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A skeptic owners reasons for not doing an ESOP
For selling owners who have skepticism over the ESOP structure. This podcast contextualizes the value of an ESOP based on each owners individual situation.
ESOPs Are Great. But Not for Me
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Suggest questionLast week, Jay Goltz continued his exploration of employee ownership, flying to Portland to meet up with Shawn Busse and Jim Kalb, a friend of 21 Hats who has already sold a portion of his business to his employees. The three owners planned to attend a conference promoting employee stock ownership, but things went somewhat awry. Jay and Shawn left the conference early, Jim canceled his flight, and as has happened before in his brushes with ESOP professionals, Jay walked away feeling convinced—convinced, that is, that an ESOP probably isn’t right for him. Two days later, we taped this podcast episode, which quickly turned into one of the more rauco conversations you are likely to hear about a somewhat technical business topic—although we did manage to find some clarity in the end. In Jay’s words, we agreed to agree.
Along the way, we confronted quite a few relevant questions, such as, do ESOPs have to be so confusing? Are the professionals who pitch ESOPs trying to make them seem complicated? If Jay wants to sell 30 percent of his business to his employees but continue running it, how much control would he have to give up? Will an ESOP make life easier or harder for Jay’s two sons in the business? Instead of an ESOP, could Jay accomplish most of what he wants to accomplish by setting up a profit-sharing bonus plan through his 401(k)? Hanging over the conversation was a larger, more philosophical issue: What exactly do business owners owe their employees? And whatever those obligations are, do they extend beyond the sale of the business? Do they extend beyond the grave?
About 21 Hats Podcast
The 21 Hats Podcast presents an authentic weekly conversation with small business owners who are remarkably willing to share what’s working for them and what isn’t. Unlike many business podcasts, which tend to talk to highly successful entrepreneurs whose struggles are in the past, the 21 Hats Podcast features a rotating cast of business owners who are still very much in the trenches fighting the good fight. Every week, our regulars gather to talk about the kinds of important issues many owners won’t even discuss behind closed doors: whether their businesses are as profitable as they should be, whether they are willing to give up some control to an investor in order to grow faster, why they had to lay off employees, how they wound up with way too much inventory, why they don’t have a succession plan, and even why they are concerned about their own mental health. Visit 21hats.com to hear all of our podcast episodes, read episode transcripts, and learn more. The show is produced by Jess Thoubboron, founder of Blank Word.