After many years of deals, one of the very cool experiences I get to enjoy is to cross paths again with people and companies years down the road and see how they have thrived.  This is especially satisfying with employee owned companies and their former owners. In the last few weeks, I’ve bumped into three old friends at ESOP companies that I worked with several years back.  It is astounding to see their success 10 or so years after the buyout of the former owners. 

I ran into one of the former owners of a large distribution company.  About 12 years ago, he got paid a good price for his firm that still bears his family name.  He is retired and is super proud and excited by what the employees and next generation of professional managers have done since the 100% ESOP sale.  The company has more than doubled in size and is debt free.  They are sitting on a nice war chest for acquisitions and for the eventual redemption of the millions of dollars of employee-owned stock. 

I had lunch with a former owner of another distributor who sold about 7 years ago.  He’s still the Chairman of the Board and has a great team of next-gen management.  The firm has been very successful under his continued strategic leadership with growth that far exceeds industry averages. 

Another old friend who is CEO of an ESOP company shared a press release regarding an employee picnic celebrating the 10 year anniversary of the company being employee owned.  They managed to buy the company from the public parent in fierce competition with several private equity firms.  10 years later, the company has generated life-changing wealth accumulation for the employees. 

All of these companies could have been sold by their owners to private equity or competitors for a similar amount of money.  I couldn’t imagine that the companies, management and employees would have fared as well under that ownership.  There is a lot written about how ESOP companies are on average more stable and more successful than their non-ESOP peers.  My personal experience definitely reflects this.  Employee engagement and morale at these companies are very high and the fact that they pay no corporate income tax certainly is a competitive advantage.

The combination of great owners, great management and engaged employees is truly impressive to see in action!