Problem

The owner of a long-standing company, with 180+ employees that specializes in surveying and inspecting healthcare facilities, was looking for an effective way to encourage its workforce to have a vested interest in the business’s mission and sustainability. The owner recognized the need to empower her employees to share in the long-term success of the company. She sought a strategy that would engage the workforce in the company's success and encourage a long-term commitment to accomplishing its goals and objectives.

Solution

The decision was made to implement an Employee Stock Ownership Plan (ESOP). An ESOP is a program that provides employees with an ownership interest in the company, directly aligning the employees' financial interests with the company's success. Benefits of an ESOP include increased job satisfaction, financial rewards tied to company performance, and a sense of ownership and responsibility for the company’s success.

To successfully initiate the ESOP, expert guidance was needed. The owner brought in Firstrust Bank to help assess the situation and advise on how to best navigate the financial impacts of implementing this program. It was concluded that to execute the ESOP significant financing would be needed to purchase the owner’s stock, valued at more than $15 Million. There would also be additional financing needs to support the acquisition and short-term working capital needs of the business.

Results

A loan was secured to support the ESOP's acquisition and an additional $2.5 million line of credit was provided to address short-term working capital requirements.

Conclusion

The partnership with Firstrust Bank resulted in the successful implementation of the ESOP and helped to create an environment with greater shared responsibility and pride for the business. This partnership provided the business with both the financing to move forward with the buyout, as well as the necessary working capital for its sustained operations.