Building a Legacy: Is Employee Stock Ownership the Right Choice? - Part Two (#270)

Building on last week’s introduction, Part two of Dave and Wayne's conversation dives into the tactical side of balancing a high-value exit with a commitment to your team. Wayne shares the real-world wisdom he’s gained as President and CEO, revealing how an ESOP can serve as a catalyst for long-term culture, stability, and growth. If you are looking for an exit strategy that honors your past while securing your company's future, this is the episode for you.

Tune in weekly to hear more from Mastery Partners and to receive relevant key content on your journey to maximizing your business value!

Podcast Chapters
00:00 — Introduction
01:12 — Structuring an ESOP to Reward Longevity
03:11 — Essential Advice for Business Owners Exploring ESOPs
05:14 — The Strategic Order of Transition and Brand Value
07:33 — The Marketing Power of Being Employee-Owned
08:38 — The #1 Tip for Building Business Value
11:12 — Capitalizing on Difficult Situations to Boost Your Brand
12:08 — Outro

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Learn More about Scott Couchenour
Scott Couchenour currently serves as the “Fourth Quarter” life and business coach and founder of Serving Strong since November of 2007. Scott helps business owners and executives in their 40's and 50's who are in pursuit of their next adventure in life. He concentrates on helping create clarity and design a comprehensive life and business plan. He helps not only with strategy but secures solid traction through an iterative approach. Scott's clients are reaching new heights and accomplishing much more than they ever thought possible. Scott is also the host of the podcast show, Serve Strong Finish Strong which began in June of 2022 on the Mission Matters Podcast Network.

Learn More about Wayne Witmer
Wayne Witmer joined Harman in 1990, the day after returning from his honeymoon. Married with four children, Wayne enjoys family, travel, sports, and music. Wayne holds a business administration degree from Eastern Mennonite University and worked his way up from project management and business development to president and CEO. “Communicating with employees and clients to make sure that goals and expectations are met is very important,” says Wayne. “I work hard at making that a priority.”

Active in the industry and community, Wayne is past president of AGCVA Valley District, Has served as an AGCVA state board member and was selected for the Butler Building Systems national advisory council. He is a past member of Harrisonburg Rotary Club board and served as club President.  Wayne currently is a member of the Central Valley Habitat for Humanity Board. Faith and trust in God is what keeps him focused and inspired to lead well in all he does.

Mastery Partners

Elevating Businesses to Achieve The Business Owner’s Dream Exit 
The unfortunate reality is that for every business that comes on the market (for whatever reason), only 17% of them achieve a successful exit. You read that right. 83% of attempted business transitions never reach the closing table. Mastery Partners is on a mission to change that. We ELEVATE businesses to achieve maximum value and reach that dream exit.

Our objectives are simple - understand where the business is today, identify opportunities for dramatic improvement, and offer solutions to enhance the business, making it more marketable and valuable. And that all starts with understanding the business owner’s definition of his or her dream exit.  
Mastery has developed a 4-Step Process to help business owners achieve their dreams.

STEP 1: Transition Readiness Assessment
STEP 2: Roadmap for Value Acceleration
STEP 3: Relentless Execution
STEP 4: Decision: Now that desired results are achieved, the business is ready for the next step in the journey!

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Transcript

Tom Bronson (0s): Welcome to the Maximize Business Value Podcast, brought to you by Mastery Partners, where our mission is to equip business owners like you to maximize your business value and achieve the exit of your dreams, whatever that means to you. With insights gained from over a hundred business transactions, we share real world strategies, lessons, and expert advice to help you build long term sustainable value in your business.


Each episode is hosted by one of our Mastery certified partners, their seasoned experts who've helped countless business owners navigate the complexities of growth, scaling, and building value. They bring firsthand experience, actionable insights, and a passion for helping you build a business that thrives. So, let's dive in.


Speaker 2 (60s): This episode is the second of a two part release. To hear part one, follow the link below. Thank you for listening to the Maximize Business Value Podcast.


Wayne Witmer (1m 12s): Did think of one more unique structure that we set up to reward longevity. So I'll get into the weeds just briefly on an esop, but if you have the bucket, let's say you have three circles. One circle is the owner stock, and then you have another circle, which is the ESOP trust. Okay. And then you have another circle, which is the employees harming construction. So as stock is purchased, shares are released into this trust, and then from the trust they're distributed into the accounts of the employees.


So picture that each employee has points in a bucket. So we chose that your ESOP shares are distributed one point for every thousand dollars of income that you earn in a year, two points for every year of longevity. So you could have an employee that is very mid-level on his income, but has been with us for 30 years. So he's getting a bigger share of stock for his longevity.


And we thought that was important to just reward a lot of our longtime employees to give them more benefit.


Scott Couchenour (2m 30s): That's fantastic. That that is. And so the retention is, is through the roof. And so you, you're not wrestling with what a lot of businesses are wrestling with, especially in the aftermath of COVID where there was a revolving door where you're hiring somebody and they won't stay. And then, you know, the mindset and, and all that sort of thing. Because construction is not an easy, like we mentioned, it is not an easy industry. Right. It's not something you sit behind a desk and push papers and, and so that longevity is, is wildly important that, that's interesting.


So if, let's say there's a business owner listening to this and they've just become alive to this possibility of ESOP and they're about to get on the phone to their employee, or I'm not employee to their, their attorney, or to their wealth manager or whatever, their business consultant, and they wanna start getting into this ESOP thing for the first time, based on your experience, what would you tell that business owner that you wish you had known when it first became a part of the landscape of your experience with Harmon?


Wayne Witmer (3m 52s): Yeah, so I don't know if it's so much things that I wish I would've known, because when the whole ESOP discussion came in to play, I did a lot of reading. So I felt like there wasn't much that caught me by surprise. But I think the main thing I would say is what ESOP associations promote, we've found to be true. So, you know, everybody can give a sales pitch, right?


If you're a representative from an ESOP association, you're gonna wanna promote it. And sometimes we're skeptical with salespeople, but basically we found to be true the things that they said would be the benefit of an esop. I would counsel them though, to go to some seminars. If you look at your part of the country and search for the, you know, ESOP association, or even oftentimes local CPA firms will sponsor seminars on ESOPs.


So that's what we did, is we attended some local seminars that, at those seminars, you know, there'll be guest speakers from ESOP consultants and CPA firms and attorneys, and then there's networking that happens, you know, at those conferences where you can talk to other ESOP companies. And that's what we did and that's what I'd recommend for sure.


Scott Couchenour (5m 14s): Yeah. There are a couple of points that are sticking out to this conversation in, in my mind. Number one is what you just said. First of all, educate yourself. Become more aware of what ESOP is all about so that you can speak intelligently and you can ferre it out some of the less scrupulous ESOP salesmen that are out there, or salespeople that are out there. And, and so you're not just kind of taking their word for it, but you understand a little bit of the mechanics and, and the benefits and downsides.


And then the second thing I think that jumps out at me is what you said very early on, and that is transition leadership before your transition employees. And I can see the importance of doing that. That's, that's very important. Is there anything else that you would wanna share about your experience to the business owner who's watching or listening to this, this episode?


Wayne Witmer (6m 11s): Well, one other thing I thought of, Scott, that has just become apparent to me over the last year or two, we present to a lot of clients through interviews. They put on an r fp and you present a package of information about your company, and then you go interview. And what we found is, is that it's been very favorably received by clients. Oh, you're employee owned. So in essence, I think there are a lot of clients who have a positive view of giving business to a company that is sharing that wealth with their, their employees.


So obviously most businesses are owned by individuals, and I'm not trying to critique that method because there's a lot of individuals that own a company that are very generous with their communities Sure. And are very generous with their employees. But I found it to be well received when it's like, wow, I'm picking a company that, you know, what if they make a big profit on my job? I'm just not making that guy wealthy. I'm making all of his employees wealthy.


And so I think that's one additional thing I would say, and I would think that could apply to any type of business that has to go out to clients to win business.


Scott Couchenour (7m 33s): Yeah, I, that is a great insight because that, that becomes a part of your brand as an organization, so that when you go out and you, you talk to the community or your marketplace about hiring you as their contractor, and they know that you are an employee owned. If, if I were approached or if I were looking to build a building for my business, and I, and I heard that, you know, your company was owned by employees, I would immediately, I would think, well, that means I'm gonna get some really good people working on my project because they own their, their job.


They, they they're invested. Yeah. They're invested in that. And so the quality of work that I will receive as a result of that is much worth it. That that's a great piece of insight. So it's actually a marketing side benefit, if you will, to have an employee owned business. Yeah. Wow. That's, that's great. So I'm gonna ask you a final question. This podcast is all about maximizing the value of business as a CEO for 35 years.


What's one most important thing you could recommend to another business owner that they could do to build value in their business?


Wayne Witmer (9m 1s): Well, I think there's a couple of key things. So first of all, cash is very important. So if you're looking at true value from an appraisal, like if you're trying to prepare your business to sell, to have equity and strong cash position to weather lean times, I think that's important. The other thing that we've really focused on, and this could relate to any business, is how you go to market. What do you deliver? So is there a, a unique way of services you provide that connect to your client base?


And I think the other thing would be is to commit toward to integrity and fair treatment for all, which is part of our mission and vision and values, which, well, our values is, and it's easy to say that, right? But it's another thing for your past clients to experience it, right? Right. And so one of the things we've been proud of is about 80% of our business is repeat or referrals from repeat customers.


And so I just feel like business is a long-term proposition where we have to be profitable on every project, but we don't wanna make need to make a windfall on one project. So to be consistent, and at times, one of the best things, Scott, that we've done to build relationship and referrals is to take responsibility. So construction is problematic. So if there's something that costs us $50,000 to fix, but it's our problem, we pay it, we fix it, definitely.


Versus trying to make excuses or trying to, you know, avoid taking responsibility. Yeah. So I think for me, that's the key fundamentals, you know, have cash, have a unique position in the marketplace, but then have integrity and do what you say you're gonna do. So then people have a good experience and wanna share their experience with others.


Scott Couchenour (11m 12s): Yeah. And in fact, it's when things go wrong, which they do, it's how you handle that situation that actually boosts your brand and boosts the, the image in the market for the future. Because people don't say, yeah, there was a problem and they were jerks about it, but there was a problem and they, they ran to it and they fixed it. So it's, in fact, when things don't go well, there's greater opportunity than when things all go well.


Right. Because, because that's where your character really shines, is when things don't go well.


Wayne Witmer (11m 48s): Yeah, that's


Scott Couchenour (11m 49s): Right. Yeah. That's, that's great. Well, Wayne, thank you so much for taking this time to share your insights and your experience with us today. I, I, I know you've gotta be busy, and so we appreciate you taking the time to spend some time with us today.


Wayne Witmer (12m 4s): Well, thank you, Scott. I was honored for the invitation to join your show.


Scott Couchenour (12m 8s): Great, great. Well, this is the Maximize Business Value Podcast where we give practical advice to business owners on how to build long term sustainable value in your business. Be sure to tune in each week, subscribe to our channel so you won't miss a single episode. We'll see you next week.


Tom Bronson (12m 37s): Thanks for joining us for another episode of the Maximize Business Value Podcast. I hope today's conversation sparked new ideas on how you can continue driving value in your business. But remember, it's not just about listening, it's about taking massive action. Visit our website mastery partners.com for more resources. Grab a copy of any of the books in the Maximize Business Value series on Amazon or via the links below.


And don't hesitate to reach out if you want to know how to apply these concepts to your business. So until next time, I'm Tom Bronson reminding you to relentlessly execute while you maximize Business Value.