What does a well-planned ESOP transition look like in practice?
In Episode 19 of ESOP Radio, Trevor Gilmore and Ben Spadt speak with Jeff Bradley and Heather Hines of M-Group, a Bay Area urban planning firm that works with cities and counties on long-range growth, infrastructure, and community development
Because M-Groupās work is built around long-term thinking, their ownership transition followed the same logic. This episode explores why an ESOP aligned with the firmās values, how pre-funding helped create a smoother transition, and what they learned about employee communication along the way
A Professional Services Firm Built Around Long-Term Thinking
M-Group is an urban planning consulting firm serving public clients across Northern California, with offices in Campbell, Santa Rosa, and Berkeley. The firm supports cities and counties with development review, policy planning, urban design, implementation, and environmental review
That long-range planning mindset shaped the way the company approached succession.
As the guests explain, urban planners think in decades. The same discipline that helps communities plan for growth, livability, and infrastructure also helped M-Group think proactively about ownership transition and continuity
Why an ESOP Fit M-Group
M-Group had been considering employee ownership for years. Jeff Bradley explains that both founders had earlier exposure to an ESOP-owned planning firm, and that history helped shape their view that an ESOP could be a strong fit for a people-driven professional services business
The reasoning was straightforward:
- The staff is the engine of the business
- Preserving independence mattered
- A sale to a larger firm or private equity could be disruptive
- Employee ownership aligned more closely with the firmās culture and values
The Role of Pre-Funding
One of the most useful parts of this episode is the discussion of pre-funding.
Rather than moving immediately into a fully leveraged transaction, M-Group set up the ESOP first, made annual cash contributions, and built a down payment over time before the stock sale was completed
That approach gave the firm:
- More runway to prepare employees
- Less pressure on day-to-day operations
- A lower debt burden at close
- A more orderly overall transition
For owners who want continuity and lower transaction stress, this is an important case study.
Employee Communication Was Critical
A major theme in the episode is that employee understanding does not happen automatically.
The guests describe early confusion around what employee ownership actually meant. Some team members assumed an ESOP would immediately change reporting lines, management structure, or day-to-day operations. In reality, the company still had a management team and continued to operate on normal business principles
Their takeaway was clear:
more communication would have been better.
The process required repeated explanation of:
- What an ESOP is
- What it does and does not change
- How succession planning differs from ESOP structure
- Why the company was making certain financial decisions before the transaction
How the ESOP Changed the Business Internally
The guests also describe how the pre-funding period changed management behavior before the transaction was even completed.
They became more focused on:
- Monthly revenue
- Net income
- Discretionary spending
- Long-term financial discipline
That shift created more transparency inside the firm and helped employees better understand what drives company performance.
In their words, the ESOP gave them āpermissionā to talk more openly about the business side of the business, not just the planning work itself.
A Broader Succession Conversation
Another strong insight from the episode is that the ESOP did more than facilitate ownership transition.
It also opened the door to more direct conversations about:
- Founder transition timing
- Leadership continuity
- Employee retirement planning
- Long-term staffing needs across the firm
That matters in smaller firms, where succession is not abstract. One leadership transition can materially affect culture, stability, and client confidence.
Client and Recruiting Impact
The conversation also touches on external perception.
According to Jeff Bradley, clients have noticed the ESOP and responded positively, with some saying it gives them confidence in the firmās stability and direction. M-Group has also incorporated employee ownership into its marketing and proposals
On recruiting, the firm expects the ESOP to help over time with both attraction and retention, particularly as the value of the ownership benefit becomes more tangible to employees and candidates
Key Takeaway
One of the clearest lines from the episode is this:
You cannot really start too early.
For owners considering succession, this episode is a practical reminder that the best ESOP transitions are often the ones planned well before a founder is ready to leave.
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Video Transcript
Chapter 1: Introduction
4 seconds
Hi everyone, welcome to ESOP Radio.Chapter 2: Meet M-Group and the firmās Bay Area planning work
6 seconds
We are excited to have him group join us today. They are based in Campbell, California,11 seconds
which is right close to San Jose down in the Silicon Valley. For those who, follow tech, they have offices around the Bay area.17 seconds
So basically from Silicon Valley up to the Wine Country M-Group is an urban planning firm.23 seconds
They work with some of the major cities in the San Francisco Bay area,27 seconds
helping them design smart growth plans that balance growth, livability, quality of life, and the environment. Important stuff.34 seconds
Jeff Bradley took the plunge into entrepreneurship in 2006 after a career in city planning,41 seconds
and Heather Hines joined the firm in 2010 with a similar background.45 seconds
Urban planners think decades ahead about land use, infrastructure and demographics.51 seconds
There are many similarities between the long term thinking that is baked into in groups, culture,56 seconds
and the long term focus needed for a successful business.59 seconds
I’m Trevor Gilmore, CEO of Menke and I’m Ben Spadt,1 minute, 2 seconds
investment banking with Menke And let’s dive in then go ahead and kick it off.1 minute, 11 seconds
Absolutely.Chapter 3: What urban planners actually do
1 minute, 12 seconds
So just to set the stage here and for people who don’t know who the Em group is,1 minute, 17 seconds
what does your firm actually do and what role do city planners play in shaping and developing communities. Sure, I’ll take that. Ben.1 minute, 25 seconds
So we as you mentioned, we’re an urban planning consulting firm.1 minute, 29 seconds
We are located in the Bay area, focused on the Bay area in Northern California. So we have offices in Campbell, Santa Rosa and Berkeley.1 minute, 37 seconds
We work almost exclusively for public clients,1 minute, 41 seconds
so we work supporting cities and counties throughout the Bay area.1 minute, 45 seconds
We do a range of service areas in collaboration with public jurisdictions, so we might1 minute, 53 seconds
come on board to help a community project manage a large development project that comes in for processing2 minutes, 1 second
a mixed use lifestyle center that might come in and submit an application.2 minutes, 6 seconds
We might help a jurisdiction manage that project. We do long range policy plans, urban design.2 minutes, 14 seconds
So really helping a community with their visioning process.2 minutes, 18 seconds
So whether that’s where does a community want to be in 20 years as a whole community general plan to specific plans,2 minutes, 26 seconds
which is looking at a specific area of the city and really diving in deeper to look at the vision for that.2 minutes, 33 seconds
It could be a corridor plan with how does a community want an area that maybe has been auto dominated for years and years and wants2 minutes, 42 seconds
to look at things to incorporate to transition to a more pedestrian friendly, alternative transportation friendly area?2 minutes, 50 seconds
So we do those kind of policy plans. We also help with implementation.2 minutes, 55 seconds
So a jurisdiction might adopt a policy plan.2 minutes, 58 seconds
But then it comes down to how do we implement it?3 minutes, 1 second
How do we make it really happen on the ground.3 minutes, 3 seconds
So this might be developing regulations for when something comes in and wants to develop,3 minutes, 8 seconds
making sure it’s furthering that it might be programs we did a lot with during Covid with parklets that you saw throughout jurisdictions,3 minutes, 18 seconds
to find outdoor spaces for people to gather, to eat, to kind of deal with, with the pandemic. So some of those kind of programs.3 minutes, 27 seconds
And then another thing we do to help jurisdictions is the environmental review.3 minutes, 31 seconds
So the state of California has very strict regulations about looking at the environmental analysis of a project.3 minutes, 40 seconds
So we help with those kind of things too.3 minutes, 42 seconds
So hopefully that gives you a picture of what we do and who we do it with and where we do it. Well, that’s a great illustration.Chapter 4: Projects M-Group is most proud of
3 minutes, 50 seconds
And, you know, Trevor alluded to the fact that this company has existed since 2000.3 minutes, 55 seconds
And Jeff took the plunge, as it were, into entrepreneurship. So in that time span,4 minutes, 2 seconds
is there any one project or series of projects that you feel really proud about or really excited about now that you’ve seen them sort of from inception4 minutes, 10 seconds
to maybe implementation and, and sort of trying to execute on that long term goal. Yeah. Thanks, Ben. It’s a great question.4 minutes, 18 seconds
It kind of touches on some of the things Heather was talking about, where as a firm,4 minutes, 23 seconds
we we do a lot of development we do for our clients cities and counties.4 minutes, 27 seconds
And I’m really proud of some of the really large, complicated,4 minutes, 30 seconds
controversial projects that cities have trusted us with throughout, throughout the whole Bay area,4 minutes, 35 seconds
some of the largest projects that get built are managed by M-group planners working for the for the city by the client.4 minutes, 42 seconds
So that’s kind of a that’s where like one type of project that requires a lot of trust on the part of our clients which would appreciate. And then on the other end,4 minutes, 50 seconds
there’s been some long range policy planning projects that Heather also mentioned,4 minutes, 55 seconds
where we come in and work very closely with the city on, on their vision for where they want to be in five, ten, 20 years. And again,5 minutes, 2 seconds
that requires a lot of confidence of of the city that they have the right team.5 minutes, 6 seconds
And we’ve won awards for some of that work in the cities, like Menlo Park right here in Campbell, where the housing element,5 minutes, 12 seconds
a general plan update in Sausalito and a very a very effective specific plan that we did5 minutes, 20 seconds
for the city of Sunnyvale for the El Camino Real corridor.5 minutes, 23 seconds
And so those types of projects are really make a lasting impact and gives us the ability to leverage that into to other projects5 minutes, 32 seconds
with our other clients and show that we can do the full range of planning services. Absolutely. And executing that in your own backyard.5 minutes, 39 seconds
I mean, you get to enjoy it as well and see that actually happen. So speaking of enjoying it as well,Chapter 5: Why M-Group began considering an ESOP
5 minutes, 46 seconds
you know, at some point you had the idea to sell to the employees.5 minutes, 52 seconds
And when did that become kind of a viable option or seemed like a path that was worth exploring?5 minutes, 57 seconds
We’ve been thinking about it for a long time. The,6 minutes, 1 second
the firm itself was founded by myself and Heather Bradley,6 minutes, 5 seconds
my wife, who who stepped away at the end of last year with the along with the Esop coming into fruition.6 minutes, 11 seconds
And we had both been in the public sector for ten years before we started the firm. But even before that,6 minutes, 17 seconds
we had both worked for private planning firms on the Central Coast,6 minutes, 21 seconds
and one of those firms was an Esop client,6 minutes, 24 seconds
who has a similar firm profile as, so larger and even more well-established over time.6 minutes, 31 seconds
But I’ve been keeping an eye on them ever since college, essentially,6 minutes, 35 seconds
and after and witnessing their transition.6 minutes, 38 seconds
So we always had in the back of our mind that an Esop would be a good fit for a professional planning firm,6 minutes, 45 seconds
where the the staff itself is really the core of the business.6 minutes, 50 seconds
It’s not like it’s not like their overhead or, you know, an expense.6 minutes, 55 seconds
They really are the engine that makes the makes the business run in that type of environment.7 minutes, 1 second
Any type of transition can be very disruptive.7 minutes, 4 seconds
If you’re if the original owners are looking to sell to a larger firm,7 minutes, 10 seconds
or, or a private equity type of situation.7 minutes, 12 seconds
And the Esop seemed to be most aligned with our values. And so as we started to approach, you know, retirement age,7 minutes, 21 seconds
we realized that that’s that’s the way we wanted to make it happen. Yeah, absolutely. And,Chapter 6: Employee reactions and early confusion
7 minutes, 27 seconds
sometimes retirement age is a four letter word. But,7 minutes, 30 seconds
if you have that proper planning in place, that’s great. So, you know, you had this idea for a long time,7 minutes, 35 seconds
and when you introduced it to the employees,7 minutes, 37 seconds
was it well-received or was there a little pushback or questions?7 minutes, 41 seconds
Yeah, there was I think there was mostly just kind of a little bit of confusion about what it meant because it, you know, it sounds really dramatic when you say,7 minutes, 49 seconds
you know, we’re going to sell the company to the employees.7 minutes, 52 seconds
Everyone’s going to become an employee owner.7 minutes, 54 seconds
You know, that people people can run with that,7 minutes, 56 seconds
in different directions of how that would play out in terms of the day to day business, because on the other hand, you know, we’re still an S Corp,8 minutes, 4 seconds
we still have a a management team and we still running on basic business principles.8 minutes, 10 seconds
And so it took a lot of effort to explain what the Esop is,8 minutes, 15 seconds
just functionally and factually what it does do and what it doesn’t do. And I think people have have come, come to terms with it more.8 minutes, 23 seconds
But we do find that maybe some of some of the younger planners who aren’t so focused on their retirement yet tend to discount it a little bit,8 minutes, 31 seconds
and people that are a little further along in their career can see the value of having something8 minutes, 38 seconds
that supplements Social Security supplements, okay, retirement plans,8 minutes, 44 seconds
supplements, whatever small pension they might have from working in the public sector in the past.8 minutes, 49 seconds
All these things kind of build on each other.8 minutes, 51 seconds
So I think over time it’ll become more and more apparent to our our entire staff. What a great benefit it is, I would add,8 minutes, 58 seconds
and this kind of just builds on something Jeff said. I think there was some confusion too,Chapter 7: ESOP structure vs. succession planning
9 minutes, 4 seconds
in terms of the Esop structure and overall succession planning.9 minutes, 9 seconds
Like the day we closed on the Esop transaction,9 minutes, 14 seconds
was there a change in the way the business ran,9 minutes, 16 seconds
or who was in charge or who reported to who?9 minutes, 20 seconds
And so some of that discussion with, with the firm and our leadership team and our employee now employee owners,9 minutes, 29 seconds
was really trying to separate out also the Esop versus overall succession planning, right? Yeah.9 minutes, 36 seconds
No, that makes sense because in a typical sale,9 minutes, 38 seconds
you know, the owner might just leave you know, go retire, play golf, whatever. So that can lead to some uncertainty. That’s absolutely right.Chapter 8: Why M-Group used pre-funding before the transaction
9 minutes, 45 seconds
And you had a little bit of a runway because you set up the plan first that you saw a plan first.9 minutes, 50 seconds
But didn’t really put any shares into it until years afterwards.9 minutes, 54 seconds
And that led to maybe a little bit more of an orderly implementation. And then,9 minutes, 59 seconds
you know, through that there were cash contributions made annually and without getting into too much of the weeds.10 minutes, 4 seconds
But that money was then used to purchase the shares or provide a down payment, as it were.10 minutes, 9 seconds
How did you arrive at that decision to set the plan up?10 minutes, 13 seconds
First, put cash in the plan and then sell your shares later.10 minutes, 17 seconds
And I think for us, been the critical factor is we like you said,10 minutes, 21 seconds
we weren’t going to go off and play golf on day one. Yeah. You know, we’re in here.10 minutes, 25 seconds
We’re in here for a fairly long transition period.10 minutes, 28 seconds
And we wanted to we wanted the firm to be able to operate as close to normally as possible, i.e. pre Esop.10 minutes, 36 seconds
And we didn’t want to have a debt burden that would be,10 minutes, 39 seconds
you know, essentially change our change our culture, and,10 minutes, 44 seconds
and increase our stress level as, as business managers.10 minutes, 48 seconds
So we really saw the, the future aspect of planning early and the down payment as a way to get the debt down to what we felt was,10 minutes, 58 seconds
was comfortable and not not overly stress inducing for the day to day operation of the business. That makes sense.11 minutes, 4 seconds
And having that down payment is important. You know, down payment, for lack of a better word.11 minutes, 10 seconds
But how did those years in between the set up and the actual transaction,11 minutes, 16 seconds
were there any changes within the company, whether it financially, functionally, managerial,11 minutes, 21 seconds
because, you know, as we’ve alluded to a little bit here,11 minutes, 24 seconds
some of those employees might have been worried about that aspect.11 minutes, 27 seconds
And so did you notice any changes that sort of organically happened,11 minutes, 31 seconds
or did you have some in mind that you wanted to kind of gradually implement?Chapter 9: Financial discipline and culture shifts before close
11 minutes, 35 seconds
I think the main thing is, is we became a lot more focused on the on the company’s finances.11 minutes, 41 seconds
Because Heather and I are our first and foremost planners and we’re and we’re client facing. So we’re, you know,11 minutes, 48 seconds
we’re we’re still doing the work and kind of on the side we also manage we manage.11 minutes, 53 seconds
But I think our management team especially noticed.11 minutes, 56 seconds
Notice the difference that we suddenly became a lot more focused on the monthly revenues than net income.12 minutes, 4 seconds
And they they realized there was there was sort of a shift happening where we were becoming more more and more, you know, like a traditional business,12 minutes, 13 seconds
really keeping an eye on the numbers and making, you know, making small adjustments. So as a manager, you feel like it’s a small adjustment, but from the employee’s perspective,12 minutes, 21 seconds
it’s like, hey, they they took away my a favorite coffee or you know, something. Right. And so we, we got feedback about that.12 minutes, 29 seconds
We’ve always tried to be transparent, but I think the,12 minutes, 32 seconds
the Esop has given us sort of like permission internally to talk more freely now that the business side of the business,12 minutes, 40 seconds
rather than always focusing on the planning staff which have which we love.12 minutes, 46 seconds
And so I think that’s been a natural been a good benefit because now I think the employees are getting they’re getting more information about what makes the what makes the company tick12 minutes, 55 seconds
and how they keep it going long into the future. And I think that also the pre funding, I don’t want to say forced,13 minutes, 2 seconds
but it pushed us to start talking about it the Esop earlier because we were pre funding and we were saying13 minutes, 9 seconds
we’re trying to set money away for this pre funding or we’re looking at our discretionary spending differently or you know those kind of things.13 minutes, 17 seconds
And so we had to talk about well why are you doing that.13 minutes, 20 seconds
You know sort of it gave I think it also gave us a little bit more of a ramp up to the actual transition13 minutes, 27 seconds
or the actual transaction to close as an Esop. We we were making some of those changes.13 minutes, 33 seconds
So we were talking about this is why we’re making them and this is what we’re there’s a there’s a reason we’re doing this kind of,13 minutes, 41 seconds
dialog, especially with our, our leadership team, but firm wide as well. Yeah.Chapter 10: How pre-funding created runway for employee communication
13 minutes, 46 seconds
So the pre fund really allowed you to have that runway roll that you saw out with all the employees. You know, when it was set up.13 minutes, 53 seconds
And as a 2020, 2023 as when we started okay. 2023.14 minutes
So Esop we set it up in 2023 allowed you three years of tax deductions, funding. I know you all put millions into that,14 minutes, 9 seconds
you know, as a way to have that down payment.14 minutes, 11 seconds
And that gave us 2 to 3 years of roll out of time there with the employees so that they understand, hey, this is the direction of M-group.14 minutes, 19 seconds
This is where we’re going giving them comfort.14 minutes, 21 seconds
And they started getting those statements to showing what their allocation was for those years.14 minutes, 27 seconds
So compared to some transactions we do where clients go all in 100% right off the bat. You know,14 minutes, 34 seconds
this definitely led to an orderly transition, especially on the employee side. Right.14 minutes, 38 seconds
And then for you all to saying,14 minutes, 40 seconds
hey, let’s take a look at the revenues profit.14 minutes, 43 seconds
Let’s get to that point that we’re comfortable to actually transact and make it happen.14 minutes, 47 seconds
You know, when you look back on the the years of pre funding, anything you would do different, you know,Chapter 11: What they would do differently: more communication
14 minutes, 52 seconds
in terms of anything from business approach to employee communications, you know,14 minutes, 58 seconds
anything that stands out during that initial phase.15 minutes, 2 seconds
I think more more every post say the same thing more probably more, more, more outreach to the employees.15 minutes, 9 seconds
We get so busy with our planning projects and our our business things. It’s hard.15 minutes, 13 seconds
It’s hard to stay on top of the communications, strategy. But I think, you know, the more the better.15 minutes, 19 seconds
We probably should have been sending out updates like, you know, every, every month,15 minutes, 23 seconds
at least every few weeks because things there was always things happening.15 minutes, 27 seconds
And I think the, the employees and the management team, they, they really like to know what, what’s going on. And I think also, you know,15 minutes, 34 seconds
I think we were chatting about this a little bit before we, we started. It’s it’s a complex process. There’s all sorts of nuance to an Esop.15 minutes, 43 seconds
And so I,15 minutes, 43 seconds
I also feel I totally agree with Jeff more communication.15 minutes, 47 seconds
And also there were times that we thought we understood and would answer a question and then we would realize, oh, that’s that’s not quite right.15 minutes, 56 seconds
You know,15 minutes, 57 seconds
we need to go back and circle back on that, to correct ourselves.16 minutes, 2 seconds
And so I don’t know how exactly to do that differently if we were to go back and do it, but understanding it better16 minutes, 11 seconds
ourselves, some of the nuances of it to better communicate it as well. Yeah. And hindsight’s always 2020. Right. And it’s,16 minutes, 19 seconds
you know, you’re in that pretty fun phase and, you know, figuring out, hey, how do we communicate this? What information should we share it now? What shouldn’t we.16 minutes, 27 seconds
You know, and that’s always a tough one to ultimately figure out and act on. Yeah.16 minutes, 34 seconds
Because you want certainty. You know,16 minutes, 36 seconds
and with the transaction you have to get through the negotiation.16 minutes, 40 seconds
And once you get that terms you then you have certainty of the deal.16 minutes, 44 seconds
And there’s some information that’s too much information or two detailed information that’s kind of being thoughtful about,16 minutes, 51 seconds
not in an effort to not be transparent, not to share.16 minutes, 54 seconds
But if you don’t have the foundation of what an Esop is and how it’s how it operates,17 minutes, 1 second
then some of the sending lots and lots of detail about nuances, you’re kind of missing. Missing. Yeah.17 minutes, 9 seconds
And we find in our client base,Chapter 12: Why employees need time to understand ESOP value
17 minutes, 10 seconds
it takes employees a few years to really get the hang of it.17 minutes, 14 seconds
They need to get several statements under their belt, hear the story, get those touch points, whether it’s quarterly, monthly, whatever that cadence is.17 minutes, 22 seconds
And also the longer they’re employed and closer they get to retirement. That’s when a lot of people start caring, you know? So you take a look at age groups.17 minutes, 30 seconds
Is is that’s usually when the Esop becomes very important because you’re like, hey, retirement isn’t that far away. What do you know?17 minutes, 36 seconds
What do I have accrued so far in my care, in my IRA,17 minutes, 41 seconds
in my ease of account and having the Esop account skin in the game being vested with the company and tied to the success,17 minutes, 48 seconds
that tends to be a win win at that point.17 minutes, 50 seconds
So I know earlier you mentioned, hey,17 minutes, 52 seconds
some of the younger employees are very much focused on the cash compensation versus the Esop. Of course, though,17 minutes, 59 seconds
if you were for an Esop company a year younger,18 minutes
you probably like that when you left and got that rollover right or figured out what you wanted to do with it, you know,18 minutes, 6 seconds
and then at that point that’s that’s when it’ll become a rule for them. It’s like, hey, this is real money.18 minutes, 11 seconds
And I know the benefit rate that you all pay out, you know, and it’s meaningful.18 minutes, 16 seconds
It’s, you know, it’s it’s not,18 minutes, 18 seconds
you know, pennies, you know, so the employees are accruing a nice balance there, which is awesome to see. Yeah.Chapter 13: Gen X owners and earlier succession planning
18 minutes, 23 seconds
I wanted to touch base on a trend we’re seeing out.18 minutes, 26 seconds
There is more and more generation acts are Gen X business owners and leaders are companies. You seen that you saw a model earlier?18 minutes, 35 seconds
Our company, Menke has been around for a while now, 52 years, and I’ve been here 11. And when I first joined,18 minutes, 41 seconds
a lot of our clients were very much baby boomers,18 minutes, 44 seconds
you know, well, past retirement age doing the Esop because, hey, I need to do something, you know, let’s do this Esop.18 minutes, 50 seconds
We’re noticing a trend past several years, much younger client base, very intentional about their planning.18 minutes, 57 seconds
And obviously in groups you fit that profile to a tee and it sounds like you got exposed to the whole Esop concept early on,19 minutes, 5 seconds
and that’s how you got exposed. Hey, this could be a possibility there.19 minutes, 9 seconds
But I’m curious if seeing how older generations handle the retirement and succession and just long term planning,19 minutes, 16 seconds
if that shaped your idea to to say, hey,19 minutes, 19 seconds
I want to create a strategy now versus wait several years.19 minutes, 23 seconds
Yeah, I hadn’t really thought about this over until I read your prompt for this question about it after reflecting on it to compare the generations, if you will.19 minutes, 33 seconds
I think our our parents generations really like identified with their their work.19 minutes, 38 seconds
Their work was sort of their whole like self self-identity almost. And so in that kind of framework, you know, you don’t easily, you know, give it up and saying,19 minutes, 46 seconds
I think that’s why we see these kind of, you know, all the stereotype of the person working, you know, way past,19 minutes, 52 seconds
normal retire any, you know,19 minutes, 54 seconds
any conception of a normal retirement age and just, you know, there’s just work, work, work, work.19 minutes, 59 seconds
And I think our generation kind of saw that in our parents.20 minutes, 2 seconds
Like, my dad basically had the same job for 50 years working at a community college as an instructor. And he he loved it.20 minutes, 9 seconds
He, you know, when he stopped working,20 minutes, 11 seconds
that’s kind of like when he started going downhill.20 minutes, 14 seconds
But he was really invested in his self-conception as professor at a college for a long time.20 minutes, 21 seconds
And I think, I think the following generations have a more nuanced view of like, work is just like one part of your life.20 minutes, 28 seconds
It’s not like your whole it’s not your whole identity. I think that, like, maybe we were more open to thinking,20 minutes, 34 seconds
about transition at an earlier age than some of the prior groups going to. Yeah, thanks for that. Jeff.20 minutes, 42 seconds
And I was speaking with, one of my friends last week who had a career in tech and retired younger than, you know, most people20 minutes, 50 seconds
that she was her whole point is I didn’t retire. I just, focusing on different things. They just stopped working.20 minutes, 58 seconds
She was very against the word retirement. I was like, hey, this seems like I’m on the board of, you know, a nonprofit, humane society,21 minutes, 6 seconds
so on and so forth, you know, doing all these activities. I’m not retirement to me. Sounds like like I’m done. You put your feet up. Yeah.21 minutes, 14 seconds
So I think that that to your point,21 minutes, 16 seconds
that’s the kind of identity just tying it to doing one thing could be shifting a bit, you know, and it’s, hey,21 minutes, 21 seconds
there’s all these different aspects to life, and work means so many different things, right? I think also for our size company,Chapter 14: Planning for continuity, culture, and founder transition
21 minutes, 29 seconds
you know, and and as you know,21 minutes, 32 seconds
the owners started looking towards retirement. There were a relatively small company.21 minutes, 39 seconds
And so there’s a big sense of wanting to wanting to plan. We are planners too,21 minutes, 44 seconds
so wanting to plan it so that it felt like everyone was kind of taken care of,21 minutes, 50 seconds
or there was an attempt to keep that foundation, keep who we were with M-group. And so yes. Just hasn’t.21 minutes, 58 seconds
Yeah. Left to go play golf.22 minutes
And I’m for some reason that’s not what I pictured doing when he does.22 minutes, 4 seconds
But you know, when you’re with a smaller company, it’s not just like, oh, this person leaves and somebody else just.22 minutes, 12 seconds
And everything just keeps. We felt a need to, like,22 minutes, 15 seconds
think about it holistically and think about what Jeff and Heather had,22 minutes, 20 seconds
you know, founded back in 2006 and which we’ve all worked across all levels, all of our employee owners,22 minutes, 28 seconds
what we’ve created and what’s the best way to keep that foundation there and keep that culture there and have the stability so that,22 minutes, 36 seconds
for instance, when Jeff does decide to retire,22 minutes, 39 seconds
he feels really good about it and not like he’s leaving his team,22 minutes, 43 seconds
you know, with uncertainty or anything like that. So I think that also pushed us. Yes, I agree with what Jeff said.22 minutes, 50 seconds
And we definitely see that that there’s more of a desire to think about.22 minutes, 55 seconds
Life’s not as you are who you are at work and that’s your full identity.23 minutes
But also, I think the structure and the size of our firm really lent itself for us to think about it earlier.23 minutes, 6 seconds
Yeah, culture is so hard to define,23 minutes, 10 seconds
but culture makes or breaks companies and you know, and makes or breaks these out companies as well. Right.23 minutes, 15 seconds
And having that culture you just described, keeping the company independent, caring for everyone. Everyone has skin in the game. You’re doing it. You’re seeing cool creative work,23 minutes, 24 seconds
helping cities think about the future. Or May is our model. Sounds to the ideal of this day.23 minutes, 30 seconds
You should come over and you should come over and write marketing copy for us. Travel and Jeff I instead of golf I think you would run.23 minutes, 38 seconds
I think you started doing international marathons, right? You were a runner.23 minutes, 43 seconds
Not not just to just marathon, just marathons elsewhere. Yeah. Awesome.Chapter 15: One year later: employee reactions and lessons learned
23 minutes, 50 seconds
And it’s been you know, we’re recording this, what, March 19th, 2026.23 minutes, 53 seconds
So it’s almost been a year since the year I’ve came in about all the stock in the company.23 minutes, 58 seconds
So you’re, you’re basically there at that one year of, of it actually owning the whole company.24 minutes, 3 seconds
How have the employees reacted to that news? Was there excitement, fear all the above. And then it’s a question number one. And then two.24 minutes, 11 seconds
Have you been able to take a deep breath since then?24 minutes, 13 seconds
I know when you go through these transitions,24 minutes, 15 seconds
a lot of work, due diligence, answering questions, you know, that pop up and so on. It’s, you know,24 minutes, 20 seconds
and a lot of intensity for several months.24 minutes, 22 seconds
Have you been able to get back to just focus on the business and how has that felt,24 minutes, 26 seconds
or do you miss the whole transaction thing?24 minutes, 28 seconds
And if so, we might need to hire you to help us on deals. You want to take that? Well, Heather, I don’t miss the transaction piece of it.24 minutes, 37 seconds
I mean, I, I learned a lot.24 minutes, 39 seconds
It’s kind of like when you buy a house, right? And you, you know,24 minutes, 42 seconds
with all the that paperwork that you’re like, do I really have to read all this? So that was a process. Glad we did it.24 minutes, 49 seconds
Don’t know if I’m dying to go through that process again. Learned learned a lot. I think that, you know,24 minutes, 57 seconds
I think some employees have been really vocal about their excitement about the Esop.25 minutes, 4 seconds
I’ve had a number of people, you know,25 minutes, 7 seconds
but now employee owners just come up and say thank you.25 minutes, 11 seconds
I recognize that that was that was something you guys didn’t have to do. And I, I appreciative of it.25 minutes, 18 seconds
I think some people still don’t fully aren’t fully like what does this mean for me? I think, you know,25 minutes, 25 seconds
I think this year is going to be a big change to those statements that you mentioned, Trevor,25 minutes, 30 seconds
because this will be the first time our annual statements will come out for 2025,25 minutes, 36 seconds
where it’s actually showing your shares,25 minutes, 38 seconds
you know, as opposed to the previous two years that was showing a cash balance based on the pre funding. There’s going to be a shift there.25 minutes, 47 seconds
And I would imagine that will be kind of a discussion topic with the larger team to understand why is this look so different this year.25 minutes, 55 seconds
That’s kind of getting used to that.25 minutes, 57 seconds
And then seeing the value of the company reassessed each year and what that means, what their shares and their vesting.26 minutes, 3 seconds
So I think there’s a lot of learning curve to come.26 minutes, 6 seconds
We definitely are focused on, you know, the company and you know running the company as best. We can.26 minutes, 13 seconds
And doing the very best we can. On behalf of all of the,26 minutes, 20 seconds
employee owners that that we now have, a group of I think we’re 43, right around there.26 minutes, 29 seconds
So we’re we’re that’s our focus.26 minutes, 32 seconds
I think what Heather touched on, well, earlier,26 minutes, 34 seconds
like when that transition happened, it or so some of the immediate topics that were coming up were around succession planning.26 minutes, 41 seconds
At first when I got like, well, about, you know, are we talking about this?26 minutes, 45 seconds
But we realized that just because when you explain Esop and you start talking about retirement for employees and you’re talking with owners,26 minutes, 52 seconds
everyone just assumes that, okay, okay,26 minutes, 54 seconds
this is what the owners are doing so they can exit just to be more intentional and more deliberate around talking about succession planning,Chapter 16: How the ESOP changed transparency and succession conversations
27 minutes, 2 seconds
which I think was great because it gave a lot of answer, a lot of unanswered questions.27 minutes, 7 seconds
But then other people started being more open with their retirement plans. So as a firm, we could start to actually like,27 minutes, 15 seconds
you know, think about, you know, replacing people when they retire, you know, in 2029 or 2032.27 minutes, 23 seconds
And you’ll really extend that, that planning metaphor,27 minutes, 27 seconds
you know, being able to actually plan for these kind of things that otherwise could just kind of happen, like, you know, with two weeks notice or whatever.27 minutes, 34 seconds
So I think it’s kind of changing the culture of the firm in that way that people are being more comfortable talking about sort of their long range, their life. That’s great.27 minutes, 42 seconds
So increased transparency in essence. And, you know,27 minutes, 45 seconds
when you’re working at a consulting firm or any company for that matter and, you know, totally new,27 minutes, 51 seconds
you know, like people don’t know how to ask, ask about succession, you know, you know, rewind.27 minutes, 54 seconds
You know, years ago when I was at a consulting firm and, you know, the owners, you know, they question, you know,28 minutes
hey, what happens when you know, when they retire?28 minutes, 3 seconds
I was too afraid to ask, you know, what do you get there? Okay. We think about that. You can’t even think about that. Yeah, exactly. Oh, I could think thinkable happening.28 minutes, 11 seconds
You know I go you know so Esop the transition allows hey like tone at the top.28 minutes, 19 seconds
If we’re talking about that it kind of opens it up right. It makes it less taboo.28 minutes, 23 seconds
And that feeling of like if you’re sharing with me,28 minutes, 26 seconds
I’ll share with you kind of I think that’s really spot on, Jeff, that increased that transparency as we increase the transparency28 minutes, 35 seconds
about succession planning from those, those, top positions.28 minutes, 39 seconds
It I think it allowed other people to feel open to sharing that as well. Have you noticed at all, after going Esop,Chapter 17: Client response and recruiting impact
28 minutes, 46 seconds
any of the clients, you know, if they they think it’s a great thing, if they notice, you know,28 minutes, 53 seconds
and does that aspect come in at all when you when you bid for work having those discussions with the cities. Yeah, I’ve, I’ve,28 minutes, 59 seconds
I’ve had some experience with that travel where I’ll be meeting with, a client29 minutes, 7 seconds
and talking about some immediate planning need they have, and then they’ll suddenly say, oh, yeah, we we saw something about,29 minutes, 14 seconds
oh, your email your employer now we think we think that’s great.29 minutes, 17 seconds
You know, it really gives us confidence that’s happened more than once.29 minutes, 21 seconds
And spend a really great a great response. We’ve had, I think from my clients,29 minutes, 25 seconds
the ones that have spoken about it and we have it all over our marketing and,29 minutes, 30 seconds
you know, on our proposal to try and,29 minutes, 32 seconds
and how about from a recruiting perspective as well,29 minutes, 36 seconds
have you found with the prospective employees being an Esop company, you know, you think of the Esau compensation.29 minutes, 44 seconds
It doesn’t show up on your W-2, but it’s material, you know,29 minutes, 47 seconds
and you get the statement once a year and you the total comp package is your W-2. Plus, you know,29 minutes, 53 seconds
the Esau has that come into play at all helping, you know,29 minutes, 57 seconds
I know it’s a very competitive job market.30 minutes
And then you all are in such a niche as what fields if that has been a competitive advantage at all? I would like to think so,30 minutes, 6 seconds
but I would have to go back and talk to our HR person and see, how that’s factored in.30 minutes, 12 seconds
We have we haven’t been doing a ton of hiring.30 minutes, 14 seconds
Most of it’s been kind of at the very entry level or people with who who have decades of experience.30 minutes, 22 seconds
But I think I think over time it will help with both, recruitment and also also retention, obviously. But yeah,30 minutes, 30 seconds
we’ll have to kind of keep an eye out on that because that that would be that would be our goal is to make it make us the employer of choice and be able to compete30 minutes, 38 seconds
with not only other consulting firms for the best planners, but also with the cities themselves, who obviously hire a lot of planners.30 minutes, 47 seconds
Heather, Trevor was asking if we’d seen a benefit on the recruitment side of know hiring, having that having that Esop structure in place30 minutes, 56 seconds
and saying just to have just a handful, that’s great. I know I’ve seen a few posts on LinkedIn, you know, the past, several months, some hiring out there.31 minutes, 5 seconds
That’s and that’s that’s great to hear. And yeah, I know we’re up here at time.Chapter 18: Final advice for owners considering an ESOP
31 minutes, 9 seconds
Any final parting tips for anyone listening that might be considering an Esop?31 minutes, 17 seconds
I think the thing Heather and I talked about before this,31 minutes, 20 seconds
interview was even though we felt like we got an early start, there’s really this really. We couldn’t really start too early.31 minutes, 28 seconds
You could,31 minutes, 28 seconds
there’s so like like Heather talked to, there’s so much to learn about the Esop process I found,31 minutes, 33 seconds
I find the history of Esops is is interesting material as well how they came about.31 minutes, 37 seconds
But I think any any business owner who has any inkling of awareness of they need a, an exit strategy and a succession plan,31 minutes, 47 seconds
they should at least educate themselves on a, on an Esop so they’re aware of it.31 minutes, 51 seconds
So you know what would probably be their biggest?31 minutes, 55 seconds
They say they say that when people buy their home,31 minutes, 57 seconds
that’s their biggest transaction for business owners,32 minutes
this is probably the biggest transaction they’ll ever do. You can’t you know,32 minutes, 4 seconds
even if you’re in your 20s or 30s and your business owner,32 minutes, 7 seconds
you should you should know about this absolute plan or any plan often. Right?32 minutes, 13 seconds
Hopefully you had an espresso and there’s some tasty ramen treat in hand.32 minutes, 20 seconds
I do recall that they were like, reaching out to Heather. They’re in Rome. When? In Rome. Thank you, Jeff and Heather, for your time today. Thanks for this insightful discussion.Chapter 19: Closing
32 minutes, 29 seconds
And we’ve often said esops are for the doers. The builders and the planners. Having skin in the game is real. This discussion is living proof.32 minutes, 36 seconds
Thanks for joining Esop radio and check us out on Menke.com, LinkedIn, Spotify, Apple, or YouTube. Also check out M-group, check them out on their website.32 minutes, 45 seconds
They do really interesting and cool work. And if you’re in the Bay area,32 minutes, 47 seconds
they probably helped some aspect of the cool new design of your city. Thanks everyone! Have an awesome day! Thank you.Planning an Exit in the Next 1ā5 Years?
If youāre evaluating succession options in the next 1ā5 years, an ESOP may offer:
- Liquidity and control flexibility
- Tax-efficient transaction structure
- Long-term ownership continuity
About ESOP Radio
ESOP Radio is the official ESOP podcast from Menke ā where real stories of growth, succession, and long-term wealth building are told.
Hosted by Trevor Gilmore and Ben Spadt, the show features conversations and educational episodes designed to help business owners better understand employee ownership.
Disclaimer
This podcast is provided for educational purposes only and does not constitute legal, tax, investment, or fiduciary advice.
Phil DeDominicisĀ is an ESOP strategist and M&A advisor who has guided 300+ companies through ESOP formations, financing, and transactions overĀ 20+ years at Menke & Associates. He specializes inĀ selling ESOPāowned businessesĀ to financial or strategic buyers and inĀ helping ESOP companies acquire other businesses.
