Employee stock ownership plans, or ESOPs, are a growing trend in West Michigan, according to Crain’s Grand Rapids, which points to a fall 2022 study that ranks Grand Rapids 12th in the nation for the number of employee-owned companies in the region.
One of those companies is Warner Norcross + Judd client DHE Plumbing & Mechanical, which is transitioning to employee ownership. Justin Stemple, a partner with Warner who led the DHE transaction, tells Crain’s Grand Rapids that employee ownership has a good cultural fit in West Michigan.
“One benefit we have in West Michigan is we have, I think, a really good business community that likes to give back to the community and back to the employees, and ESOPs seem to be an attractive fit when they’re looking at succession planning,” Stemple said.
Maintaining company culture and the tax advantages associated with ESOPs appeal to business owners, Stemple said. He added owners also have to consider a typically longer payout period compared to other deal structures and the need for a management team to run the business when the owners transition out.
ESOP deals offer a “win-win-win” scenario for the sellers, employees and company’s future, Stemple noted.
“I think it’s one of those rare situations where you go through something like this and you feel like often everybody is pretty happy at the end of the day,” he said.
Subscribers can read the full Crain’s Grand Rapids article here.
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