What does it really look like to sell a company to an ESOPāespecially at 100% ownership?
In this episode of ESOP Radio, Trevor Gilmore, CEO of Menke, and Ben Spadt, ESOP Investment Banking Consultant at Menke, sit down with Ron Brown, CEO of Brown Construction, to discuss his decision to transition the company to a 100% employee-owned ESOP after more than six decades of independent ownership.
Ron shares a candid, firsthand perspective on succession planning, the alternatives he considered, and why employee ownership ultimately aligned best with his values, company culture, and long-term vision.
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Video Transcript
Introduction and guest overview
Hi everyone. Welcome to ESOP Radio. Your host today
are myself, Trevor Gilmore, and Ben Spadt. We’re excited to have Ron Brown as your guest today.
Ron, as a CEO and former majority owner of Brown Construction.
Brown is the local largest commercial general contractor in the Sacramento, California region.
If you’ve driven on the 80, the five, or the 50 around Sacramento, chances are you probably have seen a brown truck.
Been in business for 62 plus years. For some background here, we helped him transition his company to 100% Esop, which means employee owned in 2024.
He explored all the options, decided to go with the Esop. Then, before we jump on to the interview, what are the top
three takeaways for our guests today? Yeah, Trevor, the top three I would say are number one.
What other options were considered besides the knees up? And ultimately, why did the Esop win out?
Number two when did you tell your employees? Was it the day of rollout or
did you sprinkle it in kind of along the way? And then finally, with the benefit of hindsight being 20, 20,
how does Ron feel about the transaction now? You know, are we largely good feelings or there’s still some kind of,
heartburn with it? But, we’ll find all those things out in the conversation. Exactly. Hindsight’s always 2020.
Succession planning and early exit considerations
Let’s go ahead and hop over to the interview.
Hi, everyone. Welcome to Aesop Radio. Your host today, our Trevor Gilmore and Ben Spade of Mankey.
We are very excited to have Ron Brown as a guest today. Ron is the CEO and former majority owner of Brown Construction.
Brown is the largest locally owned commercial general contractor in Sacramento, California.
For a bit of a background here, we helped him transition his company to 100% Aesop owned in 2024.
Welcome, Brown to this podcast and good to see you, Ron.
What a start. Good to see. Good to see you too, Trevor. Now to start off with a couple questions here and then kick it off to Ben.
And he has, more. So, Ron, just to kick things off here, take us back to what Brown Construction looked like
when you first started thinking about succession or an exit. I know you had, you know, quite a journey there.
So kind of take us back into what the company look like and where you’re at personally,
you know, as you started thinking, hey, what is the future of the company? And also what is the future for myself?
Yeah, yeah. Great question. Everybody that owns a company will be faced with this. For me, it was probably about ten years ago
because I knew like it would take 7 to 8 years. We’ve been in Esop for two years now.
So I knew it take 7 to 8 years to make some type of decision on what it was going to.
Things would look like for me through a transition. I wasn’t sure what direction I wanted to go initially.
Evaluating third-party sales versus an ESOP
I looked at third party sale, I looked at internal sell, and then,
then Esop came to mind. The third party,
sales, you know, had were very attractive from a financial standpoint for me personally.
The Esop had a little different financial structure to it, but the Esop
made a lot of sense for me because it, empowered a lot of other people within the company
and gave everybody within our company what I felt a chance to retire
or where our company was, as you said, I was the majority, shareholder. I had two minority shareholders in the company.
The problem with that was all three of us were about the same age, so there was not going to be
a stage succession, if you will. It was we all kind of wanted to be retiring around the same time. Now,
one of them did retire earlier. He retired a few years ago before we ultimately decided
on this Esop, path. The other minority shareholder, she has gone through these
last couple of years with the Esop, and she will transition, out,
at some point through this next year, 2026. So the company, the the company,
was set pretty well off with our, depth on our bench. We, we, we knew who are, backstop individuals
would be pretty much who was going to come up in the ranks as we would transition off, which that was very important.
But we weren’t, you know, 100% sure we weren’t. You know, if we did a third party sale, that would have looked different.
Depending on what that company wanted. The third party company would have wanted out of Brown Construction. So,
it was a little bit of a roll of the dice. I had my toe in the water on,
two of the fronts. The third party, sell and then started transitioning into the Esop.
And that that’s when you and I met, actually. So. And then it just made to me personally
Preserving independence and company culture
the more sense to go with the Esop. Yeah. And when we think about the history of Brown, the company is celebrating it’s what, 60,
62 years, six at 60, 62nd year this this summer.
Yeah. That’s amazing. So 62 years independent company. You know, do you think that came into your decision to, you know, you so took a look at all
the different options. You know, hey do I sell out, you know, to you know investor backed group.
Do I merge with a competitor or, you know, keep ground independent, you know, keep that identity because you built a good thing,
you know, for so many years, you know, it has a great brand name recognition in California.
You guys are all experts. Definitely. What you do. Did that kind of come into play, too, when you thought about, hey, what’s
what’s that next ownership structure? Look like? Yeah, 100% it did. I, I will admit at the very beginning I wasn’t thinking
so much that way because, you know, I’ve grown up in construction. This company’s been my whole life.
So I was just kind of taking a lot of things for granted earlier on. But as things got closer and closer,
Emotional factors behind the ownership decision
I started having a lot of anxiety in, you know, realizing. But hold on, if depending on what direction I go will depend on
one will happen with our company and and the the the name,
if you will, and our reputation and then to more importantly,
all these people that I’ve worked with, the majority of them won’t be part of brand construction anymore.
They will they will be moved out, most likely, because that’s typically what happens.
Now. We did have one of the third party sale companies or purchasers that they don’t do that they keep the company pretty much intact.
So that that was advantageous. But their timeline was different than our timeline.
So it kind of, for me, took it off the table. But yeah, that had a lot to do with my decisions.
And I was up, I was up every night when I was trying to make this decision, and my wife finally told me one morning,
she says, look, this just isn’t who you are. Let’s just it’s not your fabric to to go that direction.
Not that there’s anything wrong with going in that direction. It just wasn’t settling with me.
So I, you know, it sounds corny, but I,
I chose the, the different path, I guess. And, and, and I got to tell you instantly it made me feel better.
I just, I just felt at peace with it. Didn’t know what I was getting into yet,
but I was at peace with the decision and the direction we were going to go. So it was cool.
And I still see, you know, it seemed to have, you know, come into play here. You know, you take a look at the options right, of wildly
different options, you know, a company of your size with, you know, brand name recognition and so on.
You know, you have many options. So, you know, sounds like Esop allow the company to remain independent,
continue that culture, you know, continue delivering results, right. And not be distracted,
possibly by, you know, a new order, you know, and that kind of thing. Yeah.
Yeah. Ben. Yeah. You definitely. Well, Ron, I wanted to kind of touch on, you know, all that anxiety that lifted
Control, governance, and life after the ESOP
when you, you know, you just decided to cut bait with these, third parties.
Was there ever a moment like that where you were close when pursuing the Esop, where you just thought, this is too much.
This isn’t me. You know, all of those things that you mentioned earlier. So with the Esop
that it was like, the esops too much? Yeah, certainly. Certainly.
I it’s as we’ve spoken in the past, you know, I didn’t know I knew what Esops wore.
I, I, I think I had a better understanding of what esops more than a lot of people that jump into it,
but I didn’t know what esops I didn’t I didn’t know the path that had to be traveled to get to the end of having the deal put together.
But it was like I said, it was the right direction and it felt good going through it.
I mean, it didn’t feel good every day, but, you know. Yeah. Not sure if I’m answering the question.
No, no, but it was. Yeah, it was emotional for certain.
Right. Well, a lot of that, you know, is behind the curtain and it’s tough to see when you aren’t exposed to it on a regular basis.
Whereas you could just think, okay, this third party wants to just slap some cash on the barrel head and we make a deal.
But it is a that’s a whole different beast, you know? And, one of the things that you mentioned and a lot of owners mention
is, you know, control, you are the majority shareholder selling the shares to essentially the employees.
Were you worried ever about giving up control and then, prior to the transaction and then after, what’s that been like?
Yeah, that’s a great question because it’s a it’s, you know, it’s a mental state of can, you know, control who’s in control.
I will say with the Esop, the physical control,
does transfer as it should, you know, the shares transfer
and, and the mental side that, that for a few months for me that
that was a different feeling if you will like. Oh, I don’t I don’t own those shares anymore and I have a no.
But you know, I’m not in control. However, reality is because I’m still the president.
I’m still the CEO. We still have our board. Our board has actually gotten stronger because of having to bring
Leadership responsibility and post-transaction growth
the independence on as a requirement, the independent board members. So our board’s gotten stronger
individuals that we were going to be bringing up. It has allowed them,
to have that feeling of now they have more control, which is good. That’s what we want, right?
Ultimately, when we transfer, you want somebody that’s going to take the reins. So once I started seeing that, I just felt a lot better
about the mental part of the control. And and I’m perfectly fine with all of it now.
But it was mentally a little challenging for me for a little while.
I can imagine, you know, blood, sweat and tears went into that and, you know, giving that up. But,
you know, still president still CEO still has a strong board. Do you feel that you now have more freedom or more responsibility?
I feel as though I have more responsibility. And I’m and
and that’s just because it’s a transition time. So,
my workload hasn’t lessened any. I have been able to transfer some of the day to day stuff over.
So that has that has helped. But in doing that, you know, we’re in our in
this might be just because it’s self-induced.
We’re in a growth mode in our company. And so we’re doing a lot of strategic planning.
We’re looking forward to where we’re going to, states we’re going to grow into and whatnot.
So that that’s taken time. But that, once again, that’s probably not because of the Esop.
That’s just because that’s our company plan.
Let’s touch on that. So traditionally Brown. Right. California Native Company, you know, here in Sacramento.
Geographic expansion and long-term strategy
And you know, if you’re on the 80 or the five, you know, you probably see a brown truck, you know, probably you’re guaranteed almost.
Yeah. Yeah. Yeah. So what states you know, are interested. You know, when you think about the next couple of years.
Yeah. So southern first it’s going to be Southern California.
We are licensed in all the western states already. So our we’re in our analysis right now.
We’ve got some growth that’s going to be happening up in Oregon. But I think from an open office, it’s probably going to more
go down into the southwest, which is probably going to be Texas. Could be Arizona.
But first it’s going to be Southern Cal, and then it will
it will scoot over a state or two. So that, I mean, that could change.
But that’s kind of what it’s looking like. Plus the number of,
individuals we have, we have currently some of our employees are in Arizona
and in Texas already. So, we got a little bit of a head start from that standpoint.
So that’s great. Let me know with your Southern California office. You know, I will.
Yeah. Good stuff. Yeah. So, Trevor, do you want to talk a little bit about,
you know, the ability to take chips off the table and kind of what, what that part was like? You.
I think you had some questions on that. Yeah, absolutely. You know, so you think Esop, Esop is a fair market value buyer, you know, as
Valuation expectations and ESOP economics
if you were to Google or, you know, going ChatGPT, you know, how much can Esop pay?
You know, it’s fair market value. You know, of course fair market value is a range, right? You know, it’s not just one number.
There’s. Some things you calculate, you know, like profit you know, backlog and balance sheet.
Then of course, the intangible. How good is the company. What’s its history, you know, the longevity of the employees,
you know, and so on. Right. And and that’s value. So, you know, overall, Ron, and I know you talked
to, you know, other possible acquirers. You know, when you think about the Esop and now it’s two years in, you know, one here is are you satisfied with the overall process.
And you know, overall you know price you know in essence in hindsight you know that’s one question.
And then to, you know, just the overall structure there Esop you know 100 person Esop transaction a bit unique.
You know you get some proceeds upfront and then often over time you know and so on.
So I kind of walk us through that, you know from your perspective you know.
Yeah. And how that looks, you know, now two years and yeah.
So value as we spoke a little bit ago,
the, the value was spot on from the evaluations, that were done.
I, and I’m happy with that. I was happy with it then, and I’m just as happy
with it today. As I think we spoke a little bit ago.
You know, the Esop isn’t if you’re looking to, you know, maybe get the five times,
seven times multiplier, whatever it is for a general contracting firm. You know, Esops probably not the the landing pad for you.
If you’re looking to just maximize the dollar amount, for, for me personally
and our company, it was about more than that. So the, the value that was put on the company,
I thought was a fair value, by the time we got to it.
And then the way we are still doing the, the payments,
and the time line, that’s associated with getting the payout, obviously, the company has to be profitable,
to, to, in any of the scenarios, a third party sale and internal sale, anything that the company
has to be producing, whatever it’s producing and it’s got to be,
have value there. I, I have been very happy
Why a 100% ESOP was chosenāand lessons learned
with, with the way that it came out and I wouldn’t the process was tough.
Get in there. As we’ve discussed through the valuations, I, I would recommend anybody that’s doing this or any transition
that their business would start doing, valuations of their company ahead of time.
So they have kind of in their head because everybody has their number that they’re thinking that their company is worth.
Some of them might be accurate, some of them might be pie in the sky. But you need to be have a good representation in your head
that’s backed up by accounting principles, that this is what your company’s worth for whatever reason.
And and here are the items that you need to be looking at to make your company better value.
One of our big items that when we very first started the process
was how deep is our bench? Meaning who’s my replacement, who’s our executive VP,
replacements, who is our CFO? Replacements. You know, I was weak there, early on.
And then I saw that we needed to, to change that. So now one of the big items in our company for our whole strategic planning
is that every position has their replacement is in place or is
get is trying. We’re trying to identify a replacement. Just for continuity
more than anything and individual growth. Now as Trevor, you kind of mentioned, you know,
we jumped into the deep end as 100% Esop.
If I had to do it over again and I would have been, you know, five years younger or seven years younger,
I probably would have done, you know, a partial Esop. And just slowly built into the 100% Esop
for everybody’s,
mental stability. I mean, jumping in a 100% Esop right off the bat
was a lot. It’s just there’s just a lot more to it.
It well, it felt as though there was a lot more to it. Definitely a bold move. Yeah. Yeah.
But we did it and and we survived and it’s all good. But that, been to your part earlier about the emotional.
Closing the transaction and communication timing
That was a dead one because it was. Hey, I’m 100%
not an owner anymore. I am, you know, where before I, I, I was young.
Was that the most emotional moment or was there when you thought,
okay, yeah, I’m not that 100% or I’m not the majority owner anymore. The Esop owns the company.
Was that the most emotional moment or the. Yeah, that was one of them.
Now was a big one. I kind of felt and so I was just kind of alone just because I was alone, because I was at a seminar
in, in Texas with nobody around me that I knew for real. I mean, I knew some people, but I didn’t know them
like those that were here, that were in the trenches with me. So I couldn’t celebrate with anybody.
And, you know, in a matter of, minutes, I went from owning,
a healthy construction company to being part now. Yeah. It’s just different it when it it was the same, but different.
I just had get my head around it and it didn’t take long, but
my head’s around it now and I’m very satisfied with it.
That’s great. Trevor, I didn’t mean to step on your toes there. You can, forge ahead.
Yeah, not at all. And. And, Ron. Yeah, I know we mentioned back working on the transaction here.
The close might feel a bit anticlimactic, depending where you are. Yeah. And you happen to be at a conference in Texas and got a ding.
Rita signed doc who signs. Right? And. Yeah, yeah, but that’s exactly what it was.
And then I when I did the final signature, you know, you get the little congratulations.
The document is complete. No fanfare, no. No phone calls. No, it’s,
you pay and I will add in. And I don’t know if this is the right thing to do or not.
I don’t know if I would do this this way again, but, when I did the transition for the Esop and put all this together,
nobody knew I was doing it except for my CFO. So, you might say,
well, why in the world would you do that? And the reason why I was doing this? Because I didn’t want people to get their hopes up,
that we were doing an Esop and they would become owners, and, there would be, you know, this expectation
only to be then told a didn’t go through. Sorry. It’s, you know, whatever. So,
I mean, the only ones that knew my kids didn’t know. Nobody knew. I,
I probably wouldn’t do that again. I kind of a little heat for that. My wife knew, I knew, and my CFO knew, and,
no one knew on his side either of the family. And,
that was bittersweet. I caught I caught a little flag, and and I got to tell you, it
it was also harder because it was just two people doing the lift for 100% Esop.
And most of that work fell on my CFO. So any of you out there that are going to be doing it, know
your CFO is going to be doing a heavy lift and so be patient with them.
You have a very strong CFO, by the way. Yeah, I do and with the process.
But yeah, you brought up an interesting point here, you know, about, whether you communicate, you know, to a broader group your intentions
Employee rollout and cultural impact
going through an Esop or any exit or, you know, transition for that matter.
And we see it across our client base, you know, some don’t. Right. And generally,
you know, you think of company size, you know, and so on and kind of controlling that narrative. Right. That’s usually top of mind.
So I think it was for you. Yeah. Other clients, you know, say, hey, I want to have everyone on board and so on.
The downside is if you do that, you know, communicate that in a broad manner.
You know, you have a lot of expectations. You know, and as you know, the deal is a done deal is done.
Right. You know, so you have right that issue to manage. Right. Right. But I yeah.
And being you know, up there in Sacramento think it was well, March 2024 for your employee rollout.
That was fun. You know, and we can talk a bit about here if we change gears about the employee
impact and you know how that’s changed, you know, from the beginning announcement.
And now, you know, we’re two years in. And so I, I think, you know, the employees now kind of get a sense of,
hey, this is what it is. You know, and this is what we can, you know, expect to see, you know, both in terms of Esop account growth, right.
And, and just the overall operations of Brown. So,
yeah, if we think about that, you know, you know, for the from March 2024,
when you did the employee announcement, you know, and your son actually gave me a drive to the airport afterwards and, you know,
he confirmed, hey, this is the first time I’ve heard about this. And, yeah, she he was he was one that I took
a little flak from because he’s like you, you didn’t trust me to tell me. And I was like, look, I couldn’t let anybody know.
I just, I just I needed to go through it on my own. I probably I don’t know if I do that again that way.
But again, what was the initial reaction, you know, outside of the box? I think a lot of employees thought, hey,
you’re going to announce that the company has sold or something, right? You know, to they’re there in the boardroom and,
you know, but kind of the weeks after that, what were employees questions, you know, kind of enthusiasm was there.
And then kind of fast forward to today to, you know, is it has it been a net positive for the culture?
You know, there’s been no change, you know, just oh no no, no, no, no, no positive.
It’s kind of three stages. So there was first, as you said, the build up when we notified everybody, hey, we’re having an all hands on meeting
at a hotel, place of which Trevor, you were at. Thank you for being there to help explain some of this.
So there was a build up, and they didn’t know what that was going. Why are we having this meeting?
They knew, you know, my door had been shut for, you know, eight months trying to put the scene together or whatever it was.
So they knew something was up, but nobody knew. Well, and then there was a lot of that, you know, the chatter and the speculation,
so that the day of the reveal, I, I think there was a lot of, a lot of the joy was
because there was a relief of, oh, thank goodness you didn’t sell it. You didn’t sell out.
I heard down a lot. You didn’t sell out. You’re thinking of us.
You know, not everybody knows what an Esop really is.
And it’s it’s a vehicle. You see it, but you can’t appreciate it really, until you’re in it.
Driving it is kind of what I think. So we have that phase,
and then we had the phase of, Okay. Now what? You know, all the employees are okay.
Well, what does this mean? What is it going to do? Some dug right in and and did a lot of research
which those employees are. It’s good to have those that group of employees
because then they can also talk, intelligently to other people and explain, no, no, no, no, no,
this is what this means, you know, don’t expect a big return.
Yeah. I honestly had a couple of people who thought, I’ve just got the stock of this company
and I’m going to be able to retire in a few months. And even though we told them
over and over and over, hey, but you know, you’re not going to see much. Your first statement is not going to see
much. 80% of the people understood that.
And then so the second phase was when we finally sent out our statements to everybody,
you know, most everybody was like, oh, yeah, here’s what this is exactly what they told me was going to happen.
But, you know, we had a few get a little ruffled, like, hold it.
I thought I’d be getting, you know, a couple hundred thousand dollars. And, you know,
then you have to have those conversations with them and explanations of which most all of them,
understood and were good with it. The next
Long-term employee value and ownership mindset
has been the excitement of growth that they know, you know, third phase.
Hey, we’re we’re part of this and we’re going to make it grow
because it benefits all of us. And it benefits me, not me as in Ron,
but me as an employee saying, hey, this is if I get this, you know,
we get these jobs that’s going to help. So, you know, and we’re always telling them,
you know, the first few years of this, it’s just going to kind of be business as usual. From what your statements are going to look like, your statement is going to be the
I mean, I don’t know what the magic date is, but I’m kind of telling everybody, hey, ten years, 15 years,
that’s what you’re working to think of a like a 401 K in that sense that you’re going to see the build up
later in your career. So pretty much everybody understands that.
And it’s been positive. Once again, I, I, I haven’t heard any negatives
for two years. And all the dust has settled.
People are understanding it and we’re moving forward. And it’s been positive.
That’s great. And that was give the analogy an Esop is like a marathon. You know, it’s not a sprint. Yeah.
You know we’re we’re an Esop here at Mankey. You know nearly 90% owned as of recording,
which is January 2026. You know, basically I’ve been here about 11 years and, you know,
you start seeing the statement you’re like, okay, this is a real thing. You know what? You’re in five years, you know, and that kind of thing.
So it’s not a one year, you know, type situation is very much,
hey, work hard, work smart, help the bottom line. And you’re going to see that reward on these up statement.
And you know yeah closer you get to ten plus years in. You know you start saying okay yeah this is a real thing.
You know it’s something to be excited about. Yeah I did one of the biggest
and I was just going to say the most common questions that I see in employee rollouts is, when am I going to be a millionaire?
You know, when is when does all this cash in my account? And, the, you know, they’re kind of, a little let down when I say,
well, keep showing up to work. You know, after a number of years, you’ll start to see a real material amount in that account and, well,
it’s, it’s it’s kind of a bummer to them, but then they eventually see
my hard work will turn into a, you know, a better, healthier bottom line for the company,
a bigger value for the shares and then a bigger amount in my account. And I think that that’s really the proof is in the pudding.
You know, it’s right there. So few years in, you start to see that real material amount in there.
But yeah, they, they don’t like getting let down like that when I tell them, well, not right away.
No, they know it even from, you know, my standpoint as a seller.
You know, I, I don’t get all my money all at the beginning, at least the way we set it up and, you know,
it it’s it’s, it’s over time. And so it’s, and you just got to be patient,
but you’re right, there’s always going to be a group that is wanting everything right now.
And that’s just the way it is. And we had a couple of those. Couple of those were frustrated, but.
You know, they once we walked through it all with them and my CFO walked through a lot of things with them.
And they understood. Oh, okay. I get it. Kind of because it’s complex.
The stuff’s not it. It’s not easy stuff to digest.
You know, I was drinking, as they say, from a fire hose for a few months on it, and I, after signing all the documents,
didn’t 100% fully digest everything I signed.
Right or wrong, it’s just the truth. Because it moves fast. And,
you know, putting it together. Once it starts getting together, it all comes together. And then then you’re presenting it because we didn’t want to wait a long time
to present it to our, to our new owners, if you will.
Yeah. Sort of like, you know, signing a mortgage on steroids or any of all these. You don’t even know what you signed, right.
And so on, you know? Right. Going through that, that process. Yeah. It’s, certainly a lot.
Let’s see here. So I see, you know, overall though, it sounds like, you know, the employees are stoked at Brown about these, you know, two years ago, which is great.
And yeah, you know, as we mentioned, you know, a couple of years in, you know, they get their next statements, you’re going to see here, this is a real thing.
And you think retirement most people in the US have if they’re lucky if for one K that they put some money in Esop,
you know, pure icing on the cake right above and beyond that. So yeah, that’s going to be a nice retirement, you know, for those
who are going to be in it next, you know, ten, 15, 20 years, that is the whole basis
for why I did the Esop. And if they worked for, Brown Construction, they didn’t have any Esop.
Right then. They don’t have that benefit. Yeah. So it’s they don’t yeah. They get their profit sharing. They get their bonuses and pay and 401
K now they get all those same things. But this
exponential growth that they are part of the mean that’s really at the end of the day
is what I’m telling everybody is you’re part of this growth. So now you get rewarded for that growth.
It’s great. How is the market responding. You know going 100% in your market.
Market perception and client reactions
You know and you’re talking to you know OTAs you know vendors and so on.
Has this come into play at all. You know being an Esop.
I don’t know that us being an Esop. Well let me back up I yeah, some of them are pleased with that.
The ones that I’ve, you know, have vocalized something about it. They’re pleased that we did that versus a third party sale because they
said, look, if you do a third party sale, we know what that would end up. And, and a lot of our clients are national,
national or international clients. So they they know what it’s like to deal with some of these
very large firms that are owned by different firms. And, you know, right now you know, it’s still there’s issues they
they can call me if they want. So we still have that,
kind of corny down home feel. But, we didn’t we didn’t
do a cut and run it using their words, or I didn’t do a cut and run that so they were happy to see.
Hey, you’re keeping the integrity of your company. So we know that we’ll still be dealing with the same type of company.
Yeah. So that that was. And and none of them cared if I had done a full or partial.
I haven’t heard anything on that. I mean, a lot of them, well, a couple of them
that are esops and they’re 100% esops themselves. They were a little surprised that we did 100% right off the bat.
They’re like, oh, wow, you guys, that was probably a lot of work. And I said, yeah, it was a lot of work.
But it’s it’s doable.
That’s great. It is so. So did you see any
Regrets, surprises, and trustee dynamics
or I guess let’s talk about, some mistakes or regrets, you know, in terms of, you know, it being difficult,
like you said, you know, 100% was a lot to write off on the first one.
Would you go about it to say, well, I guess you alluded to it a little bit
before about, you know, selling about a minority and then kind of again, if we had an extra
5 to 7 years on the timeline, perhaps we could have stretched it out. Were there any other
sort of bottlenecks or parts that it was? It was kind of difficult where it just felt like I’m pushing and pushing and nothing’s moving.
Yeah, well, it wasn’t so much pushing. Pushing. Nothing was moving.
Things were moving really quick. And it’s a lot of information to digest. And I think it would be that way.
Regardless of the percentage of Esop we did, it’s still the same information.
I. If I had to do it over again, as I said, let it go.
You know, if I was younger, then I would have done a partial
and I don’t know what part partial that would have left that to you guys is the experts to tell me what the benefits are
and what it might. But I wasn’t five years younger.
I was what I was, so, it was a lot of information.
I jumped on it fairly quickly because
like I said earlier, you know, I was I was kind of going down parallel tracks. I was looking at the third party sale and the Esop at the same time,
trying to see, okay, which is going to make the most sense. But once
I put all the, all the cars on the Esop track, it went quick.
You know, a few months and Trevor even told us, hey, here’s about when you can expect
this is going to, you know, come to a close and
I mean, you were almost right on the money in probably a couple of weeks off and, and,
you know, I, I once again,
for me personally, I should have educated myself better on
what one the, the what the steps are through the process of any sort.
And understand, as I alluded to a bit ago, what a trustee’s role is in the Esop,
the trustees role is to look out for the employees. And I looked at the trustee as,
hey, while I’m with you, we’re looking out for employees. That’s why I’m doing in Esop.
But that’s I’m not their concern at any point during that negotiation process that you get into.
In fact, I’m I’m everything but their concern. I am I am
I am the one they’re negotiating against or with, I guess,
I didn’t realize that. So I that was very frustrating for me in the process
because I didn’t understand why this entity kept,
being so aggressive against me when I kept thinking to myself, hold on. I’m, I’m I’m part of the plan here.
This is, you know, we’re in this together. Ultimately, I’m happy to say that after
we got through the negotiations and work through all the details, it it it’s it’s a great that our trustees said
that it joins our board meetings, at our request. We we really enjoy having them part of our team,
for multiple reasons. Looking out for the whole company. Company as a whole.
So it’s good. It’s been good. That’s great. I would have just spent more time understanding what all the little nuances
were of what we were negotiating, and I didn’t fully understand them.
Absolutely. Yeah. It’s hard to know what you don’t know in those moments. Yeah.
Like, right. And Ron, you know, it was great talking with you today. I think Trevor’s got a few more questions for you,
but I just wanted to thank you for your time today and your insight into what it’s like selling to an Esop.
Yeah, and thank you. Yeah. Thanks, Ron. And do you have any burning advice? You know, for any business owner, you know, think of Ron,
Advice for owners considering an ESOP
you know, pre. Well, we started talking I think in the fall of 2022, you know and so pre 2022, you have any advice
for Ron as he looks at the different options for Ron Construction
going into say okay we’ll go Esop. You know what sort of advice would you give.
Be patient with it. Understand why you’re doing it.
Know clearly that it’s not about grabbing as much money as you can
out of your company that you’ve worked your whole life for. You got to get over that. It’s it’s about
you’re doing this for the longevity of the company and for the longevity
of the all the employees, everybody from the, you know, small
salaried person to the top paid person. Everybody benefits.
And, you know, just then thing go at it all full gusto and not don’t
it’s not half energy. Just understand what you’re getting into and be very transparent and very you
you cannot. You cannot.
How do you how do I phrases you can’t give too much information
to the, the the employees of the company that they because they don’t know what they don’t know.
Just like I didn’t know what I didn’t know. And you just want to be as transparent
as possible about the company and you know, you’re not saying that you’re
the receptionist is going to be running the company. But you want your receptionist to understand
the decision you made to become an Esop, a how that can positively affect
her, him and their family. So
it’s it’s a big decision that has a lot of affects, a lot of people
positively in the long run. Absolutely.
Well, thank you, Ron, for joining us today. You know key takeaway here. If you’re considering the Esop option education is first and foremost.
Yeah, very important followed by patience and understanding the value of your company and being comfortable with that Esop value.
And lastly, a desire to keep the company independent because you have a great culture, you have a, you know, great intangibles
going on at that business that is better off independent and then being part of a, you know, roll up or, you know, larger player.
So yeah, the sound would be the, you know, the key aspects there. On why you went 100% Esop with Brown and of course,
what makes it a success now and in the future. So we wish you and everyone in Brown much continued success.
We look forward to seeing great things. Thank you. You know I appreciate it. You guys have been a great partner.
Mentee has just been fabulous. You guys were great through the whole
the entire process and continue to be. So we much appreciate that.
So thank you guys. And I’m happy to help educate anybody on whatever
I can on a go forward basis, because it’s new for me too. I’m only two years in, so.
See what the rest of the chapters leave. Yeah.
Well that’s great. Thanks again. And, that does it for this episode of Esop radio.
Closing thoughts
We’ll see you next time. All right. Thank you. Let’s take care.
The Succession Decision Facing Many Owners
For founder- and family-owned companies, succession planning is rarely just a financial decision. It often involves questions of legacy, leadership continuity, culture, and responsibility to employees.
In this conversation, Ron Brown explains how he evaluated multiple paths forwardāincluding a third-party saleābefore ultimately choosing employee ownership. He discusses the tradeoffs involved, the concerns he had along the way, and what ultimately gave him confidence in a 100% ESOP structure.
This episode provides a rare opportunity to hear directly from an owner who has navigated this decision from start to finish.
Inside Brown Constructionās ESOP Journey
During the episode, Ron, Trevor, and Ben explore topics including:
Early succession planning and long-term ownership goals
Evaluating a third-party sale versus an ESOP
Why Brown Construction chose a 100% ESOP structure
Valuation considerations and transaction mechanics
Governance, leadership, and decision-making after the sale
Communicating employee ownership and building alignment
Lessons learned and reflections after completing the transition
The discussion focuses not just on the transaction itself, but on how ownership decisions shape the future of a company well beyond closing.
Who This Episode Is For
This episode is especially relevant for:
Business owners evaluating succession options
Construction and engineering firm leaders
Founders considering alternatives to private equity
Executives interested in employee ownership case studies
If you want to understand how a real company approached a full ESOP transitionāand what that experience was like from the ownerās perspectiveāthis episode is an ideal listen.
About ESOP Radio
ESOP Radio is the official ESOP podcast from Menkeāwhere real stories of growth, succession, and long-term wealth building are told.
Hosted by Trevor Gilmore, CEO of Menke, and Ben Spadt, ESOP Investment Banking Consultant at Menke, the show features conversations with business owners, executives, and advisors who have navigated employee ownership as a strategic path forward.
Explore more episodes at menke.com/esop-radio.
Interested in Being a Guest?
If you are interested in being a guest on ESOP Radio or would like to suggest a topic, please contact Trevor Gilmore at [email protected].
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.
