EP20 - Corey Rosen with NCEO - An Update on ESOPs

 On the podcast this week, we interview Corey Rosen, the founder of NCEO and a huge contributor to ESOPs discusses the updates and trends relative to ESOP companies. Through our discussion, Corey highlights the expansion of ESOPs as the finance world has begun to leverage this realities and benefits of an ESOP in private equity.  Some of these ideas discussed on this podcast have been highlighted on a recent 60 Minutes program (which can be found on our website at Journeytoanesop.com). 

Transcript

[0:10] Hey everybody this is the ESOP guy we are on a journey to an ESOP and Beyond we're in season 5, so excited to come today with Corey Rosen with nceo, with Corey we get to kind of get an update on a lot of different things because he's a huge um part of the ESOP community and has been has been for a long long time so Corey this is your second time on our podcast welcome again to the podcast, oh thank you it's a delight to be here Phil, thank you so um so real quick so for for those that are not aware of the nceo which is the national Center of employee ownership um Corey is the founder of that organization correct yes, and really the the the leader and so um talk talk a little bit about the NCO as as some people are brand new to that to the ESOP world you know the community as well as just some of the resources in the marketplace that are available. So we're an organization of 20 staff about 3,000 members, we had almost 2,000 people at our most recent annual conference we would have had more but we ran out of space. And we're we're not a lobbying organization.

[1:23] Uh we are not a Consulting organization we focus our work on providing, really good information about esops both for companies and other kinds, of employee ownership plans so we provide a lot of Publications we have a document Library which is extremely extensive, it has dozens of documents forms checklist templates we have an ESOP calculator available. We do webinars every week and Community conversations we also have a variety of live meetings, the meeting that's coming up next will be our fall Forum that's our smaller conference that's in Indianapolis in september we do a big annual conference every year in the spring.

[2:18] And we just really focus on trying to provide people with great resources 1 of the things I'm most excited about is if you have an ESOP. We have a new resource called the download and it's a monthly free communication tool for members so each month it's a different tool you can directly adapt to use in your own company we also do a lot of work, with companies who are thinking about becoming employee owned to try to make sure that they're on the right path and making a decision that works for them. Yeah and that's and that's a good point and I 1 1 thot because I know you guys do a lot of statistical analysis too like you know how many esops are there now or whatever do you do you have a current figure on that like how many esops in the country are are currently um we say ESOP employee owned company it could be partial or 100%, right so there's about 6,700 esopsand about 6,200 of those are in closely held companies.

[3:21] The large majority of employees are in public companies in ESOP simply because public companies are so much bigger but the large majority of esops are in private companies. And most of those now are 100% esops owned by S corporations. I owned as s corporations but there are certainly a lot of Corporations and esops that own less than 100%, yeah and that's and that's good like what I what, thinking through too is like that it always seems when I first started doing ESOP work I was kind of shocked at the fact that there were so few ESOP companies when you take out the, publicly traded ones right if you look at just that 6200 across the entire part of the United States and I and I've always felt like 1 of the reasons is is they're just not enough information or education like and so that's kind of directly coming back to like obviously the NCO that's a big a big part of your mission is is the resources that you were just mentioning um right, what what what other reasons are that that there are not more esops in your opinion or experience.

[4:32] So the primary audience for esops in terms of the number of companies.

[4:38] Consists of owners of closely held companies who are thinking about. Getting liquidity whether it's because they want to move on or they just reached a point in their life where they'd like to take, some of the shares off the table and get cash for them even though they plan to stick around in the company for a while or maybe there's multiple owners and 1 wants to sell in another dozen. And for many of these companies in ESOP would be an ideal mechanismit provides unmatched tax benefits to the company and the seller. It provides a lot of flexibility and how much you sell and when what role you have in the company going forward and it preserves the Legacy that you've worked so hard to build for your people and your community.

[5:28] But then people go to their advisors their accountants or their lawyers ora business broker and they say. Well I'm thinking about this so what can I do to get some liquidity chances are those advisors don't know anything about esops. Where they've heard something about them but they don't know a lot. And they think well if I tell my client about this ESOP thing if I have ever even heard of it to begin with.

[5:59] And I'm not an expert on it they're probably going to go someplace else plus there's a natural tendency if you don't really understand something well, to say Well it must not be a very good idea if I don't understand it so well yep so part of that is simply that they don't know very much the more Insidious part, is that many advisors particularly business brokers in m&a firms.

[6:26] And the distinction there as Brokers tend to deal with smaller companies and m&a firms with larger dealsand when you go to these people. They often have a much greater incentive to find you a different buyer, and imagine you go to a broker and you say I went to the NCO website I learned a lot about esops I think it's a great idea, that's what I want to do. Well I'm your advisor on thisand I say okay well I'd like to charge you a success fee for the deal. A significant justification for that success fee is finding you a buyer and you say no wait wait wait I already found the buyer I don't need you to do that I don't want to pay you 2 and a half percent of the transaction, to find a buyer well if I'm 1 of those peoplewho's doing the deal. I'm not so enthused about esops because that will make as much money that wayso there's a tremendous barrier there so that's 1 barrier.

[7:36] Uh the second is some people say well it's too complicated.

[7:41] And it is complicated and it's also expensive to set up these plans.

[7:49] But the truth is selling your business is complicated and it's expensive and it really doesn't matter how you do it, it's both those things but nonetheless I can understand why people might feel a bit intimidated. And then the third reason and this is I think the 1 that's unlike the first 2 potentially legitimate 1. Is if you're doing an ESOP sale and you're selling not just a piece of the business but you're trying to sell most or all of it.

[8:19] You're probably going to have to finance the significant part with a seller note, which means they're going to get paid over time and some business ownerssay no I I just really want the money upfront and the ESOP may not be able to do that so there are times when, when you may be in that situation better off selling to someone elseor maybe someone else is willing to offer you an extremely high premium that an ESOP can't, no I think those are those are really a good concise um, number of things that people are dealing with if we come back like the the first 1 was just the advisors knowing more or feeling more confident I remember you know in our own Market in Florida it was like you know when I started talking about esops and doing ESOP work people were like esops don't even they're dead I mean nobody's doing esops and it was like how where are you basing that on you know and and so I think it's really important and that's part of, you know doing podcasting or resources or setting out the information so um because it's it obviously is not right and I and I have learned that is definitely, more prevalent in different markets in the markets that have more education are you're seeing more esops so it's definitely a correlation between education and, um you know not just with the advisors but also with just companies knowing hey this is an option this is a real, really great option when you get down to write having seen a colleague or somebody in your field or your town.

[9:48] Become employee on the Huntsville Alabama has a ton of esops ton of esops because a few they had a few really successful ones, and people said oh well we should do what they did, yeah to totally now you um and this is just kind of kind of go back a little bit on your background but you had spearheaded the 1042 um way back in Champion you know that legislation and when you think about esops they're really just it's basically a legislated um opportunity through you know things like that which you do with the 1042 I know there's always legislation happening and and general that's moving more towards um more rules are coming down and more opportunities are coming so just in general what do you see as the trends there I know there's been some new things passed last year and um I think things are opening up and and sometimes questions come up from people like hey is this going to stay is this gonna is this is this ESOP concept going to be on is going to be here for the uh Horizon of time that we're thinking about doing something.

[10:54] 1 of the interesting things about esops politically is that.

[11:00] They're not just bipartisan they're sort of universally partisan, that is to say everybody supports themthere of all the now 18 pieces of legislation in Congress that have passed on esops and there are also a number of state laws now.

[11:20] The most opposition any of them have had is 1 or 2 votes that you know it's a remarkable thing when you can get Tommy tuberville and Elizabeth Warren to co-sponsor legislation on esops. So there's really noimpetus right now and I don't foresee any. To change the tax incentives for esops.

[11:46] So that's not something I I lose sleep overin terms of new legislation, a few years ago the small business administration was authorized to guarantee loans for smaller Deals they came up with some rules that were totally unworkable. And we and others have been working with them, they they changed a lot of it there was 1 big barrier and I'm pleased to say I've had some meetings with them over, the last few months and I think that last remaining issue will be resolved soon but people are already getting loan guarantees through the SBA. There's a couple of states that have taken the lead on employee ownership Colorado, Washington Massachusetts but particularly Colorado and Washingtonhave programs that subsidize some of the upfront cost. Of doing an ESOP we're hoping that thislegislative idea will spread to other states.

[12:53] So there is some movement uh we'd like of course to see more but, but it seems every few years some other good thing gets added to the incentives for this.

[13:05] Yeah and so you're in in your opinion esops aren't going anywhere I mean it this is a reality of our our the United States of what we we're going to get to you know the opportunity to build more and and get to participate more in those types of opportunities, it's 1 of the few ideas that addresses a serious. Social issue that everybody agrees on which isthe tremendous wealth and security of the large majority of the population. But does that in a way that both parties think really makes sense sojust that intersection is rare. Yeah it's and it's vital I think too the future of the country I I agree with you and that's that's what's great about esops because we can talk about you know the angle of hey how affects the shareholder and the opportunities to protect the company's culture and and the key people the employees and Legacy but the other the other part of that whole equation is what is it doing in our in our country to help you know transfer wealth and to balance out the equation that is can can be lopsided depending on where where you're living, um but the point is is that this is a a solution that hits all of those areas at the same time and and that's why I think the government is so supportive of it what on both sides right absolutely.

[14:24] Um so I think it's exciting so what when you think about like 1 of the 1 of the things I was curious about from your perspective is just, you know are there are I mean it feels like to me are there more esops being created every year for like Say the Last 5 Years and you know and how do you guys measure that if that if that's something you you're aware of, so the number of new plans really plateaued until2021 which is the most recent plan year data we've got.

[14:54] And what we have since then is anecdotal so the Department of Labor. Puts out databased on filings that companies submit when they have plans. But by the time these filings are submitted compiled and available. There's a 2 or 3 year time lag so themost recent data we have are for 2021. And we did see about a 20% increase in the number of new plans. Anecdotally a lot of people are telling us thatthey're really busy and the number of New Deals is going up.

[15:34] So I think there is some growth in that butsee just how important that is in the next couple of years.

[15:42] The 1 thing that's reallydramatically changingis ESOP companies buying other companies. So when we look at the 2021 data for instance.

[15:56] We saw 23% increase in the number of participants. And privately held ESOP companies that's a that's a very large leapfor 1 year hundreds of thousands of new employees.

[16:11] Or added to esops and of that about 20 some percentwas new esops and organic growth. The rest of it is coming from ESOP companies buying other companies this is a really important trend.

[16:29] Because what's happening is as ESOP companies mature they've paid offthe initial debt to buy the company from the prior owners. They're now typically 100% employee owned they pay no taxesthey tend to grow faster than other companies. Aside from the tax benefitwe know that ESOP companies tend to perform better than other companies. So they're growing faster and that growth is not being taxed so they're accumulating a lot of cash, and they're going to. In some cases companies in their field and some companies are setting up holding companies and becoming Diversified holding companies. And they're going to owners of closely held companies and sayingwe'll give you a fair price. But not only will you get a fair price but your employees are going to become owners of our company so you can feel really good about the Legacy, that you're providing people you know that compare that Legacy to selling to say a private Equity Firm where there's a pretty good chance that some people are going to get laid off. And the company is going to get sold again in 5 to 7 years.

[17:52] So we're not for sale and we we want to make this a permanent thingwell that's a pretty appealing proposition to a lot of people so. We're saying probably somewhere above 500Acquisitions per year so almost twice as many as new esops. And that trend is accelerating and I I thinkuh you know this is really. In terms of the impact of esops this is the most important thing that's going onso if some of you listening for instance are thinking well. I'm not sure that the the esops maybe were too small for an ESOP Maybe. I would rather get the money up front but I'd rather not do the ESOP for some other reason but I love the idea of employees. Becoming owners well there are a lot of employee owned companies. Looking to buy and you know you can get in touch with us and we've got a list of all the companies that we'vefound who've done acquisition so there are ways to try to help find who those companies are.

[19:03] That's a great Point yeah like the 1 thing you said aboutgetting your money up front that could this could be a way to do both yeah continue the Legacy and all that so the so I guess the main thing would be is just getting comfortable if they're comfortable with the holding company you know obviously that's the the owner ultimately would be whose guiding the whole company whoever the parent is yeah yeah whoever the parent is and so you get kind of some of the best of both worlds in the sense of you know right up front and, moving it through and yeah I think that's that's a very I didn't know that that I kind of knew that intuitively just because I hear that a lot but I didn't know the statistics so that's that's very interesting and makes sense because there is a lot of cash on the balance sheet at some point when companies are successfully hitting every year, hey the dead off they're not paying taxes so what are we going to do with the money at this point yeah I think this is the most important thing that's happening in esops right now, yeah then I'm I'm very optimistic aboutwhat that portends for the future of esops.

[20:06] Now recently there's um there's been some things going on about like how private Equity is coming into the ESOP World regarding uh the 60 Minutes thing that came out um those kind of things and you got you guys were involved in that conversation or how how, you know how I know you said you kind of were were talking about that on you know some in some other venue how so let's just talk about what that is first like you know break it down, what private Equity is trying to accomplish when it comes downif you're interested in learning more about that the Freakonomics did an hour long.

[20:41] Podcast on this in May but I was on that and Pete Stavros. Who is 1 of the general Partners at KKR.

[20:53] He's the person he also was on thatand Pete is the guy who's really created this idea. And I met himwhen he was getting his MBAback in the early 2000s and he read an article that I'd written and called me up and said hey I'm interested in this employee ownership idea. And we talked and he wrote his thesis about it and then he went to work for KKR and.

[21:21] Psee it been there long enough he's tried to convince them, that they should share ownership with employees when they did deals this was not the way private Equity worked no I thought that was a really crazy idea why would you give equity, to everybody give it only to you know the key people or what they defined as the key people butPete was determined. Andeventually in a position of KKR so he could try doing this.

[21:54] And it worked the companies did well the employees did well. His Partners were suitably impressedand he was able to win them over and so now it's become part of the way KKR doesalmost all of its deals so what happens is, on tkr buys a company they set aside a certain amount of shares for all the employees it's not an ESOP, it's typically some kind of restricted stock award.

[22:27] And it's usually 3 to 7% of the total sharesso it's a limited. Come out of ownership and it's for a limited amount of timebecause these companies will be sold typically in 3 to 7 years or occasionally go public.

[22:47] So he really liked this idea was committed to it put a lot of his own money and some KKR money and they got other funds, to create a nonprofit called ownership workswhose goal is to get other private Equity firms. To do the same thing and importantly and a number haveuh most importantly Blackstone recently announced. And and perhaps not coincident coincidentally right after the 60 minutes program in uh April right. That they were going to do this too, in all their deals and Blackstone and KKR are the 2 biggest private Equity firmsin the country so it's an enormous impact.

[23:32] And I say these are not esops butP also is working on a project and I think they will be announcing itsoon. To try to createadditional tax incentives for esops for large companies, a different set of tax incentives that would apply to large companies because right now very large companies. There are companies at 5 10 15 thousand or more employees. For the most part don't do esops now there are Exceptions there are some very. Large companies that have Publix is majority owned by an ESOP that's 265,000 employees. Um but but a lot of large companies destroyers of public companiesprivate equity-led deals for large companies. There are a number of reasons why, they decide they don't want to do an ESOP and so what this effort is is to try to find a way tomake that more appealing.

[24:41] So here's a big fan of esops and I think you know they're going to be putting a ton of money. In talibong for this it's a big hill to climb but it's an encouraging development. You know and what it what it what sticks out to me with that is that it demonstrates even on the non- ESOP side deals that they're doing right it demonstrates the power of ownership like connecting like if that's 3 to 7% put aside as restricted stock, it makes a difference like at the end of the day and I think this is a kind of a something people kind of think about are early in the process of thinking about an ESOP or even as they go through the whole process of doing it is what's going to be I mean really I mean we all talk about it but what's really going to be the impact of the employees, being connected to the value of the business and how that can really play out and obviously that I mean the financial markets are seeing that that as a a actual real, element that's not just this you know thing we talked about right and it's it's it's real and they they probably see it in the statistics like these companies outperform other companies right logically makes sense I mean if I own part of the company I'm going to feel different about my job and I should feel different about my job. Right my biggest hope for this is that it normalizes the concept of employee ownership that this is just something you should do as a good business practice.

[26:06] Yeah exactly I think and and people do stuff that's trying to simulate what an ESOP is but I think the difference here is, um with the with basically with an ESOP versus something else when you're trying to simulate ownership is that it just ESOP spreaded across the whole rink and file I mean everybody's connected is I've seen people try to take yeah I just want my few people to have like a, piece of the equity or a simulated like a synthetic piece of equity and all that but the I think the power of an ESOP it does cross the entire company, touch every employee and and then you can have people like at Publix there are bad boy bad girl whatever and then eventually they'd be it retires a millionaire so these are real stories, and when you're a customer of Publix.

[26:51] Publix to you is not thechief of strategy or the head of HR or the CFO, Publix is the clerk who how they treat you and what the store looks like. Now that it's all the little things that make shopping at 1 Supermarket different from shopping at another when, otherwise they may be pretty alike absolutely um 1 1 of the things that sticks out to me too is like the, the way you know esops get created and then eventually some of them sell right so that's part of the number you know we get to create so many but then others leave ship they they get bought what are the stats behind that or what are you guys seeing are there more um more or less Acquisitions in for an employee owned companies or what are you seeing there it's a pretty steady, Baseline rate of 3 to 4% per year that's been the case.

[27:50] Pretty much since esops have been around that's also about the same rate that 401K plans are terminated and the termination reasons are the same the companies acquired.

[28:03] A lot of ESOP companies the the most common reasonesops are terminated is that the company was sold, occasionally it sold because it's in trouble but the vast majority of time it's sold because they got a ridiculously high offer. And they just couldn't say no or didn't want to say no.

[28:27] But then the second most common reasonis companies just decide. Well it didn't work as well as we hoped or it was never meant to be permanent some companiesput it in place to buy out. For instance 1 of multiple owners and it does that andthe other owners end up buying out the ESOP or something like that.

[28:53] Uh I mean just sometimes it just doesn't work out sometimesthe company may be as trouble paying off its debt or. The employees don't ever relate to it very much it's a very small minority of companies like that but it happens.

[29:11] Yeah and it's and it's good to talk about that stuff because I think sometimes people hear 1 story and it was a bad story right and you're like and then their whole world of understanding esops is that 1 bad story and if you really pulled that story apart and looked out what happened you know there's going to be a host of of of things that are going to happen and they're not not 1 story is every story right and I think the the 1 thing I wanted to kind of, sharing that is like the for the most part if you did a bell curve right it's like mostly this is just an phenomenal you know opportunity for everybody that talked about the Holistics you know planning and then the bell curve like every the outlier story here and the outliers lawyers over there, and that's always going to be the case when you get down to it it's important right you're not all going to be the ESOP at SRC Holdings which has been an ESOP for 40 years, and whose stock price has gone up over a million percent, million yeah I know you're not that's not always gonna happen but you know right so it makes no more sense to focus on that outlier than it does on the United Airlines being an ESOP for 5 years and and ending it yeah.

[30:19] I have a like from a, other other aspect of this because we all know like esops are regulated by the Department of Labor in a sense they're regulated by the Orissa and then Internal Revenue Service from a compliance standpoint, um The Dol has always been a big conversation when it comes to the ESOP Community what are you seeing in this as like DOL investigations and that kind of thing is it up is it kind of flattening out um.

[30:46] If you talk to lawyers about the Department of Labor they will tell you how scary it is and. How the Department of Labor is really actively on ESOP cases and.

[31:00] If you actually look at data which is what we do perfectit's a different storythe Department of Labor. Has initiated fewer lawsuits in recent years than in the past but never initiated that many to begin withit was typically 5 to 10. Cases per yearthat the department of labor initiated that made it to court remember that's out of 6,200 privately held, ESOP companies there was another 10 to 15from private litigators. Oh sometimes justare trolling for a settlements you know they just try to harass you into a settlement but still if you add those together, you're looking at 15 to 20 cases per year typically that make it to court and frankly some of them deserve to but maybe half or somewhat more probably don't. The other thing that the Department of Labor does is. Aside from taking it a court which is the most drastic stepis to audit and investigate you. Andthe number ofInvestigations that have ended in a monetary settlement.

[32:25] Is down dramatically it's now somewhere in the 20s per year.

[32:31] So there are a number of reasons for this to decline 1 is that the Department of Labor simply doesn't have the budget that it used to to do this kind of stuff. The second isa lot of the things that Department of Labor wanted ESOP companies to do. To make sure that they didn't end up in 1 of these situations they're doing now. So I think it's a considerably overstated fear the the big issue with the Department of Labor right now.

[33:04] Is they will be issuing guidelines on valuation.

[33:10] So that'll be a big deal to see what they come up withwe'vehad a number of conversations with them. Uh we had the assistant Secretary of Labor cameto our meeting in Tampa andshe's the assistant secretaries in charge of this project overall.

[33:31] And she met with lots of ESOP companies and Heard lots of great stories and was very open and encouraging about it.

[33:40] So my guess is what these regulations will come up with is going to be fairly General.

[33:46] And probably not terribly different from where we are now but that's just my guess, yeah that's been my guest too you know in doing valuation work for I do the sell side valuation work so we're and then we negotiatethe process itself, now and this is why I think the Department of Labor stuff's down I think the process is very very um effective in that you have you know completely Independence on both sides, and when you start looking at the numbers um you know it's cash flow I mean when you get down to it and I think if if if cash flow is the main area like if it's discounted cash flow or capitalization of earnings if if if it stays in those Regard in those areas and I think it really balances out because I always tell people, if the company let's just say your Market approach has you know this big multiple. But if you don't have the cash flow to pay the deal off like it doesn't matter you know because, can't structure the deal I can't have a a seller note that's 30 years right and the immunization you got to get the you got to get the debt off the books right and so I think that for me has always been like the the balance between what is a healthy valuation you know considering the company and everything else.

[34:57] If it doesn't balance on the feasibility side with good cash flows that can pay out debt um we got to get that debt off and we also have to just keep in mind the employees this is a retirement plan and that's what the Department of Labor cares about. Right if you're taking money from an employee um ultimately you're not you're not in a a holistic minded well-balanced position you're not probably a good candidate for Esau you know and I think that's that's probably shared amongst these professionals I'm thinking, yeah if you're looking for the biggest price from what m&a people tell me anyway, if you net out the tax benefits about 15 maybe 20% of the time. You could get somewhat more and then a few cases a lot moreselling to someone elseso.

[35:45] As I said if that's really your top priority thenthat's what you should do, that's what you should do and and that's 1 of the reasons like when I and think about and talk to people like they're thinking well I'll do a parallel path and the parallel path is I'm going to look at ESOP and I'm going to look at strategic sale and I'm just I mean again this is all preference and do whatever anybody wants to do but in my opinion, it's like this is an apple this is an orange right and if you're if you're going to run that parallel path I think what you're really saying is I really want to strategic sale. Yeah I think you're right.

[36:21] So I'm like you know do if you want to do that great but I always tell people you know why don't you do that and then if you if it doesn't work out come back and we'll talk about the ESOP and um and that's been I mean the ones I've done ESOP ESOP work I've done where we they've gone through that and they're like this is not going to work um I'm closing 1 right now and the next week or 2 and they had a big deal strategic deal blow up at the end of the last year and the guy's like I'm done and then what was cool about this deal is like he then he started talking to his key people about what they really wanted. And they're like we really want the ESOP and so now you know what that what happens is everybody flushes out that idea of what it's almost like they need to know. What that's going to look like for real until you it's like it's like now they're always thinking the back of their minds I could have gotten whatever um so anyway that's just a a sidebar but I just thought that was you know interesting based on the, and I think it's important to rememberthat.

[37:18] If you sell to someone elsethey don't generally just write you a check. They say well you get this much now and you get this much based on whatever future earnings profits or some other contingency.

[37:35] Esops typically don't have those kinds of contingencies.

[37:40] So you need to Discount the price somewhat I've also talked to some, people who said I sold my business to a Strategic Equity partner.

[37:51] Uh 1 of my favorite stories is a trucking company in Texas big trucking company. Was sold to an even bigger trucking companyand the owner said. What are you going to do with my peopleoh we're going to keep your locations we're going to keep all of your drivers. We're absolutely committed to that a year later they were all gone every 1 of themwow.

[38:16] So he said I'm going to start another trucking companywhich he didand now it's a pretty big company hundreds of employees. And he said when I sell that company which he now hasits going to an ESOPbecause I'm not having that experience again. And I've talked to some other business owners who sold to Strategic Equity. Who were so distressed at what happened that they bought their company back so they could sell it to an ESOP.

[38:48] Is phenomenal those are great I have an expensive proposition but they were so yeah disturbed about what was happening, and that's and that's like they've you know I think the education was was it was the whole idea is like education is expensive when you get down to it right and this kind of like sometimes people just have to see it to believe it, that that's the reality you know and if they have an inkling in their head like hey we really want to preserve the culture the employees you know not disrupt what's what they've built, Dina you have to be realistic about it but until they really know that that's for real. You know than it is what it is we can talk about it all day long but but I think it's good a good point for you because you you do touch a ton across the country of of these types of stories and, I think it's always helpful for people to to kind of hear that and especially as they're listening to this they're thinking okay what route do I want to take because there is there is a decision-making process that they have to go through and feel and feel good about it because it is their company.

[39:49] Um so as we kind of get closer to the end here um anything like on the top of your mind of advice for companies and and kind of kategorik I'd say you know as we've expanded the podcast there's certainly a lot of companies that are listening that, are thinking about esops or they're kind of really pre-op and this is a conceptual thing there might be some that are in the middle of doing their deals and then there's always companies that have closed and now they're moving on in the first year and then of course you got, the companies that have been esops for a couple years so any any kind of top of Mind advice for any of those categories yeah so if you're thinking about an ESOP, get educated first. Before you approach advisorsand I'm not saying there aren't good advisors out there there are some great people out there. But you want to know what your options are to startand that's really what we're here for to help you. To learn what is this thing how does it work what are the different ways it can work.

[40:51] We have a really basic publication called who should own your business after you and it's free you can go to our website and get that. And it's mostly stories and brief explanations of the different ways you can do employee ownership maybe you'll find an ESOP isn't the right approach but there are other ways you can do employee ownership that do work for you. And you know if you go through that and you say well this looks interestingthen we've got some more in-depth material.

[41:24] So do that if you can find other ESOP companies to talk to. And we can help you if you can't that's really useful to learn what their experience has been and you'll find, these companies are really open the ESOP Community is a wonderful group of people and that really love to share their experiences.

[41:49] So that's what I would suggest if you're starting on this and then get the right advisors if you do get people who know, how to do this and we have a service provider directory so that you can fine-tune those folks are.

[42:05] I already have an ESOP and you're thinkingI want to make sure this thing actually works. Yeah there's there's 2 critical elements to that 1 is obviously communicating to people and educating people how it works and how your business works.

[42:24] And there's a lot of tools now available to help you with that we have. A ton of materialon this like we now have the download this weekly communication tool. Uh we have lots of other communication tools and ideas. So you can learn a lot about how to do this without you know not you don't have to reinvent the wheel the other thing that's really important.

[42:51] Is you need to go beyond education. You need to get employees involved what the research shows is that the companies that make the most money with an ESOP. Are the ones who involve employees in work level decisions.

[43:11] I wrote a book called Beyond engagement how to make your business an idea Factory. And that's the key idea how do you become an idea Factory the first line of the book is its simple the best companies are the ones that generate the most ideas from the most people about the most things.

[43:30] If you can be hypertherm with. And I think they have a couple thousand employees now they generate at least 2 ideas per employee per year that they implement. Imagine if your companythat every employee on average generated 2 ideas to move the company forward, per year every year how much better your company would beso the trick is how do you establish a structure. That createsa way for people to do that on a regular basis.

[44:09] And that book beyond engagement walks you through that with lots of examples. But you go to any conference ours other organizations on ESOP there's lots of meetings. You will find a ton of panelson this topic where you can learn from other companies how they do what they do. And the companies who do this love itthey become absolutely Evangelical about it because.

[44:39] Not only are they making more money because they're generating more ideas or more people about more thingsit's just a lot more fun it's fun to run a business when everybody's thinking about how can you improve the bottom line. If you're if you're in adopting their ideas like I think sometimes people try to do stuff but then they're not fully committed to taking those ideas and doing something with them and that can be an opposite effect that's right are willing to make that commitment then gosh I mean how more how much more fun to work at that place than somewhere else where you're just clocking in and clocking out, you need a bias towards yesyou do need a bias towards yes you know partly too like culturally it's a culture thing like I gotta get out of the way you know I gotta believe that that other people have great ideas that the strengths finder thing and and it takes a team and all of those elements of culture I think are important um to do that but I that is a really good advice I think just just kind of segwaying into what you're saying because I think that's where people um you know to get involved part the education piece of like hey what's an ESOP I think that's kind of a standard you know drum beat everybody's gonna have to do that but, but getting people like involved essentially in in carrying and saying like we really care about what you guys think, that's I think that's a game changer so that thank you for sharing that I think that's really really helpful sure.

[46:02] And in general just kind of thank you again for just what you've done in the ESOP Community what you are doing what you're going to do I don't know you know like your organization has just made such a big contribution to know thank you, yes it's pretty fun and it really has been a joy to work with the people I do feel and the whole ESOP community.

[46:24] It's just a wonderful group of people it yeah people who are committedto. Doing things to make the world a better place for people that's it's a great place to be, it really is I think that's why people just don't want to not work in esops I mean that's that's my experience I just loved what I do and you know I could do a lot of different things but it's I think it's similar for everybody that that, does ESOP work is it's it's fun because you're working with great people you are contributing to something that's bigger and will transcend and years and years ten years you know 50 years down the road I mean who knows what all this is going to do but it will do better better things for the world so it's it's exciting yeah when you talk to a company and you talk to people in their company who say.

[47:09] This changed my life yeah it's there's just no better feeling than that I know I'm telling you you get like, you know goosed up and tears can come like it's it's pretty cool and that's for and that's real like that's not like sowell great well thank you again for for the our uh thank you I really appreciate it, so um you you guys are always on our website so if people go to journey to an ESOP calm you're going to find a direct link to and CEO we're going to we've also linked the 60 minutes, um episode and so that's available if people go on there check out ncos website of course and as Corey said there's a ton of resources there that are just out your disposal um to be involved and eventually you know I think what we're saying is NCO would be a great thing for you to become a member of because it's going to be this ongoing resource that that is going to be helpful, if you're not you should be that's not you should be so well great thanks for joining us today everybody okay thank you you are really appreciate it all right we will see you guys on our next step on this journey to an ESOP.