Thought Leadership

Turning Your ESOP into an Advantage Again

As I meet with agency owners some seem hesitant to mention that their agency has an Employee Stock Ownership Program (ESOP) in place.

When we talk in more detail, the agency owners admit that what started out as a good idea – aligning employees with the success of their business – has turned into something that feels like a hurdle to overcome as they consider owner succession.

These owners list familiar complaints: the wrong people have ownership, so they can’t get their superstars enough ownership; ESOP valuations are low; heavy debt on their balance sheets limits their ability to acquire other agencies; and, of course, high regulatory and compliance costs. Additionally, after several years the plan loses its motivating factor and becomes an expectation by many employees.

I’m always pleased to let them know that BroadStreet℠ is positioned to help agencies with ESOPs achieve their objectives.

Our co-ownership model provides a unique perpetuation alternative that allows key management and employee owners to stay operationally independent while maintaining significant equity ownership.

BroadStreet’s℠ investment in agencies with ESOPs can result in:

  • Increased internal stock valuations;
  • Recapitalization of balance sheets; and
  • Expanded management ownership.

These benefits occur because BroadStreet℠ makes majority investments in high-performing independent agencies, using direct equity ownership in a framework that supports long-term results versus short-term gains.

Our investment helps navigate the constraints of an ESOP and provides a solution for on-going agency perpetuation without changing the performance-based ownership culture that the agency created in the first place.

Partner agencies enjoy operational autonomy without the limitations common with ESOPs or other investment options. Our partners also gain access to BroadStreet’s℠ stable capital base to fund acquisitions.

If you’d like to learn more about your ESOP-related investment options, please contact me to start a conversation.

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