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CSG in the News - Fall 2024
November 22, 2024 •CSG Partners Staff
This fall, industry organizations and business publications recognized CSG's employee stock ownership plan expertise with top awards and featured commentary. In addition to picking up ESOP Investment Bank and ESOP Deal of the Year honors at the M&A Atlas Awards, CSG won the Industrials Deal of the Year award at The M&A Advisor's annual ceremony.
The Business Journals, Long Island Business News, and Modern Contractor Solutions also highlighted CSG's advisors in a variety of ESOP-focused articles. Read ahead for their thought leadership on employee ownership-led business transitions.
The Business Journals Quote Lawrence Kaplan
A Day Beyond the Dakes
Lawrence Kaplan, founder and managing partner at CSG Partners, which builds ESOPs for companies, said more firms are exploring these sorts of exits—a decision that contrasts with large-scale mergers and private equity deals.
"Rather than selling it to a private equity firm and having the profits go to some Wall Street bank or some place, [Stewart’s is] keeping it in the company, and the employees are reaping the rewards," Kaplan said.
A benefit of this sort of deal: 100% ESOP-owned companies don’t pay federal or state taxes. "They could be paying 40% or 45% of whatever they make would be going out to taxes. Now this company is not paying any taxes... it allows the company to quickly deleverage its balance sheet, pay back the bank, pay back the selling shareholders, and now the employees, or the owners of that equity, are going to see this huge increase in equity value," Kaplan said.
The complete article is available on Albany Business Review and other affiliated publications.
Long Island Business News Quotes Lawrence Kaplan
Leaving a Legacy: ESOPs are Exit Ramps with Benefits
"We’re living in an era where so many things feel disposable," says Lawrence Kaplan, founder and managing partner of CSG Partners in New York City. "A sense of purpose, community, and legacy are becoming scarce commodities. Middle-market business owners increasingly want more than pure-play exits. Others are interested in partial liquidity events without having to sacrifice their companies’ independence. These are big reasons why we’re seeing a surge in employee stock ownership plan interest."
Kaplan points to Hub Truck, a Farmingdale-based truck rental and leasing company, as an example of a local ESOP success story. The business used a two-stage ESOP strategy to sell equity to an employee trust over a multi-year period.
"This enabled the founder to gradually liquidate his holdings without selling to a third party," Kaplan says. "Meanwhile those team members earned stock in the company and gained a true measure of ownership—both financially and psychologically. And Hub has thrived. According to recent filings, their ESOP plan has over 160 participants and $30 million in assets."
The complete article is available on Long Island Business News.
Modern Contractor Solutions Features George Thacker
Employee Ownership: ESOPs as a Business Strategy
Contractors using employee stock ownership plans (ESOPs) as a business strategy are on the rise. Fifteen percent of all employee stock ownership plans are sponsored by construction industry companies. That gives contractors comfort and confidence in the viability of ESOP-led business transitions.
One driver of the trend is demographics. Construction business owners, on average, are getting older; they’re in their fifties, sixties, and beyond. Many are saying, "I need to do something with the business."
Doing nothing means an uncertain and potentially costly future. If we look at a business and say, "Let’s model out the next decade and look at the amount of cash flow consumed by income taxes," it’s usually a sobering number. An owner might pay as much in taxes over that period as his entire company’s worth now.
While an ESOP doesn’t make sense for every company, construction industry owners, either thinking about exiting immediately or in the next five to ten years, should explore the strategy. One major difference from other transactions is that an employee trust is the buyer in an employee ownership sale—not an outside party.
George Thacker's complete interview is available on Modern Contractor Solutions.