In the News: ESOPs Buying the Remaining Shares of the Company to Become 100% ESOP-Owned

Wood-Mizer Products Inc. (Indianapolis, IN)

The story of an ESOP buying the remaining shares of the company is told in Wood-Mizer finishes sale to employees. The total price of Wood-Mizer Products Inc., an Indianapolis manufacturer of portable sawmills with 630 employees, was "about $35 million—less than half what the owners could have received on the open market."

"The owners wanted to see the company survive and give the workers a chance to succeed, said Laskowski, who is a son of Don Laskowski and was elected chairman the day of the latest transaction.

"Any other form of trying to sell the company and take the equity out would have placed the company at significantly higher risk of being moved, sold, broken into pieces," he said. "This allowed the entity itself to continue and the culture to continue."

The culture includes a policy whereby the company donates about 10 percent of pre-tax profits to hospitals, orphanages and other mission projects in developing nations. The donations are made in the form of cash and in sawmills used to build the facilities."

The article also described some of the financing details:

"Employees financed the initial, 53.9-percent stake with $6 million from their 401-(k) and a $10.2 million loan from Laskowski and Tekulve at a 6-percent interest rate. The co-founders directed most of the proceeds to foundations they started, Laskowski Family Foundation and Tekulve's Blessed Virgin Mary Foundation.

The latest acquisition was financed primarily by a 12-year loan at a 10-percent interest rate from the selling shareholders, Jeff Laskowski said. A bank loan funded the balance."

Quick Wire Co., Inc. (West Brookfield, MA)

Employees On The Way To Owning Quirk Wire Co. tells the story of Quirk Wire Co. Inc., a West Brookfield, MA manufacturer of high-temperature wire and cable. The company's owner, who previously sold 49% of the company to the ESOP in 2003, will be selling the rest of the company to the ESOP this month and retiring. The first 12-year loan was paid off in 4 years. The article describes the ownership culture:

"It's easy to see why Quirk would be unwilling to sell his company to anyone but its employees. The plant has run without a foreman for all of its nearly 30 years. Each employee has a key to the plant, and is permitted to work all the overtime he or she wants. Quirk makes the company's financial data available to employees as well."

Nypro (Clinton, MA) and Lampin Corporation (Uxbridge, MA)

The above-mentioned article also mentions Nypro (Clinton, MA) and Lampin Corporation (Uxbridge, MA) as examples of ESOP companies.