8.5 percent higher in employee-owned companies than in their traditional counterparts the sales and employment rates grow at two percent faster per year in employee home firms and also again speaking of uh less Workforce volatility fewer layoffs happen in employee-owned companies um versus you know traditional companies and then with this particular slide it's really important to to mention that employee ownership um when a firm becomes employee owned they're better able to weather economic downturns um so we found that during the height of the covid-19 pandemic that the employee-owned companies tended to outperform other firms by retaining jobs at a four to one rate during again the height of the kova 19 pandemic so very important and finally better wages better incomes for employee owners so and several studies indicate this so we found that among employees who are part of worker cooperatives they earn two dollars more per hour and 53 Higher incomes are attained among ESOP employees so if that weren't enough in and of itself we also have some other unique benefits of employee ownership transitions so in addition to the fair sale price for owners owners are also able to customize and craft their own exit timeline based on their different needs and goals that they want to achieve and owners are able to preserve in addition to their legacy of their business the all-important culture that they've created and built um they're the people the relationships and other assets that that are important to the business so we've touched on the definition we've gone over all of the advantages of employee ownership now let's look at the different models um of employee ownership so at project Equity we focus on what we call broad-based employee ownership and essentially what broad-based means is we want as many people to have the opportunity to become employee owners so we have three different models that we promote and advocate for at project Equity so we advocate for Employee Stock ownership plans also called esops worker cooperatives and employee ownership trusts also called eots now there's a lot of detail involved in each of these models so for the interest of time I will go ahead and just give you all um the main characteristics of each model to take away with so with esops these function primarily like 401K retirement plans whereby some of the shares of the company or all of the shares of the company are put into a trust that is held for and on behalf of its employees now we tend to see e-stops a good fit for companies that have you know that are larger um in Workforce size that have at least 40 or more employees and have a 2 million annual revenue um per year so also with these models just to say that they are bound by federal regulatory laws so department of labor laws um erisa law um and they require High setup costs and maintenance costs so they can be costly um but that is offset by the huge tax advantages that they bring now with a worker Cooperative these tend to be 100 employee owned um and they have Democratic governance um and profit sharing already built into the model and at project Equity we see this a good um fit for companies that have you know maybe at least 12 or more employees um they're good for all sectors of Industry um they have the employee members uh make up a lot of the board of directors and the employee members can also they sit on the board but they vote for the board of directors as well um and there are some tax advantages depending on how you structure um the worker Cooperative model as well now with employee ownership trusts this is a trust structure that really exists to keep the business going in perpetuity so um without the potential for being acquired by an outside buyer and to exist for the benefit of the employees um it is a very bespoke customizable model it has profit sharing built in and it can also have Democratic governance incorporated into it um one thing I will say with employee ownership trust is that you know there are a few if any at all tax advantages but similar to a worker Co-op we see them a really good fit for companies that have 12 or more employees foreign you all some really good examples of some companies that have successfully transitioned to employee ownership so I'll talk first about a slice of New York now this is a very popular Pizzeria chain in the Bay area of California and they transitioned to a worker Cooperative um back in I believe 2017. and what I really wanted to highlight um this business is because it really shows the importance of how profit sharing helps the employees so with a slice of New York they were able to distribute almost half a million dollars uh in profit sharing to its 35 employees within the first two years after becoming a worker Co-op so again this is really huge to highlight that worker cooperatives and employee ownership in general provide that Economic Security that's hugely beneficial to workers um especially if you're living in the high cost area like like the Bay Area thank you so this is a recap of all of the great benefits of employee ownership and then it touches on some more information that I'll share with you um towards the end of the presentation here so with employee ownership again the the selling owner can achieve a fair market price for their business and this is achieved through a debt Capacity Analysis that we perform here at project Equity to determine the sale price of the business employee ownership it can bring huge tax advantages depending on how you structure the business um where the owner and the business can both benefit the owner can control the process now this is a really big item to mention because the owner not only can drive the sale the timing and all of that but it's really um dependent on um you know their needs and and what they're aiming to achieve here employee ownership it supports flexible financing um and I'll touch on this a little bit more um as we go along in the presentation but a leveraged buyout in terms of how these deals are financed allows for this flexibility and then finally employee ownership strengthens local economies so the employee owners are able you know to increase their assets to build their Equity um the business is able to go on and be preserved to continue operating successfully and that money is continuing to circulate in the local economy okay so let's move on we've heard all the great facts about employee ownership and advantages on the different models so let's move on now into how the transition process actually happens and in all of those steps so let's look at you know what happens when you sell a business so when you sell a business again it's stock words assets are trans or transferred to um a new entity whereby the employees are now the owners okay the business is this is financed through a loan that is taken out by the business and then that is paid down through a future cash flow of the new employee owned business so doing it this way allows for the selling owner to get some liquidity up front and for management to stay in place and continue on operating that business successfully now in terms of financing the sales so typically in these types of Transit transactions um there are two main components of of the financing so on one side there is financing provided by a traditional lender like a bank or a community development financial institution also known as a cdfi that puts up the financing in say an amount of 50 to 70 percent and then the remaining amount would come from some type of seller financing so typically as sellers know whereby the owner would agree to receive installments paid back over the loan period with some interest that is from the new employee owned entities cash flow so um so that's typically how these are done and then I will say as well that there is a very small employee owner buy-in that is specific to the worker Cooperative model that is just a nominal amount that is set relative to the workers earnings again that comprises a small portion of the financing only with the worker Cooperative situation foreign so at project Equity we have the whole client Journey experience that we take you through when you're exploring and pursuing the path to employee ownership so the first step is the exploration phase so is this just something that you're thinking about are you wanting to this to explore this opportunity further this is the first step so this is where we have the consultation phase whereby myself or fellow colleagues on my team will speak with you and assess if this is a good choice for you um at this time and then we go to step two um this is the part of the feasibility this is where we assess um the financial due diligence to see if the employee ownership opportunity is viable for you and the business at this point step three is the transition phase so this is the the time where we start looking at how will the deal be structured um how would it be financed all of those things and how would the employee owned business what would that look like in the future we do all of those um we look at and explore all of those elements in the step three phase now this next phase is just closing the sale this is where we make sure everything is buttoned up and good to go so that the terms and all of that could be finalized and then finally at project Equity we really um go beyond the the closing of the deal phase with you um we offer post transition Services as part of our work um called the Thrive step which is we are able to continue Consulting with you for a period of up to two years after the transition occurs just to make sure that the employee owners feel like they're performing optimally and that the business continues thriving for years to come so I mentioned step two the feasibility phase so just to go a little bit more granular here and to explain to you what a little bit more about what the steps involve um so this is where again we do Financial modeling um to come up with you know debt Capacity Analysis to see if this is financially viable for you so again we conduct that debt Capacity Analysis to establish the viability and to also come up with recommended sale price sale prices for the business and the sale price ceiling um also a part of this work involves Employee Engagement so we support that throughout the process and we get started on that engagement um in the feasibility as well so we also look at what your existing management looks like and what it can look like going forward so we have to plan accordingly um for you know any changes that might occur in your management and then at the end of the feasibility we come up with a raw construct type of straw model where we can see what the new employee owned entity would look like so Readiness doctors this is where we go through Readiness factors with you on our consult calls um but we often get asked you know how do I know if if I'm ready for this how do I know if my business is viable for an employee-owned transition well here are some of the you know requirements that that we would like you to consider um that you should be you know aiming to achieve if you're not already there uh for considering an employee ownership transition so we recommend that project Equity um 10 to 12 or more employees for a worker Cooperative model or an employee ownership trust model and 40 or more for esops we want you to have a profitable company so has the business been in Good Financial standing um for at least five years so we like to see steady profitability of the business um has the business been operating um for many years so a proven track record of of business history as well and then finally um when we do our due diligence on uh financial analysis we want to see um as minimal debt on the books as possible so again our team look at short-term liabilities long term and all of that to get a sense again of is this the right fit for you at this particular stage in time so if you don't already know um you all have some amazing employee-owned businesses existing already in Tucson so I wanted just to bring them up to your attention so we have Barrio Brewing Company uh Pima Medical Institute technicians for sustainability and Tucson asphalt which um I'm super excited to to share that we have a representative here of Tucson asphalt Ramon who I will hand it over to you in a little bit um so he can provide you a brief testimonial on employee ownership and how it's it's impacted the business um but yes so just so you know you have employee ownership right at your doorstep here so before I I hand it over to Ramon um and before we go into our question and answer session I just want to provide you all um my contact information and say that you know please feel free to get in touch with me um I'm happy to discuss you know more about your business assess if this is something that that you should move forward with at this stage but I'm happy to talk to you so please get in touch with me that's my email address you know we're super excited with um to have you know to be a partner with the City of Tucson and to be able to provide you with our business support services um because of this partnership so so thank you all um I will go ahead and and hand it over to Ramon for a few words about employee ownership and how it's it's impacted Tucson asphalt so Ramon over to you all right great uh hopefully everyone can hear Jeremy thanks Annie thanks project Equity uh for participating yeah Tucson asphalt uh first of all my name is Ramon ganders uh Chief Information officer here I've been with the company for about two years this is my second stint with a uh an employee-owned company so I'm familiar with employee ownership uh we started our process back in 2018 uh doing a lot of due diligence as Annie kind of listed with the education and meeting with various folks making some decisions on whether or not it was a good model for us we we became on ESOP officially in January of 2020 and certainly what I can speak of being with two different companies now it definitely first of all I will say I'll never work for a non-employment company ever again what I've realized is the culture has shifted completely when you become an employee-owned company the morale is is different and obviously Employee Stock ownership plan ESOP is really truly an entire retirement plan as stated earlier and the best part of that is it's at 100 no cost two no cost to the employee obviously there's some benchmarks to work a thousand hours a year and uh in our case it'd be 21 years or older in order to be part of that and there's a vesting process in order to to get to 100 percent vesting into the the ESOP um and so it's a commitment but the best part is it's a commitment and no cost to the employees versus a 401k uh we see 401ks every day like we do right now in our stock market up and down I look at mine every day um esops are not built that way and I think that's a great benefit to the employees not having to put any money their own money into the plan um what I will say um particularly with uh the way I've seen esops grow um it's it's as Annie said there's a lot of upfront um things you need to know uh do some research it's a continued education uh with your employees we meet with our employees every two weeks we actually did this morning talked a little bit about esops uh we're headed actually to a conference tomorrow with about seven of our employees again continued education um to bring back to our employees and able to share some of our learnings and fact-finding um being 26 years in the business here at Tucson asphalt I think it was a perfect model we're about 42 employees as of this morning and we've seen some great success our turnover rate in the last nine months has been probably the best that's ever been and I think it's a testament to to our employee ownership model and being able to share with the guys what that means for the retirement uh for themselves for their families um in years to come um I think uh Tucson um you know has a lot of great companies here we do communicate with one another um amongst that slide that was there there's plenty of other out there out there that we communicate with to do some sharing and and figuring out there's things that we need to be mindful of being a new ESOP but I'm certainly grateful to be part of a great team here that was committed to it our previous owner Paul Polito um uh did uh consider other options and I'm really grateful for him to look at the ESOP model uh to be able to uh as stated earlier continue the Legacy for him to sell the company at a fair market value um and Tucson asphalt's name obviously will be something that will be here forever from thankfully to him and now it's up to our management team here um to grow this company to to things that maybe he never considered while we take care of our family our team and I think that's a great benefit to this community is a great benefit to our employees and so really grateful and and I should say you know we did not use project Equity um and I wish we had and I've met the team there now for several months and I'm really really grateful for for everything they've done there I think this is an absolute great benefit uh if you're considering uh to go to an employee-owned model use project Equity I think the team's fantastic and um you know I'd be happy to answer anything but honestly what I could tell you is it's it's a great opportunity to continue the company moving forward we've seen a lot of businesses in Tucson closed and I wish that we had this project equity in front of our businesses here a long time ago to maybe help preserve that Legacy in our employees and so we want to make sure everyone's employed and um and has a job so thanks to project equity and yeah I'll leave it at that but if you have any questions please let me know so we are open for Q a so if anyone has a question please feel free to ask it now um to put it in the chat um we're available here um to answer your questions well if there's no questions now and you come up with anything um after thinking about what we've discussed here at our webinar please feel free to email um after the presentation email any of us and um yeah we can go ahead and just uh wrap up for today but thank you so much for for all of you who've attended um and and dropped in today um we hope that you found it interesting and useful and we hope to hear from you again to see if you're considering employee ownership I think there is one question on there just take a peek foreign you explain how a typical financing scheme works so yes Bradley thank you for quite your question so um with financing these transitions are done through through debt so the forms of loans to the business um so again it typically varies as to how much of um the financing comes from a traditional bank or a cdfi um but it can be like I mentioned earlier anywhere from 50 to 70 percent um and then the other component is some seller financing that's attached and again that can vary depending on the unique circumstances of the business um but that's that's typically how it's done we do have some funding that is available at project equity for some businesses as well so um so yes that's how how these transactions tend to work so I hope that that answers your question a question a little bit there Bradley I think there was a another question there it says hello what is a typical range of cost for legal fees for the car for the conversion process yes yes so with legal fees um this should be budgeted for accordingly outside of the the the transition to employee ownership and those can vary depending on you know where you're based um in the country um so I really can't give a specific price point but you do have to factor in legal costs or any other um business advisor that you might bring on a tax specialist or all of those but legal fees are separate um and you should explore what your options are based on where you're located in the uh yeah I'd be happy to follow up you know we've had some some questions about that internally here uh there are definitely some fees there that that as you mentioned Annie to to budget it for and I would suggest doing that for at least the first three to five years because there's typically a lot of questions that you might not know do your plan documents and different things uh particularly on the esep side you do for us here we have a board of two employees we have a trustee and then an independent board and between that sometimes there's questions that you have and my suggestion is absolutely planned for that but I think as the years get older um and I could speak to that for my last company as you get older and more and become more mature those fees typically um decrease so right yes yes thank you Ramon um that's very good advice um in terms of budgeting and plan ahead um Bradley I see that you have another question as well regarding um Banks willing to make loans to employee trusts and what we the project Equity makes loans as well um so to answer that Bradley I can say that um when we have you know I've mentioned traditional lenders but also there are financial institutions called cdfis community development financial institutions and those function like primarily like Credit Unions they are very Mission oriented and they offer really affordable flexible lending terms um you know when they're used in these uh in the financing um so they see worker cooperatives they see employee ownership type of transitions um as you know really good Mission oriented transactions to finance so yes they will you know be part of that financing and they're able to do those type of financing deals um but a huge part of what we do at project Equity is looking at you know doing that due diligence to see is this financially viable for you so we look at when we mentioned Readiness factors we looked at profitability of a business so we want to see you know what net incomes you've been achieving per year what's been your annual revenue what's your ebitda and all of that so that we can make sure that the business can sustain uh the debt to do these transitions going forward so that's really important but to answer your question yes um cdfis and some traditional lenders if you've had a long-standing bank that wants to you know do some of the financing you know they're certainly able to be a part of that process um and we do have some funds um in our at project Equity that we can use to tap into to help some businesses there are some requirements um involved with that meaning that you know we um it's part of our mission to help load a model to moderate income um workers um people of color workforces but we can certainly assess you know what type of financing we could bring to the table once we get further along in a process with with the with the business owner so charges yes so at project Equity we have we're able to provide free consult calls um education um as and all of that part of being a non-profit as well as through our our city Partnerships that we have including with with City of Tucson um when it comes to doing you know feasibility assessments and transitions um we do have to um look at some costs there to charge so when we do for feasibilities and for transitions we look at ebitda so we'll look at the three-year average um of the most recent years of the business to determine um what the price point is um because yeah we do a sliding scale um so I can't give you an exact specific number right now without you know having been consultation with you and without doing an initial financial review first um but yes we we do look at price points based on your three-year average ebitda um and transitions just to give you a ballpark here for the cause um for a worker Cooperative or an eot from the whole thing you know from Soup To Nuts we call it the entire transition process could you know we give ranges again because every business is different depending on complexity and nuance and all of that um but it could start anywhere from like 35 40 000 at the starting point to 55 or maybe even 60 when it's all said and done um so again I'm sorry that's very general but again it's down to the business um and we have to to see a little bit more um what's involved and how complex your business is um before giving you a specific number to narrow that down um and then Ramon would you like to speak maybe on the ESOP pricing side of the house um yeah I mean it's it's it's probably in the same range and some even a little bit more um a lot of that more on the legal side uh because once you're selling the company to the owner or sorry the owner's telling the company to the employees there's fees Associated to basically everything we do and just like anything else right with when calling attorneys um and that's just that's just the nature of the business uh in this case and and I would 100 recommend that you work with an attorney that um at least has ESOP knowledge and counsel um I I'm not even sure we work with somebody um out of state I'm not 100 sure there's somebody in the state of Arizona to be honest with you maybe Annie you you might know but I I haven't found someone here locally that has specific knowledge on esops but what I will say to answer the question is be prepared to to work with an attorney for sure and make sure as you mentioned in your slideshow I'm dotting the eyes and Crossing those tease exactly exactly we have a lot more questions here so we'll try to get to um as many as possible and if for some reason um we don't get to answer everyone's question um please know that you can follow up with me and I'll provide you an an answer after this presentation as well so definitely no worries on that um let's see so do owners usually or often recuperate their investment in legal costs by earning a little more in the sale as compared to trying to sell their business on the open market okay there's a lot of things to unwrap in this question so okay let me let me do my best here to try to to unwrap this one um so depending on how you finance the deal you can earn um earn earn interest so like say for instance when I mentioned the okay traditional lender cdfi comprises 50 to 70 percent of the financing and the rest is a seller's note if you do more sellers uh financing seller financing um you are able to get that Garner interest with time over the loan period so you know if the business is um growing um doing really really well profit wise um and then you get that additional interest it might be worth maybe taking on a larger seller's note and benefiting from that type of of deal structuring when you're doing the finance um and then when trying to sell their business on the open market and then again this goes back to how quickly and will you be able to sell your business on the open market you know and of course you know at project Equity we obviously advocate for employee ownership but we recognize that you know you want to consider all the options available to you so if you consider putting your business out on the market you know of course that's an option but um just be mindful that it might not sell right away you might not find that right buyer you might find a buyer that has different goals and has a different mission strategy than what you have you know um so you will get you know if it's especially if it's a strategic buyer or private Equity Firm you can get you know good good money from from selling that business but not necessarily keeping your Workforce or keeping it locally rooted in the community where it's been um so so there's a lot of you know pros and cons and things to weigh as you're making um an Exit Plan um as you're thinking about your options but if you can you know explore employee ownership and and consider that for your business you know we'd love to talk to you because it could really be the way forward for you um so let's see another question here um what if your company is doing around 3 million in sales but only has 25 employees with this work for an ESOP great question you know at project Equity we always give you know recommendations based on um the experiences of our client services team and working with businesses but you know every business is different there are certainly exceptions um you know sure if you're a business that you're growing you have 25 employees now but if you're you're taking on you know two in three months you have plans to bring on five or to eight folks next year you know if you have that kind of uh trajectory going forward for your business um yes an esot could work for you but um what you do want to plan for is as Ramones rightly said you you got a plan for this then make sure you get you know a person who really knows what they're doing good partners um a good trustee legal um the right legal team um so you you gotta account for all of that but but yes you you could if you're doing three million in cells um also looking at your ebitda so the earnings before interest tax um depreciation amortization that you know line item on your income uh statement that is very important as well to look at um but to answer your question yes um it's possible um but you know happy to talk about your your specific situation one to one to look at it deeper but but yes it could be possible uh Ramon do you have anything to add on that as well just be you being an ESOP at Tucson asphalt I was going to say that I know of a company that's uh doing actually smaller than that employees and roughly about that in sales that's been in ESOP since 2019 and um I've heard nothing but good success stories from from a board member there so uh I would say that yeah I think depending on your specifics it could work very well great great so thank you for for that question a really good one um have you ever worked with Community foundations for loans for worker cooperatives um yes so we have um Partnerships with some cdfis um for some some loans that we have um so so yes we do and again just to reiterate that with cdfis they support Mission oriented transactions like worker cooperatives um so they see the value and and they offer that that um flexible um um financing um through through working with them so so yes we do um is there a real benefit from an ESOP over Co-op or trust um I would say that there's different models for every type of company there's no right or wrong model um it's just dependent on the specific owner the specific business and what you're looking to achieve um for your company um when we first started at project Equity we focused primarily on worker cooperatives but you know e-stops are a really good fit for companies that are larger and and have different needs or maybe the owner really really likes those tax advantages um and that that's really important for them so you can incorporate Democratic governance into an ESOP model it's not inherent in the model itself but project Equity we can help support Partners who do that um who do the ESOP and then we can work on building that Democratic governance into it so so there's no right or wrong model it's just dependent on what your needs are um with the worker Co-op as I said there are some tax advantages um I'm not a tax specialist so I give you the general um view there we we encourage you to speak to a tax specialist but I will say that you know with a worker Cooperative that profit sharing that's built in that model that is tax deductible to the business um and and yeah it's a good fit for companies that are you know smaller um and then with an eot again that's um really we've seen a lot of interest in that particular model um over the I would say the last 18 months um it's a model that has been hugely popular in the UK um and now we're doing more of them and we're seeing more of them in in the US um and it's just really where if you want that business to keep you know to remain intact and to keep going without getting acquired that's the way to go if you have a particular Mission attached to your business um that's the way to go um and if tax advantages aren't really you're not interested in that then an eot could could work for you so again no right or wrong it's just dependent on on what you're looking to achieve and then in our consultation process we really work with you to determine which is the right path to kind of steer you towards um and and we can get a better um better sense of which one to to point you towards if that makes sense so so thanks for for your question um see I think we have one more so a lot of good active activity in the the question chat so thank you all um if you already have a profit share program in 401K does this change the thinking of which program might be most attractive um you know we get this um a lot um I would say that if you have a 401k you can still keep that um and profit sharing it's great if you already practice that in your business because it's just going to make it easier when we do a worker Co-op or an eot and we we start talking about that you've already practiced that your employees are already used to that so it's just gonna make it better basically um but you are allowed to have a 401k um as well as when you do an ESOP remote I don't know if you want to add anything because you deal with that directly already if you want to add some color to that yeah we we have uh 401K option as well here that we match with the company uh to employees and so yeah we strongly encourage it in fact to do you know to have the 401K boss your ESOP and uh we show actually a great model that shows you know hoyex who's with us if they contribute to 401k and get an ESOP versus employee y who has neither of them um or maybe just or just the 401K there's a significant difference and we we you utilize the 401K as a retention tool on top of the ESOP so going back to what you said earlier in the presentation this is also a retention Tool uh particularly construction wise so we we try to utilize everything we can on top of the um the ESOP great thank you all and if you again think of anything that you know you might not have thought of before or if something else comes to to mind please feel free to get in touch with me um if you have a question for Ramon I can field it to Ramon um later on but just let us know if you have anything that we can answer we're happy to do so so thank you again great great Lively q a session so if you don't have