ESOP Success Stories
Consulting Firm, Oregon: $4,000,000
This firm’s employee base is primarily made up of highly educated individuals that develop a substantial amount of intellectual property during the ordinary course of their consulting work. In addition to trying to finance a second stage transaction to bring the ESOP from a 24% shareholder to a 69% shareholder, the company was also looking to preserve cash flow flexibility to continue to invest in multiple potential new lines of business centered on that intellectual property. The initial ESOP transaction was completed without bank financing; however, the company had grown rapidly since then, causing a sharp uptick in the total valuation of the business as well as the subsequent financing needed for the buyout. First American Bank was able to provide a financing package that allowed the Company cash flow flexibility to continue to invest in new business lines, while providing the founder with a substantial cash payment on day one.2. Manufacturer, New Jersey: $12,000,000
Logistics Firm, Tennessee: $10,000,000
This 100% ESOP transaction structure included financing from three different parties: First American Bank, the selling shareholder and a third party mezzanine lender. It was important to the selling shareholder to receive a certain level of cash at closing that was in excess of typical senior bank financing standards, so being able to work seamlessly with the third party mezzanine lender was key. While introducing an additional lender into the fold typically adds substantial time and cost, we were able to navigate the closing process on a timely basis with, not only the selling shareholder, but also a third party mezzanine lender. This helped to ensure the former owner was able to receive the initial cash payment necessary to complete the transaction and the company had a debt structure in place that would allow it the ability to continue to succeed moving forward.