The ESOP consulting community endeavors to advance employee ownership.  In a recent call of 70 leading ESOP consultants hosted by the Beyster Institute at the Rady School of Management at UC San Diego, we discussed why some ESOP transaction closing dates were delayed. These delays resulted in increased transaction fees and frustration from the company and selling shareholders as their enthusiasm of becoming an ESOP-owned company was challenged. Our discussion aimed to understand how to avoid these unnecessary delays, which can harm the growth of employee ownership. We have convened a working group with the help of the NCEO and will work on finding solutions over the next few months. 

One common issue is ESOP knowledge.  Some of the professionals involved in the transactions are experts in their chosen field but fail to understand the unique aspects of ESOPs. One consultant may be a mergers and acquisition expert but fail to understand the unique interplay of ERISA, transaction financing, company culture, and so on. The consultant provides advice that works in the normal M&A transaction but will not satisfy ERISA’s requirements. We need to train the next generation of ESOP professionals.

The need for ESOP consultants with broad knowledge does not stop once the transaction is complete.  The next generation of ESOP consultants needs to extract the knowledge from the first generation of ESOP consultants. The first generation had no mentors to extract the wisdom that comes with experience. The Beyster Institute last summer asked 11 mature ESOP companies to provide their historical financial information to help understand the key financial metrics in being ESOP-owned.  A myth this data revealed is that the repurchase obligation is not self-correcting in business downturns. The myth was that the company’s value would drop as the company’s performance declined. My co-presenters, Scot Storjohann from GreatBanc Trust Company and Chris Staloch from Chartwell Financial Advisory, Inc., look forward to presenting the results of the project at the NCEO's 2022 Annual Employee Ownership Conference in Seattle in April.

The Beyster Institute is proud to hold our second annual Understanding ESOPs: Training to be an ESOP Professional course. This 15-week course will be held Wednesday nights starting March 30. Leaders in the ESOP community have once again agreed to be guest lecturers, sharing their individual expertise as fiduciaries, lawyers, CPAs, investment bankers, valuation experts, investment advisors, compensation experts, and organizational development experts in a course designed to be graduate-level. Our aim is to prepare individuals to serve successfully as professionals in the ESOP field.

The course is rigorous and time-consuming. You will be expected to read relevant Internal Revenue Code and ERISA sections, court cases, and articles to provide a foundation for your lifelong journey of education in this rewarding career. The ESOP consulting community is a wonderful community for many reasons. The intellectual challenges across so many disciplines from complex transactions to management succession to Internal Revenue Code compliance is rewarding. The personal satisfaction of helping leading companies in various industries be platforms for providing wealth to their associates, keeping the business local, and providing a safe place for all to work is rewarding as well. 

The need for this course has never been greater.  ESOP consulting firms cannot find enough professionals with the ESOP expertise. More information and registration is available online.