Meet our client:
Diego “Dee” Solares, CEO
Dee was 56 when we first met him, and we just celebrated his transition out. Dee, like a lot of our clients, didn’t know where to start. His initial desire was to sell his business to a third party. He wanted to cash out. However, after talking to a few brokers and taking his company market, he didn’t find a buyer. Dee was devastated. He knew his industry could be cyclical, and he had an off year in 2020. Dee struggled with the idea that employees could cash him out and he didn’t have any family he wanted to sell the business to. Dee was stuck.
Plan Facts
Dee is 56
2 key employees
5 critical, but not key, employees
17 employees
Revenue of $7.5MM
EBITDA of $750K
Can’t sell the business to a third party, no family to take it over
Results
Developed, motivated and retained the key employees
Increased EBITDA to $1.8MM
Sold to all the employees via ESOP
Business continuity and legacy are intact
Dee is on the Board of Directors
Dee found financial freedom and emotional relief
Dee was introduced to us by his business broker. And, quite honestly speaking, Dee was crushed. His dreams of cashing out had just been squashed and he was ready to take a step back. But his financial future was far from secure. After our initial meeting with Dee, we quickly realized that he had two key employees that could make a significant impact on the business growth but didn’t have any cash to buy the business from Dee. Knowing that Dee wanted to have a liquidity event in the near future, we started exploring and ESOP as a potential transition option.
Dee had heard of the ESOP concept prior to meeting us, but was turned off from it after talking to other owners who implemented ESOPs in their business. What Dee realized is that an ESOP is not for every business, but it would work for his set of objectives, cash flow and management team. We worked with an ESOP specialist to prepare the company for transition, communicate the process to the participants and position Dee to take a step back. As Dee began to see his exit path, he became reinvigorated in his business. He wanted to continue working through the transition and ensure that the culture he build would continue.
Ultimately, through the design and implementation of an exit plan, Dee was able to sell his business to his employees and have a liquidity event that met his personal financial goals, all while remaining in control of his company.
If you would like to learn more about selling your business to your employees, please contact us today.