EP27 - Dirty Rotten Scoundrels - Identifying Roles at the ESOP Conference

This episode highlights ESOP advisors you may run into at the conferences (or really anywhere!)  The topic is to help provide an overview of the ranging roles as it applies to ESOP advisory and how to choose advisors who can best support your personal journey to an ESOP.

Transcript

[0:09] Good day mate this is the ESOP guy of course I'm not Australian so I kind of bag that right now. Thank you guys for joining and if this is your very first episode of the ESOP guy journey to an ESOP and Beyond thank you if you've been, traveling around with us a little bit thank you as well and today we're going to get into something I think is important and I'll start off before I start off with what we're going to talk about I just wanted to tell you kind of what I've been thinking about and preparing for as we get closer to the fall, is just the normal series of conferences that kind of come up. Um getting ready for the nceo conference and as I have thought through that I've been thinking about how important it is um to be prepared. Um and help people and the podcast to be prepared for who you're going to meet in the conferences so let me start with this and then I'll get into the topic.

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[0:59] Music.

[1:21] A confidence man a trickster this, topic today is called Dirty Rotten Scoundrels and please don't like I mean I'm just going to start off with the topic here please don't get too focused on that like Dirty Rotten Scoundrels I'm not trying to say in any negative way. That you're walking into a conference and everybody's a dirty Rock scoundrel so let me just get that right off. Right on the plate right off the plate and say look that's not what we're going to get into howeverthere is a sense of. What what people are already thinking when they go to a conference like who can I trust. Who's you know who's legit in this and and and who's not legit in this and is there is there a reason for me to even be talking about this you know from a from the standpoint of, a episode of the podcast so so Dirty Rotten Scoundrels in terms of my advisor and how we should go about thinking about your ESOP advisor very important topic and as I as I go into this the reason I think it's so important is because there are so many people that you will meet at a conference, and it's I would say relatively confusing and I think 1 of the major confusing Parts about it and and or it can be is that you're walking into a world. Of

[2:38] Let's just say experts at a topic that you're probably not an expert on you know and or at and you wouldn't be probably listening to this podcast if you were, and so the idea behind it is is that if somebody is an expert at something and you are not and you might be an expert at you know mechanical engineering or at.

[2:58] Um some technology software code that nobody understands you know and you know it and you understand it but but people that do ESOP work are generally pretty good at it and they're they normally do they they normally are in a sense experts now, the the choice around the expertise is how they communicate that and how they actually teach people about what they need to know, in terms of actually trying to help them and that's the that's fundamental to the mission that we're on with this podcast because it's really not. About you hiring or finding me and saying hey I want to I want to hire you to do my work it's really about you understanding is an ESOP really right for you. Does it even make sense for you for for you and your company, um it's more about ruling out that possibility secondly then if it is right for you if you've gone through all the education you've done the research then the second part is is who you're going to work with and that's really kind of what we're going to talk about today and this is primarily going to be more of a pre- ESOP topic I know we've jumped into some post ESOP but this is going to be primarily more of the pre- ESOP. Part so if you continue to listen that's what we're going to talk about today.

[4:05] Go to our website at journey to an ESOP calm you'll find out a ton of information on on other episodes that may be helpful. If you like the podcast please share it with a friend please give us a 5-star rating it's super helpful for people that are looking for this type of resource and want to know that it is is something that could be helpful to them and so, with that um I will just say that as we start off the first thing I wanted to say is this Dirty Rotten Scoundrels movie. Umis a movie that is a it's obviously it's a comedy came out in 1988 what happened in 1988. Personally I graduated from high school so this is an old movie right and it starts some people that are like probably Beyond you know some people that are younger right that really had um a sense for who they are but Steve Martin and Michael Kane. And they're super funny people, um this was 1 of those kind of kind of I would just say a hilarious comedy you know comedic type of movie however the undertones and the theme of the movie were that hey. People are going to take advantage of other people so the whole storyline is about 2 conmen confidence Men that end up in the re Riviera 1 is like a highly professional con man has a whole thing orchestrated with the.

[5:25] The city uh chief of police and that's Michael Kane and then Steve Martin shows up the town they basically get into um. You know in alignment and then they kind of separate and then they compete and then they try to like dupe this this woman who is a better con person than they are right and so it's it's kind of funny at the same time there's also this undertone of like hey this is totally terrible like they're totally taking advantage of people by lying to them and you ought not to do that right so, um so anyway that's that's the movie The reason I'm using it today is because I do think that there's um the the purpose and the the practice and the methodology of a con person is is is to, deceive somebody into making a decision without really understanding what they're doingand it's a process of, of using whatever methodology of deception it could be um sympathy it could be um bringing somebody into something where they feel like they're, they're empowered to do something and now they feel Justified and they don't the first thing is they just don't know the whole the the truth and that's why. It's important to understand like the whole landscape of these things and as I as I lay out and unpack this I want to start with this and again I wanted to kind of make sure I mentioned.

[6:47] Um as I say the topic itself could be really construed. In a very negative way like everybody you go to the conference is not a dirty rotten scoundrel right these are really good people and the ESOP community in general is really um um. A combination of really great people that want to help each other and help help others right so please don't misconstrue that part of that is for the dramatic effect of it all. So and it and it partly is wanting to get across the idea that it could feel like for some people too, in unfair to the ESOP advisors it could feel like who can I trust and some people might walk away with this go to a conference and like I don't know anybody I don't trust anybody and never make a decision to go towards Esau because you just can't find the um the advisor for you alright so hopefully what I'm going to do as we talk about this is to strip away any paranoia when it comes to that and give you a road map of things I think it would be helpful to you as. Looking at not only is an ESOP work for you and your company and your situation or in addition to that.

[7:54] How would you move forward in this situation with an advisor where do you start um and really just try to be a resource along those things now, high level as I start talking about this on a high level basis what what happens typically if I just kind of peeled it back a little bit I would say that decisions that people make aren't generally are not normally Hasty when it comes to an ESOP so that's so that's not something I think people normally have to worry about you know there are cases where people go to a conference they get super jazzed up they hire the first person they see and, you know off off their running or they talk to their friend and the friend says hey you should use this advisor because I used them and blah blah blah and they don't really ever vet out the friend's advisor they just kind of jump in, and they realize maybe later or whenever that that was probably not a good fit for them.

[8:47] We had over the last year we've had some people, um come to us as as new clients or potential new clients right and and and a number of them have done different things and I'll talk a little bit about some of those things I think there were very very.

[9:04] Structured approaches to hiring the person the V the advisors that they thought that they needed to help them with that so I think on a high level, there's a sense of um you know trying to figure out like what is a good advisor for youobviously you know when you think about. The the place that you're at in life you're you're most likely a very established and successful business person or. Persons where where you've done this before you've hired professionals to do different things so you're not going to just be tapping into nothing right you're tapping into, experience at hiring maybe the way you hired your CPA or maybe the way you hired your attorney or maybe the way you hired, whomever in your Professional Services so there's obviously a base a ground floor there of just I understand how to interview people I'm not going to get into that at all.

[9:54] What I want to get into um is really just the the first part of this is understanding when you go first off to a conference who are you going to be running into. And how do they affect your life and depending and really kind of depends on what stage of the ESOP you're in. And that would um and then also just kind of who. Who may be a better fit for you in terms of of some types of different types of advisors that do some of the same things that overlap so we're going to get into that so.

[10:27] You know when you think about first off let me think about let me just kind of express 1 of the things about esops Employee Stock ownership plans is that we we all should know from a from a very basic level that an ESOP is a retirement plan.

[10:43] And as such as a retirement plan it is governed by the Department of Labor and also the Internal Revenue Serviceso. When we talk about the Department of Labor we're going to immediately talk about erisa in erisa law so that means we're going to have attorneys involved and when we talk about the uh IRS side you're going to have tax attorneys you're going to have tax people involved, in addition to that you're going to have because it's a retirement plan you're going to have third-party administrators that help to guide a plan so that's going to be part of it because an ESOP itself is a trust you're going to have trustees and so some of the people that we're talking about are by Nature and relative to their discipline they're going to bethere for the purposes of of. What they actually provide us as a service directly related to those to those roles and and respective roles that they have of their career of their discipline so obviously an attorney trustee third party administrator CPA those kind of people and so.

[11:50] Keep in mind that you know you're you're going to you're going to look at that and run into those types of people so specifically when we start breaking this down let me just kind of say categorically you're going to have a lot of different um you're going to have attorneys there. And some of the attorneys are going to be attorneys that represent the trustee.

[12:08] Some of the attorneys are going to be attorneys that represent the company when we say the company we mean eventually the proposed ESOP and it may be an existing ESOP and that.

[12:19] Attorney is representing the company side. So what happens is the attorneys can do and some of them do both right and they kind of flip-flop back and forth some of the attorneys in the the conferences um. Professionally will do other things like sell-side advisory work with the attorney work and so there's a there's a combination of things that they're doing that again is is helpful just to understand and give you kind of the basics behind it. So a lot of attorneys and I could try to come up with an attorney joke but I'm not going to at this point but there's a lot of attorneys there so um.

[12:56] The second category would be Bankers Bankers are there so these are normally going to be um larger Bank institutions. Like say Chase Bank and Bank of America and Wells Fargo those kind of larger National um banking, banking institutions or or even global, um and then you're going to have like smaller more Regional banks that are that are more nichy niched into esops, um and then you're going to have other types of banks that are maybe not not they're like non-banks getting into it and then that you're going to have another subset of Bankers that are specializing in SBA. But what's their role their their role is to help provide uh financing to fund the transactionand so. Um as we talk about their role there I mean of course it's really helpful to talk to them and ask the question like hey what do you what do you typically do how much do you usually lend those kind of things are are great to to talk to them about. Um the next group of people would be the trustees now the trustees are going to be because they're an ESOP is an employee stock ownership trust they are going to serve the role. As either the train well both really the transaction trustee which is the role of of being the buyer in a negotiated transaction.

[14:16] And then eventually they would become the ongoing trustee so they are going to be the ones that are responsible for the plan, and the ESOP trust to make sure that those are done and operating according to the way that they're set up to to make sure that they're um. Following all the the fiduciary responsibilities they are supposed to as a retirement plan.

[14:42] The next group would be um well let me go back to the trustee so the trustees are going to be you're going to find them in 2 categories generally speaking you're going to have individual trustees who are really their own. You know. Entities by themselves with a group of people so they could have an individual trustee with a firm who has ultimately like people that work for them but the trustees the decision maker and the other people are more support staff related to the trustee doing and being engaged as the trustee for the ESOP plan and then you're going to have institutional trustees that are more bank-like and they're going to have more of a, uh a corporate veil around them where they're operating as an employee of the institutional um Trust. Company and so those are the 2 types and you're going to kind of meet those people as well.

[15:32] The next group would be people like third party administrators and their role is going to be to do the accounting for, the ESOP plan so that the participant statements, and all the accounting going into the allocations has been done on an annual basis correctly and being then accounted for in a 5,500 report for a retirement plan.

[15:57] That is the the tpa's responsibility to make sure that those that that has been done correctly within the uh. The guidelines of IRS and the guidelines of odisha the guidelines of the actual plan document and that is a um an annual typically an annual um function that they serve, in addition to helping with other things you know in in what they would do if that they have you know maybe multiple service offerings but the primary is going to be the accounting the there are things that they will do to help like with repurchase liability studies those kind of things.

[16:34] Uh the other ones that would would be kind of the the I guess the mention and as as I get closer to to this 1 is it's more important to kind of group all of this in terms of. Um the the ESOP advisors that really operate as cell site advisors. And this would be a slash feasibility advisor so they kind of. They kind of fit both of those roles feasibility as we talk about esops is going to be. The work that's done to determine whether or not the how the esops actually going to work and that's going to be done in a lot of different ways depending on who these people are and how they operate, and then the sell side part is usually a continuation of that of that role so the sell side advisory part is going to be part of the role of of actually conducting the transaction, So within that there's going to be other subsets of of things that they will do which could include, sourcing financing um it usually would include organizing the whole. Uh transaction itself and being the the the party that goes back and builds Poe most likely the team that you're going to have on the sell side and the team that's going to happen on the buy side.

[17:49] So those are the those are the main folks that we're going to get into of course there are other people like CPAs and um different types of professionals Insurance folks are going to be important element there that, um we don't get into a lot of but they are absolutely important because particularly with respect to fiduciary insurance and and the process of, of making sure you understand like how fiduciary Insurance works is really important, um they also will be helpful at help helping to to Source the dno insurance for the board so definitely insurance people are going to be an important part of the advisory groups that you're going to, get to meet at these conferences. Are you 1 of my subjectsno I'm an American Fanny Eubanksyou can be trusted but he can't be trusted.

[18:48] I couldn't help overhearing if you're in trouble in there somewhere I can help thank you.

[18:53] But I cannot acceptyou've already risked too much just in speaking to me.

[19:11] God you're attractivetotally totally conning this ladythis land.

[19:23] I must gothis is Michael Kane jumping off a balcony dramatically.

[19:30] Getting this woman to believe that he's a a a royal person who needs help in his efforts to save. Ultimately the Freedom Fighters and then she's so like excited about it because now she feels like she's part of this whole thing so classic Khan as he left yes just a moment to go good. Please you must tell me where he lives.

[20:15] Yes he is hands has been over for 5 years.

[20:19] Music.

[20:42] Is getting conned right and now again I'm I'm using this as our as example, um and I don't want to be too overly dramatic either as far as this goes because it could be taken the wrong way however. Prudence and the caveat I guess the Caveat Emptor right you know let the buyer beware as you go to a conference and you're looking at who can help me the first part of our topic was really to kind of lay out the the landscape of the people the ESOP professionals that you're going to get to talk to, um now we're going to cover just things I think are important to to say best practices and again not to be redundant on some things that you might already know. Um but just thinking aboutways to help. Consider a good a good way to kind of help or make a a checklist of items that that might help you uh determine like who do you want to work with and how and how do you want to go about hiring them so.

[21:40] I think it's kind of goes without saying but the first the first part of the best practices here is is let's not get too hasty right let's not get too um. Quick to make a decision on on who you're going to work with and obviously there's obvious reasons behind that um 1 of 1 of the. Experiences I had a long time ago and doing ESOP work was um I had a client who came to us through an attorney who. Had started working with the client and they and this client had gone to a conference and they had. Um hired the first trustee they found and they didn't do any analysis they didn't do any work on actually planning out their their ESOP transaction. And so they had gone through this whole beginning process kind of putting the cart before the horse and not really understanding what they're getting into and, and and the bottom line is that that.

[22:34] You know they didn't do anything wrong but they got super excited about the concept of ESOP so they go to the conference get super excited what happens next they meet people and like all right let's get let's just get this thing rolling right and. Because uh they did that they kind of wasted some money of course they wasted some time too and the process was um much more different when they come back when they came back over and we kind of worked through let's start over again let's start at the beginning and so.

[23:02] Don't be Hasty take your time do your due diligence have some idea when you know a lot of times people go to the conferences they're they're not thinking they're going to do an ESOP for like a couple years, but what I do find is that there are is like an excitement around this idea let's do this this is great everybody's excited you start telling people, and your company about doing an ESOP and you start putting pressure on yourself so 1 of the other parts of this is is hold off on really communicating that this is something that you want to do until you've done your research in your homework. And there are really excellent, areas of evaluating is this ESOP right for you there are um specific conferences with like the nceo that are specifically for the this is this even work so you can do some preliminary um work of course this podcast is dedicated to that front and then reading reading as much as you can there are articles there's tons and tons of information and I think when you start thinking about the list of his niece operate for you start thinking about the very beginning what are your goals and objectives in as the shareholder.

[24:10] Which are really the decision makers behind moving forward in ESOP and it and of course it could be people that are key people that are in the company that are not shareholders that are listening and same thing for them would be. Make a very written Quantified or detailed list of goals and objectives that you want to accomplish, and with the ESOP and that could include hey I want this this kind of return on my my stock as I as I go into the transaction or this is how I want my, my payout it could be very financially driven it could also be very um in addition to that it could be other things that you want to accomplish like we want to we want to. Continue to improve our culture using the ESOP we want to continue to work through our succession plan the ESOP will help us do that could be we want to.

[25:00] Um work through a a growth strategy and this is how we think the ESOP could really help us do that there's there's a lot of things that you can do. To anticipate how to use the ESOP and I think having a set of written goals and objectives can help as you do these other very you know specific tasks, in order to determine who you're going to work with and that's kind of the the gist here is to avoid of course the dirty rotten scoundrel um and. Then again I'm being very very facit about that so just keep that in mind, um I'm certainly not labeling ESOP people as Dirty Rotten Scoundrels but the point is is that you want to feel like you've you've hired the right people for your efforts that you're going to go forward on.

[25:48] So once you have all that I think the next step is to really then lay out a game plan and you at this point you probably have a list of of potential, people that you're going to hire and it and I and I would just say kind of as we start thinking about this there are a couple ways to go at the beginning the couple ways to go are hey I'm going to hire a traditional sell-side advisor Investment Banking firm, right and all the things I've talked about related to Investment Banking firms is hopefully that you're aware like the cost structure there is is pretty high. In relationship to a regulated m&a ESOP transaction so you you navigate that if it's complicated and you really do want that then obviously work through the analysis on who those who those firms might be. There are sell side firms advisory firms that of course are not um their advisory. Confirms that charge advisory fees they're not charging you a success fee so that might be the category you're looking for.

[26:48] And within that grouping like for us we are a CPA firm that provides that there are other CPA firms I think that provide that kind of. Service um there are attorneys that do both so the sum attorney firms try to do both of those things. Kind of be the 1 Stop Shop type of thing and it's and it comes down to. I think some of the preferences behind that and and experience is 1 as we talk about. Vetting out those those individuals I will say that the key person or persons you hire at the front end are going to also lead you to the other hires that you're going to have on the buy side including the trustee, the independent valuation firm and and the other attorney on the deal as well as other, you know other parties so that includes the third party administrator those kind of people so so this is going to be the first the real key higher that you're going to make is the the the company that and the advisors they're going to help structure everything. So within that Realm1 of the first best practices we should be thinking about is, incorporating how much like quantifying like what do they do how do they do it right how much experience do they have you know in doing ESOP transaction so it could be, you know maybe list out the client the the transactions that they've done or um they're they could get into some specific as to the nature and size of those transactions So within the experience level um.

[28:15] Do you mean even sometimes geographically if that's important to you what does that look like um just so you have some idea of of, how much that experience translates to your specific ESOP deal and to make sure that that is a good for you a good sense of like yeah that that means that they would be a good fit for us in that sense, um 1 question you might want to ask is like what what other services what types of services do you offer like get get very specific as to the services but also that kind of leads us into the processes that they go through like, give us a very specific roadmap in a process and maybe even examples of some deliverables as far as how you go about it so. So you 1 of the things that is kind of standardized in our ESOP industry is that they will do some kind of feasibility analysis on the transaction.

[29:06] So what is the feasibility analysis kind of look like what are we getting is it a big PowerPoint slideshow um is it just a lot of information that, um is coming and and how useful is that information to you in terms of making decisions because when you think about feasibility.

[29:25] In your evaluating that aspect of what the what services are being offered to you. Um I think it's important to do to think about feasibility in the sense of not just Is it feasible. But is it how and why is it feasible and so can I from the information provided as the user of that information can I as the as the. User or purchaser of the services can I can I manipulate that data to ask some very specific questions in terms of structure that could be. Percentage of how much I'm going to sell that could be the amount of stock um not just the amount of stock but the amount of debt that that's going to be required both senior debt and seller note, the structure of the tax benefits around the nature of an escort versus CCP a lot of those, initial like presentationparts of the of the uh, feasibility can they be manipulated into asking different questions so that really where I'm getting at that is can they help shape it into something that optimizes your goals and objectives and that's coming back to that very beginning list so I think that's kind of obviously important in the processI think. You owe it to yourself to be very very direct.

[30:47] And ask fee structure questions like how much does it cost what is this what am I paying for and then within the fee structure questions how much time does it take to do each of these functions and then of course within that. Who am I going to be working with like what what is the team look like and what are their backgrounds and experience and everything else so as you as you start to evaluate those. Those aspects you may get like a very formalized proposal which is fine.

[31:18] Um but really the meat of The Proposal are all these things that we're trying to kind of ask questions. Part of this process like as I say it does take time right and you want to you want to be efficient about how you're using your time. So you might as you if you interview like 3 firms and you're like okay I want to just see you might have a a a template that you create some kind of way to approach the um. You know comparisons between who's doing what 1 things that's interesting about this area of of advisory is it is relatively. Different for each advisor the way that they go about things and that's why having possibly sampled deliverables is helpful to kind of see what you're getting and how it's workingnow 1 of the things that just kind of makes sense to me is that. You're going to wantto at least if you if you have this level and and this happens every once in a while but it's I think it's a really good idea. You know what why don't you talk to people they they've done deals with and ask questions about the processes that they've gone through. Um at some point in your evaluation process so that you can get a good sense of of what the client experiences were were now.

[32:30] I'd be surprised they're going to give you any clients that had a bad experience right so keep that as a as a grain of salt right like that's just, take it is what it is but if they don't have any right that that's also an indicator so having a good client reference is helpful to. Understand that this was this is a good this was a good experience for for that client so it could be a good experience for you.

[32:56] So as you um as you go through that process too 1 of the things that I think is important in doing esops is. Is the why behind it you know and I think that something that we have talked about on the podcast a little bit but. You know you're you're pursuing this from a y perspective which is I want to do an ESOP becausebecause it it works for me, as the shareholder and it works for my company and it works for my key people I want to do an ESOP because it helps to transition the legacy of the business into um a group of people that will will continue to um pursue the same level of objectives that we had originally in our in our mission and what we tried to set out so so the the why behind your ESOP is important. And and and I kind of bring that up here because I think part of it is. Probably not as obvious but I think that the advisors that work in the ESOP space have their own wise and I would say like 1 question I might ask is like what why do you do ESOP work.

[34:03] And it's kind of probably maybe even a strange thing to say I mean of course I do at least up work because I like to do it and it and it makes sense and I make money at or whatever but the point is is thatI think that. As I've done ESOP work for now several several years right and over this, um time of doing the podcast I've actually really thought about my own why of doing ESOP work and the more I thought about it the real they realized thatas we have aligned our clients, you know in terms of our selection process like this is a client that we want to work with what I realize is that very best very best experiences that we've had, have been when r y aligns with their why and our philosophy of an ESOP, in terms of putting 1 together is much very much about holistic holistic planning and win-wins, that makes sense not trying to maximize um a shareholders multiple on the deal coming out of the deal that's not our that's not what we're doing like that's not why we're doing it we're doing it because we believe in the concept.

[35:11] And. If if my strategy in philosophy in notion or behind why I'm doing ESOP work as an adviser aligns well with that strategy and philosophy of the client then I think that's a very good. Um relationship you know and within that what I think ultimately is happening is.

[35:33] There has to be and this is part of the best practices but it's 1 of those things that I wanted to kind of build up as we talk about it there has to be a deep sense of trust between the advisor and the client.

[35:47] And some of the some of the elements of trust will simply just happen naturally as you start working together like okay now we've done some work you kind of see how we're thinking about things the questions we asked a a client or as we go through specific you know. Preparations for parts of the ESOP processare are going to naturally build trust with a client but but ultimately at the at the I guess at the core. Trust is B is there because there's an alignment of philosophy and so that's that's a little bit more difficult to get at but but if I were sitting down and I'm on the side of the the the table making a decision to iron ESOP advisor. I really do want to understand like why did you get into this business in the first place what was motivating you and you can hear this in some of our episodes and we interview people like, I do ask the question frequently why did you why did you even get into these opiates like what do you what do you like about it and a lot of times you're going to hear people say because it's it's something that they really believe in and they believe in the concept of employee ownership and they want to help. Build that into companies all over the country so that's a pretty good why when you get down to it and you can kind of tell like if it's an answer that's you know.

[37:04] Pretentious and like ah yeah right right my you know and we're walking watching all these, things in in the election right now right and and and honestly I hate politics but I it's necessary right and so when you look when you watch the debates and stuff you're like okayyou know. You can kind of see through all these different things that people say and and it honestly it's just terrible but at the same time you you know thank God we're not dealing with politicians within the ESOP world right it's it's. Professionals that really do ultimately I think.

[37:34] Um overall really do want to help so I think understanding their why behind it and and aligning that with your your why is a very effective way to to hire the right, um and I think some of that has to do with personality anyway so the next part of that is like of course you know when you're interviewing somebody.

[37:54] You want that personality to. Click with your personality and the group of people that you're working with on your side so it could be your key people multiple shareholders, so you're going to want to like get a sense for that like is there is there a deeper sense of we are we are there's good chemistry here to work through this now. This is really kind of focused in on the transaction side, but this is also something that I think leads into the other part of of the best practices because as we start to segue into some of these other elements what we are, thinking about is other people that you're going to hire and 1 of those those people is going to be the transaction trustee and the eval the independent valuation firm which is really. Hired by the trustee now the point of this is that we have we got to not. Focus so much on the transaction that we lose sight of all these different relationships that we're going to be building. The truth on the sell side advisor relationship is that it is much more of a short-term Focus. And so a lot of those the the relationships that we build through that need to be there need to be solid but ultimately that's going to lead to um long-term relationships with trustees and valuation firms third party administrators and we want those to be good now. Overall 1 of the things that I think are important to interview on and ask questions about.

[39:18] Is how and this comes back to a little bit about philosophy but as how does the advisor.

[39:25] Structure the deal so that the company and its long-term people, have very solid relationships that are going to make sense and that includes the bank and that includes other people that are they're they're going to be working with in the long term so obviously that's going to be important for.

[39:43] Um you to think about and understand how they're not just delivering a good transaction but how are they delivering, overall a very healthy company with good relationships you know that can sustain everything that's going to come after the ESOP and who knows what's going to come after these uh because honestly anything can happen you know, I love forecasting and everything else but when we think about forecasting in the financialswe don't know what's going to happen and any company can go through a downturn and it can happen like that for 1 of 1 reason or another right and then, other sides that can go up and you can have abundance and then scarcity so building it for the future is important so, along that line 1 of the questions that we want we want to ask is just this idea that how do you. You know we talked about the why now it's more of the how how do you build this to ensure as best you possibly can sustainability. Sustainability would be um being able to work in whether through downturns sustainability would be you know estimating potential issues related to repurchase liability and and things that are going to come down the road, so that there's not this just dramatic myopic focus on just getting the deal done.

[40:57] But there's a wider view of of does this work and that could be financially and that could also be other things that include the the long-term transition plan or the short-term transition plan of an owner. To an employee to somebody that's just on the board of directors. So how do they function around that how do they give you advice to get you through some of these things that are just um.

[41:22] Better understanding and and and really advising on on some levels of, of things that are just beyond a spreadsheet Beyond a PowerPoint Beyond some of these other things and experientially how does that how is that worked with your clients and so that's why it's kind of cool to talk to some existing clients that people have worked with. And in some cases you can talk to the owners that are that are either on the board and have exited, and and just see what their experience is and just understand that better but I do think this is a very important, obviously we spent This Much Time on on this podcast this is a very important um part of the decisions you're making going towards an ESOP.

[42:02] I do think it's very confusing unfortunately when you go to a conference and you're and you've got 15 million business cards of different people doing it and.

[42:13] So I think it's important to take your time as I've said before um act intelligently not quickly would be that the, um the phrase of just slow it down look at what's in front of you ask the questions, um and be careful with everybody's recommendations and referrals do your homework for yourself if your friend use somebody and they loved them great interview them do the research do all the things that we just talked about, um because you won't besorry if you take the time and hire the right people you will be sorry if you go through this whole process, and realize it was structured in a way that is not in alignment with what you really wanted at the front end so hopefully that helps you today it was its kind of 1 of those um fun ones for me just to kind of play around with this this movie um it was 1988 I graduated from high school back then so um this was my second Steve Martin 1 by the way which I did Pink Panther um a few weeks ago, so we'll see he's funny that's probably 1 of the reasons why I chose it. For for everybody that's listening thank you guys for listening today and go to our website at journey to an ESOP cam, um if you have more questions reach out on our uh form there you can fill out in the website and look forward to our next step on this journey to an Isa.