EP9 - Interview with Steve Thornton and Eric Harris of Monte Sano Research Corporation

In this episode, Jason and Makenzie sit down with Steve Thornton and Eric Harris of Monte Sano Research Corporation (MSRC) to discuss the company’s evolution to employee ownership. They reflect on their company’s journey to an ESOP and how succession was intentionally embodied well before the formal transition, and the cultural foundations that made ESOP alignment a natural fit. The conversation also explores how employee ownership can bridge founders to successors, along with candid advice for leaders considering this path, including preparation, key decisions, and lessons learned along the way.

Transcript

Interview with Steve Thornton and Eric Harris of Monte Sano Research Corporation

Episode Summary

In this episode, Jason and Makenzie sit down with Steve Thornton and Eric Harris of Monte Sano Research Corporation (MSRC) to discuss the company’s evolution to employee ownership. They reflect on their company’s journey to an ESOP and how succession was intentionally embodied well before the formal transition, and the cultural foundations that made ESOP alignment a natural fit. The conversation also explores how employee ownership can bridge founders to successors, along with candid advice for leaders considering this path, including preparation, key decisions, and lessons learned along the way.

Key Topics Covered

• Building a long-term vision and “not for sale” mindset
• Preparing for an ESOP years before implementation
• The role of company culture in employee ownership success
• Structuring and leveraging an advisory board
• Lessons learned from ESOP planning, execution, and communication

Transcript

Editorial note: This transcript has been lightly edited for clarity and readability while preserving the original meaning of the conversation.

Introduction & Guest Welcome

Jason Miller: Welcome back everyone to the Journey to an ESOP and Beyond podcast where we seek to make all things related to Employee Stock Ownership Plans both accessible and understandable. I’m your co-host today, Jason Miller, and I’m here with Makenzie Worth and our special guests Steve Thornton and Eric Harris from Monte Sano Research Corporation.

This is the accessible part of the podcast where I enjoy the interviews with founders and leaders probably more than anything else that we do or talk about because these are the stories that help to change lives through employee ownership. And there’s a lot that goes into an ESOP and into a succession plan and into leadership well before anyone contemplates a transaction, but we’re going to hear about that from our guests today.

With that, I would like to turn it over to Steve first to introduce yourself, and then to Eric, and if you could tell us a little bit about Monte Sano, that would be amazing.

Company Background & Founding Vision

Steve Thornton: Excellent, good morning, thank you. I am Steve Thornton, CEO of Monte Sano Research in Huntsville, Alabama. We’re a little over 15 years old, approaching about 200 employee headcount at the moment.

But from the beginning, one of the foundational aspects of Monte Sano Research was that my partner Steve Teague and myself had been through being acquired no less than four times. Each time we thought we had found our forever home and our careers, that turned out to not be the case. Eventually we decided we would just have to do this ourselves, of course we wanted to do that.

So from the beginning, creating a legacy, creating stability, answering the trifold call—not only to be an example as a business enterprise, not only to have a noble mission to support the war fighter by providing research and science and technology expertise—but also to be a mission to God and Country that we could leave in place that would long outlast, at least in theory, the memory of those who founded it.

So from the beginning, Monte Sano was intended to be a privately held enterprise, partially or maybe eventually completely an ESOP, but in any event under the control of a small single digit number of dedicated individuals that would see that legacy through from its instantiation and repeat it for future generations.

CFO Perspective & “Not for Sale” Mindset

Eric Harris: And I’m Eric Harris, the CFO at Monte Sano Research. I’ve been here about nine years now. Back when we were around 50 or so employees, I joined. I came from a larger publicly traded company.

And I guess as you get through your career, you kind of learn more of what’s valuable to you. And I guess serving the stockholders and trying to raise the stock price wasn’t as enjoyable as what Steve and Steve were selling.

And just hearing their story when I interviewed with them—how they founded this company and how they were going through what they wanted to name the company like, “well let’s just name it Not for Sale Research so people know what we’re about.”

To me that’s inspiring. And we tell that story at our all-hands meetings. I think it has a lot of meaning to our employees.

As you see the company go along and you see a lot of our peers getting bought out by private equity or people not having a plan of how they’re going to flip their company, it just shows how intentional they were in founding this company, what its purpose was, and how they’ve stuck with that all along.

And we’ve talked about how we’re in that research phase—we were very intentional about our next succession planning steps around the ESOP, and we put a lot of time going to conferences and making sure that we’re doing the right thing for the employees.

I’ve always told Steve and Steve I hold myself as a fiduciary for the employees, making the right decisions so that this can stand the test of time. We aim for a 100-year company now.

Long-Term Vision & Pre-ESOP Journey

Jason Miller: That long-term vision is powerful. Steve, you mentioned being a “pre-ESOP” for a decade or more—tell us about that journey.

Early ESOP Intentions & Learning Curve

Steve Thornton: Yes, from the beginning we thought it would take somewhere between 10 and 15 years to start from scratch and grow Monte Sano Research to about a billion-dollar run rate.

Under that assumption, we believed we would be able to provide for the finishing of our careers in transition and establish a second generation of leadership that would repeat the same.

We are headquartered in Huntsville, Alabama, and that’s a hotbed of ESOP expertise. Some of the founding fathers of ESOP thinking even reside here, so we were not short of good advice and counsel regarding ESOP implementation.

That being said, it took us more than a minute to wrap our minds around what the best practice was.

We were on again and off again about whether ESOP was really going to meet all the intents of the founders—which included making something enjoyable. We wanted to enjoy the rest of our professional lives and show others how they could also enjoy it without destroying the goose that lays the golden egg.

ESOP Complexity & Learning from Others

Eric Harris: It’s hard because you go to ESOP conferences and hear so many different experiences. Some people say it’s rough, some say it works great depending on how it’s structured.

You can’t just take one class and understand it—you need smart people around you. That’s been key for us.

ESOP as Strategy & Cultural Alignment

Steve Thornton: It’s about mindset. If it’s just about money, you might be more like private equity or venture capital.

But ESOP is a strategy when you think holistically about employees, mission, and legacy.

The most successful ESOPs retain the personality and culture that made them successful in the first place.

Readiness for ESOP Decision-Making

Jason Miller: How long did it take before you felt ready to move forward with an ESOP?

Trusting Advisors & Moving Forward

Eric Harris: Honestly, I don’t know that I ever felt fully ready. I just met the right people and trusted them to guide us.

Steve Thornton: It was very deliberate and collaborative. It took time to align leadership and understand that theoretical ESOP benefits matched practical implementation.

Importance of Professional Guidance

Eric Harris: You need professionals you trust—not just accountants or attorneys, but peers and other companies. The ESOP community is very collaborative.

Collaborative ESOP Community

Eric Harris: Everybody is willing to share. People will tell you what worked, what didn’t work, and what mistakes to avoid. That’s been extremely valuable for us.

Culture as a Foundation for ESOP Success

Jason Miller: How do you build culture for the next generation?

Defining & Living Company Culture

Steve Thornton: The first thing you have to do is answer why you are doing this. If the answer is bigger than yourself, you’re on the right track.

Then you define your culture intentionally.

At Monte Sano, our name reflects stability and endurance. We describe our culture as:

• Elevated
• Exceptional
• Enduring
• Rock solid

Eric Harris: When we were small, culture was implicit. As we grew, we had to define it, document it, and live it intentionally.

We also interview for culture fit now. It’s not just something we advertise—it’s who we are.

Succession Planning Challenges

Steve Thornton: You cannot wait until the last minute to plan succession. You must be intentional early and identify who can grow into leadership roles.

Career Growth & Leadership Development

Eric Harris: I started in an entry-level role. Leadership invested in me and gave me progressively more responsibility. That built trust and growth.

Advisory Board Structure & Purpose

Jason Miller: Tell us about your advisory board.

Origins of Advisory Board

Steve Thornton: Early on, we learned from peers and experienced leaders in the Huntsville community. Many were willing to share insights openly.

As we grew, we formalized an advisory board about 7–8 years ago.

Role of Advisors

Eric Harris: They are not a governing board. They are advisors. They help us think strategically and avoid mistakes.

Importance of Trusted Advisors

Steve Thornton: Choose advisors you actually trust and will listen to. Otherwise, their advice is wasted.

Mixed Perspectives on ESOPs

Steve Thornton: Some advisors were supportive of ESOPs. Others preferred private equity. The key was clarifying our long-term intent.

Aligning Strategy with Purpose

Eric Harris: Once we defined our “why,” decision-making became much clearer.

Founder Evolution & Leadership Separation

Steve Thornton: A successful founder must separate their identity from the company’s future.

Advice for Founders Considering ESOPs

Steve Thornton: Ask yourself what comes next. If this is your life’s work, ESOPs can preserve it.

Implementation Reality

Eric Harris: It feels like jumping off a cliff at first, but the right team helps you figure it out.

Lessons Learned

Steve Thornton: Surround yourself with good advisors early.

Eric Harris: Ask peers who they trust and who they used. That accelerates everything.

Communication With Employees

Eric Harris: We communicated early and often with employees. That helped build trust.

Delegating ESOP Work

Eric Harris: We built internal teams to help manage communication and implementation.

Employee Reaction

Eric Harris: Employees were excited when ESOP was announced. It reinforced purpose and ownership.

Cultural Impact

Eric Harris: People were excited and engaged. It created momentum across the organization.

Stewardship Mindset

Eric Harris: You have to be a good steward. The ESOP is about long-term value and responsibility.

Stability Through ESOP

Eric Harris: It helps keep teams together and prevents disruption from private equity turnover.

Final Advice

Steve Thornton: Be prepared to evolve. What you think you know will change over time. Stay humble.

Eric Harris: Always return to your “why.”

Closing Reflection

Jason Miller: Thank you both for sharing your journey and insights.

Final Thought on Growth

Steve Thornton: There is such a thing as unfun growth. Growth should be sustainable and enjoyable.

Episode Wrap-Up

Jason Miller: Thank you for joining us on Journey to an ESOP and Beyond. Join us next week as we continue exploring the foundations of transition planning.

Final Takeaways

• A strong “why” is essential for ESOP success and long-term strategy
• Culture must be defined, lived, and aligned before transitioning to employee ownership
• Advisory boards provide critical guidance and help avoid costly mistakes
• ESOP readiness is less about perfection and more about alignment and trust
• Communication and employee involvement are key to successful implementation

Resources & Next Steps

• Explore additional Journey to an ESOP & Beyond episodes
• Connect with the team at www.JourneyToAnESOP.com
  
  
• Learn more about ESOP strategies, succession planning, and employee ownership

Listen to the Episode

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