EP26 - Interview with an ESOP Trustee - Bryce Lenox out of Cincinnati OH.

 This episode focuses on the role of the ESOP trustee through an interview with Bryce Lenox - an ESOP trustee out of Cincinnati, OH.  Bryce does a great job reviewing the role of an ESOP trustee both on the transaction and ongoing side.   Relating to transaction, Bryce explains the role he plays as a buyer and the steps he takes to conform to the department of labor process agreements.  Once the transaction is complete, he explains his ongoing duties for the retirement plan from a fiduciary standpoint. 

Transcript

[0:09] Hey everybody this is the ESOP guy and we are on a journey to an ESOP and Beyond so excited today. For this podcast because we're going to go into what does it look like for an ESOP trustee and what's their role and how does it all work and to do that we're going to interview Bryce Lenox. And Bryce has been a trustee that I've worked with on other deals and so with that Bryce I just wanted to invite you and welcome you to our podcast.

[0:33] Well thanks for having me Phil I appreciate it. Cool so let me ask you um as you start off as you start off introducing like your role and everything else how did you get into esops originally.

[0:44] By accident um I think maybe like a lot of people it my my Journey's kind of interesting I I I'm a lawyer I became a lawyer in 1998.

[0:55] Uh and but frankly I I was a litigator and which is a little bit unique for the you don't see a lot of litigators in the ESOP space at least in the transactional side. I was a corporate litigator for a very large Law Firm here in Cincinnati where I live. I did all kinds of litigation of of multiple Stripes I did because. Uh I'm I had a pounding background and there was a former accountant I did a lot of litigation that involved financial math. Or uh you know business breakup sometimes our business divorce is where there were numbers involved and people were trying to figure out you know shares and things along those lines. And so as a result of that you know I I kind of. You know I I had a I I kind of naturally a little bit risk averse as as most litigators are and kind of maybe a little bit pessimistic as many litigators are. Um but frankly the way I entered entered into the ESOP world is uh like I said by accident a. Colleague and a friend of mine my college roommate actually had an ESOP uh out of Columbus Ohio that, uh they transitioned to ESOP in 2017 and his trustee resigned and retired frankly and uh spoke with his lawyer and and they said well we need a we need a new trustee and. They really weren't interested in a institutional trustee or a trust company they wanted to work with an individual an individual trustee like they had in the past.

[2:20] And uh my college roommate knew kind of my background knew my chops if you will and and asked me if I'd be as trustee. And I I gladly accepted you know I I it was kind of new to the space so I I.

[2:32] As many people do I kind of dragged through a fire hose and and really kind of you know immerse myself in the in the ESOP world I. Uh as you know many people may or may not know it's governed by the Department of Labor and so the Department of Labor has put out, you know multiple uh what are called process agreements that kind of tell trustees like me how to how to put a deal together and so I I immerse myself in those and you know uh and you know several years later here you know or many years later here I am as an ESOP trustee um at that time I really started with 3 and it's it's grown organically since then and. You know as you said you and I have had the I've had the privilege of working with you and your firm on several uh ESOP transactions and, and I love it and I am I'm no longer practicing law I, um a 100% I've dove in feet first into the ESOP industry and and frankly I love it uh I love working with entrepreneurs, uh it's just it's a great place to be and I think it's uh you know I see myself and no other industry at this point awesome well well that's a really good um intro and before we jump In Too Deep I wanted to ask you in our tradition, would be what what's your favorite movie and whyokay uh I I've always loved. The point Tarantino he is I think he's uh you know anything and I don't think what that says about me on well I know I'm gonna say I'm like gosh okay now now what's your favorite Quinton Tarantino movie.

[3:56] That would be Paul fiction oh my God for any reasons yeah for a lot of reasons it's it's a definitely a dynamic umyou know situation so. Um cool well great well thank you for coming on the podcast today and um I think it's interesting the first part of how you explained getting into this. And I think 1 of the things about trustees too they're they're all from different walks of life and and it's not like any when somebody says hey I'm going to go to get my degree and being an ESOP trustee it doesn't happen. Um being an attorney and being a trustee do you feel like what what are the pros and cons of having that as your background as as your discipline.

[4:34] Sure I I think you know particularly as a lawyer you know the practice of law as you can imagine there are a lot of lawyers I mean lawyers are integral into the ESOP process in any number of, Waze, you know and and any deal I as a trustee you know higher uh a retain a valuation company to help me you know a financial adviser to help me with the numbers surrounding any proposed transaction, and I you know even though I am a lawyer uh you know a lot of times or you know depending on kind of the size of the transaction I almost I I retain outside counsel. Uh for any number of reasons uh because I I think it you know it helps you really you know papering the deal you know it's always great to have another set of eyes on on a transaction.

[5:19] You know I think lawyers bring you know to to the ESOP world and maybe to the trustee side is I think I see some things you know maybe, like I noted I think ESOP or litigation litigators particular a little bit jaded and so I think I look at I come with a little more, you know an eye for you know more risk maybe are you know I kind of I think I kind of look at it from a different lens as to where it could be the problems with transaction where it could be the pitfalls where would if I were going to pick a deal apart if I were the Department of Labor where would I look and what are the things you know that you know the trigger points the red flags and so I think when I approach a deal I think I look at it throughout that lens particularly uh that maybe others maybe they do I'm sure a lot of people do but I think lawyers are you know largely trained for that and so I think it does help uh in at least me as a trustee I I I find it invaluable mhm no I think that's I mean obviously having a a discipline and being able to read documents and be able to understand risk. And and interpret that especially within within the erisa guidelines and things like as you mentioned Department of Labor. Um when you chose to be a trustee did people kind of come at you and say what are you doing that's crazy because. You know as a trustee you do have a high degree of fiduciary financial responsibility and so talk about that a little bit I mean obviously it um they didn't scare you enough to say I'm not going to do this right.

[6:45] Um no you know but I did you know there were several raised eyebrows I I would be lying if I didn't say otherwise uh because you're you're right when when I am the trustee I am not you know as an individual trustee I'm not a Trust Company. I don't get to sign it as you know as a corporation I have to sign it individually that means I am individually on the hook. If the Department of Labor you know comes knocking or if uh if there's a class action lawsuit uh and a plaintiff's lawyer comes knocking um and so that's you know that's. You know if you work really hard to you know kind of build a a life and knowing that that's kind of it could be on the line you know that is a little daunting that said I'm I'm not. It never deterred me for the fact that for the reason that I I've always and I think it's key for any trustee is to surround themselves with really really good people. And if you get a really you know really good financial advisors and you get really you know build a team of real you know really good lawyers. That have that know what they're doing and have been you know immersed in this industry. Those it it any of that risk is greatly mitigated in my opinion because these folks have been around the block if you ask me you know I don't think any you know you just. For example evaluation. If you've never done an ESOP valuation you know I don't you're not going to be my first choice you're not going to be on my list at all for that matter right you know for real yeah you know, and and so you really have to kind of you know be aware of.

[8:12] The folks that you're you know you're utilizing you know I vet every single valuation firm I I've. That all the lawyers you know I you know the Department of Labor requires that I do that and it's it's an obligation on my part to make sure I'm getting a good team, that knows what they're doing and it's going to make the transaction not only go smooth but to to to do it correctly and to check all the boxes and make sure that it comports with everything that the Department of Labor requires of us.

[8:39] And so knowing that it you know knowing that I surround myself with good people I sleep well at night that's good and I think I think that point of that and part of it is for education for people to know I mean the fiduciary the the trustee is personally liable and. That can be pretty scary I don't know if I told you I actually am a trustee for an ESOP I did a long time ago and it's a friend of mine and I'm like you know, but when I did it I I told my wife and we put all the money in her account right I mean it was just like this I was like I was scared I was like I was like oh my gosh you know they you could get sued personally for all this and. Um that that should wake people up and I think part of that. Topic is segueing into the other side of it is like because of that right I think that part of it I think is a trustee and this is part of a question too is helping people understand the the on the transaction side the role that you play it's a big deal, like it's it's not like hey you want to be adversarial which I don't find you ever to be adversarial but you don't want to be creating roadblocks so the ESOP deal can't get done. There there are just things you got to do because you are personally liable. Like and so you know so talk through that a little bit from your standpoint the question is more about the trans on the transaction side what I know you have a team of people that kind of support you, um but how do you feel like okay with the liability that you're having from a personal liability standpoint.

[10:08] Sure you know and and it's I think it's twofold it's not only surrounding yourself with good people but it's also, doing the right you know taking the right steps to yourself personally as the trustee it's jumping through the Hoops it's going and interviewing the you know the the the potential financial advisors and you know going and getting recommend you know they I often get recommendations of who who I should talk to and talking to those people and it's during the process it's not only that but it's also.

[10:37] Documenting the steps and documenting the rationale along the way. As to what you know why we are doing what we're doing why do we just how can we justify whether it's the price how can we justify you know maybe it's you know the the amount of SARS that are, are being given to Executives every deal is a little different um these aren't cookie cutter and so it's not in the sense that every you know you can just go along and. The same the same terms every every time so you have to be very you know selective I you know if it's if the ESOP involves for example a a really unique Niche industry. You know I would want a team that to the extent they have you know expertise in that that's helpful because there are some very strange companies and I say strange in the unique companies whether it's on a Consulting side or otherwise a good example is I I just closed a deal and borrowed involving a a consultant in the Charter School uh systems. And that's you don't cross paths with those very often so you know surprisingly or fortunately I was able to find a lawyer that had, you know had been on a board of a charter school and had not intimate knowledge of charter schools and uh evaluation firm that had you know surprisingly you know touched you know been in that.

[11:52] On the on the fringes of that industry as well so I you know I think it's very important if if you can if it's possible, industry experience helps a lot in in that you know in that process and helping to you know Garner and and guide that transaction along the way with expertise.

[12:09] What what would be some things that you would be like um.

[12:13] This is a tough question but like when you look at the opportunity to become a trustee on something where you'd be like I don't think I want that you know would it would it be an area where you feel like you just don't have any industry experience and you can't get that. Or where would you just kind of turn down the opportunity.

[12:30] Sure you know I don't think it's ever an industry experience issue I mean it I I think it you know most trustees you know if if you're you can learn an industry you know litigators do that you know lawyers do that all the time you know particularly litigators if you you know and 1 day you may. Uh litigate and odisha matter the next day you may litigate an environmental matter and you're always learning new Industries and new facts so I don't think it's. Being a lease up trustee I don't I don't think I would turn 1 down just because I'd never done a charter school or I've never I'd never done a.

[13:01] Pool company for example or whatever it is you know I would turn them down if I I think I saw, you know something that just doesn't sit right with me in my gut or I you know or you find out you you know sometimes you meet somebody or you're like I don't know if that's a great fit for me. Because I think personality really matters a lot too because it's it's a relationship true on a going basis and, if you don't hit it off with the person or the the potential owner you're going to be working with these people you know long long down the road so if if you're if you see a, a personality conflict uh that may be a good reason to you know maybe not take the take the engagement if you know sometimes maybe you know God forbid there be you know they've been in trouble in the past or this company is, you know you've been cited for something or you know by the justice department so you just never know yeah and so you know you kind of got to do a little little due diligence you know in your own right behind the scenes before I and I always do before I accept an engagement, just to make sure that it's a good it's a good fit for me and you know I'm going to be comfortable working with these these folks on a long-term basis yeah no I think that makes a lot of sense I think sometimes.

[14:09] Um there are some broad Strokes hey we I'm comfortable with this but I'm not comfortable with that so you're pretty much comfortable with most things and when you're choosing. To be a trustee, is there any other concerns that you have upfront like geography or you know or is it because I've had other trustees tell me hey I'm I'm not going to go outside this proximate range of area that I'm that I'm at because of the you know the difficulty we just talked about.

[14:34] You know the the travel that that it can take I mean it's it takes a toll on you and your family as well.

[14:40] Well you know it absolutely does I am certainly not I don't restrict my practice to to geography as. As you can tell you and I have a went on out on the west coast for example and so. Well you know I'm by Coastal Inn in the esops that I am currently a trustee over I have a I have a lot of Florida I have them in the South I have them in Chicago I have. On the west coast but you're absolutely right there is, there is a lot of travel in because almost in every ESOP transaction you know there is a due diligence meeting on site um and I always make it a practice, you know Co notwithstanding that was a you know a unique situation but, you know I I want to go I want to go see the facility I want to you know see the owners look them in their whites of their eyes and kick the tires on it and make sure that you know this this business that I am potentially buying on you know or buying on behalf of the plan participants you know it exists and it you know it looks robust and you know that it's there and that you know so you can you know they say a picture is worth a thousand words and I think a due diligence visit is also worth it you know is important yeah it's really important and part of it too as you said, the due diligence in getting to know and building relationship because you do have this ongoing um process of being part of the company. Um so those are some things I want to ask about but before we go there I wanted to kind of look at things when you look at the trustee like.

[16:03] I mean if you compared yourself to different trustee practices right. And there are a lot of different types of practices the weird thing about trustees in the country there's there's a hand there's not a handful but there's a there's a small group it's not like you have a trustee in every single state they're. Doesn't happen but when you compare yourselves to I guess the pros and cons of saying because you're a smaller shop you're you know, and somebody's looking for for what you do versus a bigger shop like how would you compare yourselves and then kind of give somebody like a pro and con on, you know what would be a good a good fit for you as far as them making a decision for something like what you're providing as a trustee.

[16:42] Sure I I think every ESOP you know there's there's a there's a right fit for every ESOP and I'd be lying if I didn't say I'm the right fit for every ESOP you know I I don't think you know there's. For any number of reasons you know I think you have to.

[16:56] There's got to be the right the right fit um I think you know for those you know I think the benefits of a individual trustee, uh such as myself is I I think you have a I think there's some cost benefits to it I I dare say I don't probably charge as much as an Institutional trustee uh because you know trust companies are are large and they've got big payroll at the end of the day that's true I don't why I can I can afford to charge less. Uh I think uh individual trustee has the ability to be more nimble, uh potentially more responsive and and can turn a deal quicker frankly um often times trust companies if if there's major decisions that need to be made they have to run it through a committee of 3 people or or however many else you know depending on who you're dealing with. There's I have no committee here I'm in you know any decision is made by me and me only and I can make it pretty quickly so I think responsiveness. You know and uh the ability to turn on a on a dime as I like to say are really some of the advantages of a of an individual trustee, you know on the downside you know if you know sometimes the smaller shops there's sometimes concern about you know Longevity if you will and are you going to be around 5 years are you going to be around to 10 years.

[18:06] You know for and I and I that's a that's a legitimate concern by by owners and those looking to explore it.

[18:13] I'm pretty young still and so I I I think a lot of it's an interesting area because I think a lot of the trustees are you know there's a you know becoming a more mature industry now that's true and I think some of the the folks that were kind of originally in the industry are you know it's, from the 80s or you know it's it's are starting to there's a graying of kind of I think our trustees, in this industry a little bit so I think it's I think it's right for some young blood frankly I I agree I you know experience and and everything else keeping all that in mind I think 1 of the things you said earlier was this helpful.

[18:44] Because you're building a team around you with tons of experience when you you know you're not like you're not completely making a decision on your own absolutely doing the opposite you're collectively collaborating with people that have have like I know the 1, you know firm that we see a lot of they have like 250 transactions on their belt like so that's not you're not taking any chances there so I think that does provide. Um a very good solution. When if somebody were to like look at like they're listening and they're thinking I might want to be an ESOP you know at some point or I'm thinking about you know soon. Um how would you explain from just a pure Department of Labor requirement on the transaction itself like as we talked about, you know the Department of Labor how would you sell tell that calm that company hey this is what's going on why the transaction is the way it is and then we'll talk about the transaction a little bit.

[19:36] Sure um you know if I were getting the advice to a potential owner it's you know this the because of it is these deals are scrutinized by the Department of Labor and they're you know it's under their purview you know it's it's a it's a slightly different you know esops are a different animal is how I would describe it from whether it's a private Equity deal or really any other you know if you know any other transaction if it were for example a a strategic sale to another another business in your industry it's different and, for that reason you know we there's a lot more scrutiny I think there's a there's a lot more process that maybe that needs to be involved, um naturally and I you know I see a lot of owners you know sometimes, you know as part of the negotiation you know obviously we're there's a letter of intent that you know has passed back and forth and it gets passed back a lot in most cases and you know sometimes I think owners are like why is this why why can't we get this done let's just let's just knock this out and you know I think owners really have to understand that that you have to follow the process and you have to trust the process um because it's not like uh a private Equity deal in that sense and so you know and and with that you know I think it's.

[20:48] You know in part you you know you have to you know press the pro process you know and and be a little patient with it at the same time, to your point you know these deals you know as you as you note it's they're mutually beneficial for everyone they're beneficial for the owners as an exit strategy they're very beneficial for the plan participants it's, you know it is an employee benefit that for all intents and purposes they get for free that they don't have to pay for.

[21:12] And so it's it is very beneficial to them as well and so that's kind of the you know if you go in with that mindset I I think it you know that the transactions you know go a lot smoother and.

[21:23] You know and and you know usually close a you know in a very effective fashion yeah and I think part part of what you said too is just helping people know like there is a requirement for an arms length negotiation that the Department of Labor doesn't mess with they want to know. The problems that have happened in ESOP the ESOP World years and years ago which are part part of our job is to.

[21:43] Kind of like flatten out some of the misconceptions when it comes to it really originated because there was there's there was originally not an arm sling transaction there was. 1 group of people was were putting together a whole transaction and they. Unfortunately you know conflict of interest they just didn't look at it and boom you have an overvaluation that creates an unsustainable ESOP and then who loses the employees. And and ultimately I think to this the intent for the selling shareholders and all those things but those those have gone away since these process agreements that you are referencing and that kind of has necessitated a little bit of this formality.

[22:20] And I I guess a lot of the formality in a sense but at the same time you know the nice thing about ESOP transaction negotiation is that there is a. It's not like you're someone like try Bryce is looking to get you like oh I found something where I'm going to get you for a buck or 10 bucks or a million dollars whatever they're just doing a deal where they feel like is is representative of of what's truly fair market value.

[22:43] Exactly and that's that's the Benchmark we have to hit I mean the you know no less than fair American value is the is the definition and so you know we're obligated to do that yeah absolutely. When you look at like a company that says oh I want to do this but I'm a little leery um the Department of Labor really scares me how would you how would you calm that person down when it comes down to um I'm afraid the Department of Labor is going to be monkeying up my business or I'm afraid that you know the trustee is going to be monkeying up my business or I've got you know it's going to be just. Not it's gonna be too much trouble more trouble than it's worth how would you kind of address that for a company that's thinking about that is an issue.

[23:23] Sure I would argue that the benefits outweigh any burdens uh Associated whether it's with the Department of Labor or certainly not with the trustee you know if you know you guys really as a 2-fold question you know, you know concerns about the Department of Labor you know I would be lying if I'd say that they aren't you know real in the sense that you know the Department of Labor does go out and they look at some of these transactions so, that is a you know a potential you know inevitable thing that might or might not happen you just never know um but you shouldn't be scared of it because if you do this process correctly uh and you do you know and and we all follow the steps we're supposed to follow, then you don't have anything to worry about you've got a clean you know you have a clean deal with you know where you know the all of the information was well vetted all of the the steps were taken all of the processes were fall followed, the due diligence was you know incredibly complete and the documents and you know everything you know evidence is that so you shouldn't worry about it you know could it happen yeah, should you worry you know okay you can tell anything's possible but you know should you should you lose sleep over it absolutely not because, you know I I you know with the deals that I do I'm you know I know the process that I'm you know I'm if I if I can sleep at night then you as an owner should sleep in. Is the way I look at it yeah and I think that that's a good advice and I think that partly to.

[24:44] I think part of what we've tried to help people do is find the right people to work with when you get down to it. Um people the right people to work with will guide you through a transaction where you can sleep at night because. And I think part of this interview is to help you understand if your trustee is not talking about the Department of Labor process agreement.

[25:02] Then something's not something's not right because that's going to be a standard protocol of every good deal because that protects them, and ultimately that protects the the selling shareholders and the employees as well from the Department of Labor issues that could come. Um you know everybody's going to genuinely I think if they're with an adviser that's just trying to do a good deal.

[25:23] Provide the right information I think the issue could be if if a client or a shareholder was trying to provide information that wasn't. Genuine or authentic or even fraudulent right that could create an issue and I I think how would you touch on that issue like I mean I. I mean it's kind of an obvious question but I'm just curious what your thoughts are.

[25:44] Yeah I mean you want you know you everybody needs to tell the truth at the end of the day tell the truth the whole truth nothing but the truth.

[25:51] Yeah and and that's that's kind of part of it as an easy you know if if you're an owner you know you've we've got to tell the truth you've got to give realistic projections you know your business, you know might you know the valuation team that I hire part of their job is you know to go and and to point kick the tires and make you know do some testing to make sure that the the projections are realistic, that said it's not an audit and and so if if you know if you're cooking your books or or you know being un you know not forthright with information. You know then that's a problem and know that that said that's you know as part of any transaction there's indemnities and warranties and representations, that the owner makes you know to try to alleviate those things and you know and and so you will be subject to them and that's you know that's part of the the negotiation product with negotiation, process is to you know try to figure it out some of that stuff as much as humanly possible but. You know it's you know you again you hope you know you hope in in 90 every case every ESOP I've been involved with they've been really great owners really honest owners, really smart owners uh and folks that really want to do the ESOP for the right reasons and so I've I've never come across that to date yeah.

[27:06] I think that I mean and that makes sense because I think that's probably majority of of how esops are and but it's those it's those outliers that get talked about like what happened with that 1 right and I think part of it is, as a um as you're listening to this it's thinking about who your advisors are and what advice they're giving you. And I would say 1 of the red flags I see in our industry is if you're doing it for the wrong reasons you know wrong reasons might be hey I just don't want to pay any taxes, like I that's probably not a good reason to do Esau wrong reasons might be hey you know I'm I'm going to get a much better valuation here than something else and it's not that you can't or can it's just that needs to be a that needs to be, coupled with other reasons that make it make sense so 1 of the questions I I I asked people and I think you do too is why are you doing an ESOP like I think that helps to answer. And vet out that idea like what why are we even here right and I think most of the time people genuinely do want to do the right thing by their employees you know when you get down to I agree yeah I agree yeah so so as you as you go into um the. Providing the service you do on the transaction side which we covered a good a good bit kind of back and forth with your team and all that.

[28:21] You as you segue into the ongoing because we do like have a separate like engagement for you like you're coming in now the deals closedyou're the trustee. So the first things are just what sort of roles what are your responsibilities as ongoing trustee to the ESOP trust which of course is Bene is is really representing the beneficial owners or the participants.

[28:43] Sure you know it's it I always say it's a very unique. Again these apps are a strange animal in the sense that the trustee is hired to negotiate a deal you know against the owner, yet as soon as the deal's done he puts on a different hat and he almost acts as as a more of a consultant kind of role, or a uh you know an advisory role in large measure and working with the owner, you know to ensure that you know everything goes smoothly you know for purposes of these that plan and the trust and, you know that the the contributions are made its etc etc so you know on an ongoing basis you know I think there's a you know 1 of the misconceptions of esops I think by many people like oh this trustee is going to come in and you know, take over my business it's you know he's like an activist investor he's going to start second guessing me all the time he's going to start controlling the day-to-day operations and the last thing that you know anybody it's it's farthest from the truth frankly you know my job I'm I'm generally at what's called a directed trustee, which means often times there is a an ESOP committee above me that is usually comprised of some of the board members and usually the you know an outside director often shares it and they give me direction as to you know certain aspects of of the ESOP and how you know how to do things that you know pursue into the ESOP.

[30:00] My job as a trustee is is fairly limited frankly it's you know I hire the board uh on an annual basis, you know I I control the plan assets to the extent there are any you know you know when they do you know when they start to accumulate whether that's you know monetarily through Investments or otherwise oftentimes you'll hire you know an outside investor to do those roles um and generally a duty to Monitor and you know make sure that what's going on comports with.

[30:28] With the rules of odisha that's kind of it it's not you know the Java Bryce Lenox is not to go in and start second-guessing. You know why did you why did you do this why did you buy a truck why did you you know why did you drop this client or. With the like that's that's not my job um and you know working you know on an outside basis and collaborating a lot with the owners and you know.

[30:49] You know I I think there's a perception this trustee is this you know evil empire outside of the outside of the business that is you know just there to point fingers and. Be a naysayer and that's really I think that's not the truth I you know it's as much anything as a it's a a very fluid relationship with with the owner of the business and with the board in large measure. Um because at the end of the day we all have fiduciary duties to to the plan participants and. So you know we all you know sometime it takes a village sometimes to to make sure that those fiduciary duties are, are met and and you know there's compliance and those things so it's not as adversarial as I think many people perceive it to be potentially yeah I mean even even the other side of it it's it's, an a advisory situation where hey we have a question about this this that could affect our repurchase liability and how could you you know help us walk through that or we have a question about even, considering I I think a question I get a lot from companies that do partials.

[31:46] Is what happens if we want to sell the company you know and how and how does the trustee, interact with that as far as the board of directors making that decision and so you know in general right what what's your role there when you get down to like if they're going to sell, and the company is just going to go ahead and and sell out to a strategic after the ESOP is donewell you know I I you know to your point you know 30% 100 percent it it kind of varies a little bit but you know it's at that point you know my role as a trustee switch is a little bit and it's to once again still fiduciary but it's to you know ensure that whatever transaction is is again it's a fair deal to the to the plant participants, and often the times you know that will once again you'll engage you know a team of folks to kind of do the do a very similar process to make sure that, you know it is a good deal and that you know that it isn't the best interests of the plant participants it's this isn't just a you know whether.

[32:43] Policy and transaction or a money grab or something like that or an easy exit you you know it's that is is truly a good thing for. You know going forward and so that's kind of my role in that point you know is to is again.

[32:56] Always looking out for the interests of the shareholders but you know I do have a I do have a role in in any transaction they did you know an owner can't just go and, not tell me and you know sell the company and hey hey by the way rice sold it yesterday I know you got you got you got a new folks to deal with so congrats you know, yeah you're going to have some influence over that if it is a partial and so I I think the the direct question I get from people if I have if I'm the owner and I have 51% and you're the trustee and you have 49% and I'm on the board the board, says hey we want to we've accepted this Loium obviously you're an owner like the trust is an owner and you're representing the trust. How would that work like what would you how walk that out for like the next steps would be hey we're going to have to go ahead and um. You know look at the offer from the trustee side and make sure that we approve of the deal what would you do specifically in that regard.

[33:50] Um you know probably a lot of the same things that we we talked about you know kind of you know look to your financial advisor look to my counsel to kind of. Kick tires and make sure it it is you know exactly kind of the way it should be. And uh again I I I'll lean heavily on my outside folks for that to to for guidance to make sure that it is indeed you know. What you know what it's cracked up to be and what a perceive it to be and and so I don't know that it changes that much yeah I think the main the main part of my question probably is just if I was 51% I could pretty much vote to sell the company right even though because I have I have control. Versus control so if you and I would never I would this is all hypothetical but it's just curious because I think this is part of something people ask me all the time I get asked all these kind of questions you know you'd imagine like I get asked a million different ones.

[34:43] Would it be a it wouldn't be possible and that situation if they really wanted to sell for the for the trustee to say hey I can't do that. Even though they might voice their objection if it's not a good deal for the company.

[34:56] I I think so but I think there's certainly remedies if you know even if you are the the minorities of trustee I mean again you know an owner's got you know they've they've got they've got fiduciary duties you know to, dark this isn't can't be just self-enriching at the end of the day that's true it's not a proper stamp hey all right well let's go ahead and do that right yeah yeah you know they they you know, in most companies if it's a closely held company or a small company you have they have you know even maybe higher duties to to minority shareholders so true it's not a situation where somebody just be like, it's my way or the highway and yeah you know frankly I'd be a little disappointed if if I were working with an owner that, took that at it I may have picked the I may have picked the wrong horse know for sure and that's part I mean I was kind of rabbit holding it a little bit but I was kind of like an ex you know from an extreme standpoint I think people think about this stuff and they're like what happens if. Because because a lot of people don't know you know and part of it. Interviewing the trustee understand the relationship understanding the impact of of what this means I don't think that they want to put themselves in a corner I don't see an issue with if it's a good deal like why I would trust you ever not, you know accept it and and I would say typically a good deal is it's probably something above fair market value. Is is what you're getting offered you know why else would you want to sell it you know when you get down to it so it usually is is everything's usually in alignment I mean that owner and the controlling owners right would be in alignment.

[36:18] Um yeah I I I've never I would be shocked if it's to your point if it's it's a a solid off or well above. Or above fair market value not even well above if it's a good deal then everybody will likely be on the same page if it's below fair market value then there's still pushing forward then you know that's a different scenario and that's 1 you know where. Yeah scratch your head while you're doing this right there's something here it's not exactly and I you know I think the more questions would be asked a lot more question.

[36:44] Right and like you said 1 of the things about that is there isn't just the trustee there's an independent valuation firm that's reviewing everything from an independent level and they're digging into the the even though the deal's done they're digging into the the the all the details of everything that's happening in the company on an annual basis so you're getting that support as well, um well great so I think the last kind of final question is just more about just you know from a. ESOP versus uh another type of deal you know if somebody's thinking you know I'm going to sell my company to a strategic or a private Equity or a third party. Versus an ESOPum what would you say to them in terms of how to guide them towards what what's the right decision for them at the end of the day.

[37:32] You know I I think it largely depends a lot kind of what we talked about what are your motivations, if you're motivated by taking every last dollar out of a deal and sailing off into the sunset you know and and parking and drinking margaritas on the beach and wiping your hands clean of a business. Then and he stops not right for you at the end of the day sure if if you're if that's your motivation if you are motivated, uh in a different fashion if you're motivated you know to help benefit your employees to still you know what I would call maybe make it a a a smooth transition out of the business um you know then I think an ESOP is a really good opportunity for you you know there's there's a lot of I think industry sort of businesses that are custom built for esops I really do companies that you know may not be don't have strategic buyers or their the their their competitors for example um you know are conflicted out you know manufacturers reps are a really good example of of those that are really good ESOP companies um you know but it's and so as a as a result you know I think it's motivation I think it's you know kind of, what you're where your head is you know if again is there what are you driven by and what's your outcome and where where do you see this and and why are you doing what you're doing uh in large measure like we discussed earlier I think that's the difference if if you want to go scrape cache.

[38:54] You know go to you know. There's there's plenty of ways to to go and and maximize value if you're looking at it from a a different lens than an ESOP is a wonderful opportunity for an owner to to not only exit um but also do it in a in a way that's really really great, and to preserve the business that he's worked he or she's worked very hard to build over a long time and keep company culture, you know oftentimes you hear these business owners in esops you know time and time again it's like this is my family I've not deserting my family I want to take care of my family. And when you hear that you know you know that resonates and you know that you're you're with a they're doing it for the right reason and this is not the kind of person 90% of the time you know that is looking to just. Take as much cash out of the and and sit on sit on the beach somewhere.

[39:43] You know I I think that's the difference I I hear that I think that's a good theme of of things where people do talk a little bit about. Their employees a lot in those initial conversations that we have with them and you kind of kind of like starts to. Align well with what we want as a client too I mean we're we're wanting to work with people that are really going to be good, long-term ESOP companies not hey we're doing this for some weird short-term reasons that for me like I want I want them to win but I want their employees to win and really I want the trustee and the valuation firms I want everybody to win so so part of when we put a deal together we we were looking at all those things because if that happens. Then everybody that kind of comes out of that it's like that was a good experience like let's talk about like how how that was fun and we will tell everybody that you know this is the best thing ever right as opposed to. Oh my gosh we shouldn't have done this so yeah. That's I I you know you've done you know you've got a a really solid deal when you start getting referrals from those people, whether it's in the same industry or you know friends of theirs and and it.

[40:48] You you know you've you've hit paid her and you've done it you've done it right you've done it and you start getting it and you can feel good about what you're doing for a living when you get down to like I think part of the like I know that you do this but like the reason you probably gravitated to ESOP is because you probably really enjoy it and it's like you're helping people I love it yeah it is it is very different than litigation you know it is very different litigation. No that's cool and I'm happy that you got out of the litigation side I'm going to imagine that's hard that's a hard. Stressful career you know yes it it it it way it's wearing and it wears on you um but I like I said this is uh I'm I love getting up every day uh and and working in this community and working with folks like you um because there's a really a ton of really talented talented smart people that are very passionate about esops in in in the community that we work in and uh that that you know it's it's a great that's cool well Brice thanks for for your time today I appreciate all the information and the insight for everybody that that was able to listen today.

[41:50] My pleasure it's great to be on so with that for everybody else thank you for listening and we will see you on our next step on this journey to an ESOP.