EP44 - The challenges of ESOP financing with Jamie Walrack...First American Bank from Chicago, IL

[0:11] Welcome back this is the ESOP guy and we are on this journey to an ESOP so glad you could join us today, we are so committed to providing this ESOP podcast as a resource for you and thinking about what you might want to do an employee stock ownership plan that we're doing it on a podcast and a YouTube video on. Christmas week and so. That's just kind of shows you you know as you go through this process of looking at it there's a lot of information that you're going to need and so you know we can't like just waste one whole week just. So we're here to do that and we're committed if you have an interest in this podcast and want to look at other episodes please go to our website at journey to an ESOP.com. Also we've been running and uploading some of these videos into the YouTube and so you can go if you go to YouTube and Just. Put in the ESOP guy you're going to find all of our YouTube videos as well so hopefully those are helpful for you as you go through the process of learning more about. So today what we're going to do is we're going to interview and have a discussion with Jamie walrack with First American Bank. And Jamie's out of Elk Grove Illinois which is pretty close to Chicago is that right Jamie. [1:22] That's right we like to just say Chicago to avoid any sort of confusion whatsoever so it's a big it's a big area but so Jamie and I had talked a little bit about doing this this video in this podcast, a little while ago I'm he's a, really representative of the ESOP lending arm of in terms of doing an ESOP deal what they would do is provide the financing so what we're going to talk about today is the challenges of ESOP financing and, really just worked through some of the questions that might be really helpful for you as you're thinking about. When you go through the ESOP process you're thinking about hey how am I going to get my money out of this what you know what's my liquidity event look like and that's really what Jamie's team does but before we start that Jamie I had a quick question because it is Christmas week. What is your favorite Christmas movie. [2:10] Oh man that's a good question I know a lot of people have been coming up with die-hard Allah trees but more recently but I still can't see that as a Christmas movie I showed my wife Christmas vacation for the first time and she just laughed her butt off after I saw I'm going to put that one at the time for Christmas vacation all right well, and why is it your favorite just because it's funny yeah absolutely Chevy Chase is fantastic especially back when they were recording that it's got a great cast good combination of physical humor and then some some nice sarcasm which I always enjoy I think it's a good move because your. You know Christmas is so stressful you know at least for some people and it's like you got to get all these gifts and packages and whatever and everything's got to get. Which is really hard especially for guys in you just need you need a break you need a little bit of a stress reliever especially because it's the end of the year. And if you do ESOP deals you know that you at the end of the year it's really stressful because we're all running around in circles so. But cool so so awesome so thank you for joining the podcast let's let's just start off with you know give us a little background on on you and the bank a little bit about you know because this is specific to esops, how did you get into Aesop's and then just kind of talk a little bit about your bank and what you guys do specific to esops. [3:35] Great that first of all thanks for having me feel really appreciate being on here give me opportunity to spread the ESOP word so the little background the bank we're a smaller privately-held Bank based at Elk Grove Village like you mentioned been around for over 50 years the stock in the company is owned through primarily officers and one one primary family who also heads it up to CEO but a unique thing about us is we actually have an ESOP and place in the bank as well so we've got a 9% E7 place which allows us to share some of that ownership and practice a little bit of what we're for preaching which is which is been a plus. [4:16] We got into the E Subspace more so is a defense mechanism all of our clients are smaller privately held businesses most previously were right around Elk Grove Village we are headquarters in the middle of the industrial park so we wanted to make sure that if one of our privately-held clients came to us and said hey we want to put an ESOP in place, we didn't have to send them elsewhere. And as you know once you do a transaction or two in the inside Space you get to know a few other people it's a very small community our first transaction was actually referred to us by a larger Bank was LaSalle bank at the time which is now Bank of America. And that client was too small for them at the time has now grown to over 250 million in revenue and 1,200 employees Nationwide so, really who was more of a defense tactic which ultimately grew into the something that we've been able to really appreciate and enjoy so that was 20 years ago and still around and kicking over that period of time that's awesome. So going through like let's just start off with like the process of you know people really want to understand to like the process of going through a loan approval. Um when you're going through that for an ESOP specifically what if is there any differences between the loan approval process for a non ESOP deal versus an ESOP deal. [5:39] I would say you just kind of have to look at everything a little bit more closely because during a traditional underwriting structure you're looking at collaterally looking cash flow so you're kind of spreading the the underwriting around on a bunch of different fronts but an ESOP is you know in most cases there's usually a pretty substantial collateral deficiency that I've not run across one company it has as much assets as they do they're looking for in a loan for what the overall value of the company has because ultimately if the company had enough assets to cover the entire purchase price of the of the company then the company likely wouldn't be doing very well to begin with so you probably couldn't afford on the cash flow. So I guess the biggest difference that I see is that you look at things more closely you stressed the cash flow a little bit more so the reporting is the requirements are a little heavier from that perspective as well. [6:36] And then on top of that you need to potentially factor in a complete change over a management or complete change over and ownership. Typically like to see the owner staying on for a period of time or at least I have a management group that's been in place for a while but in some cases the owner is done they don't want to be involved anymore and they want to be able to take their money and ride off into the sunset so that's another. Underwriting factor that you have to take a look at that wouldn't necessarily be if you were just doing an equipment loan or mortgage or line of credit it's a great point. In your in your process specifically do you guys have a loan committee versus a signature Authority. And if you want to comment on the differences between those two approval processes that come that Banks intend to end up you know gravitating to. [7:27] Yes we're on the smaller side of things so we've actually still got a long committee I sit on our senior executive loan committee which meets every Monday but technically is always in session, but so we, meet every Monday to kind of review the transactions to go through and I know some different banks there is signature Authority that goes through there as well I would say it has its pluses and minuses both both sides really to form a committee perspective. Obviously more people potentially more questions potentially more issues, but on the flipside of that as well if you have one individual and a signature Authority who just really doesn't like Aesop's or really doesn't like the construction industry or really doesn't like this thing or that thing that one person that you're trying to convince you're never going to get over the hump as opposed to in a committee setting you have perhaps a little more support from some of your peers or somebody else that can provide a more balanced approach to it as opposed to just trying to have to get every loan approved by more to individuals in the bank. [8:29] I know I think it's not as much you know part of its to help two people understand the inner workings of how the process works and you know keeping it from that perspective I remember because I was a banker a long time ago and I've done both one committees and. Recovering Banker I'm a recovering banker and you know I that was a long long time ago but I appreciate the opportunity to kind of like help people understand. You know and I guess Segway into this next question. How hard might be sometimes for you guys you know you're walking into an ESOP deal so that so the question we really here is more, from A bank's perspective you know what are the most difficult things that you see in and challenges you see in in walking into a potential ESOP deal. [9:14] Yeah so from my perspective being in the industry as long as we have, the first probably three to five years was really the most difficult to getting something up and running at a bank because you're trying to convince a bunch of people who don't know how to spell Lisa what, what is what is going on and why there's this huge collateral shortfall why the owners are leaving why the balance sheets completely upside down, well what's going on here why are we looking to make this low for my perspective I've benefited somewhat because we have been, fighting those battles for a while and we have that track record in place that's shown that hey these companies actually perform pretty well, this isn't like a private Equity transaction we're going to have to change over our customers every three to five years these are longtime clients and after they get done paying off the loan they might be able to make Acquisitions that are accumulating a fair amount of cash on the balance sheet and just generally it's a very loyal, client base because you're able to put something in place that not every other bank was able to provide at that at that given time. [10:19] Yeah but you need to I need to understand your audience I've got a committee full of a varying different personalities and things that people like I got an individual really likes to see something that's extra sophisticated so you put a little extra spice on it and make sure that they understand how sophisticated this company is now the guy that really loves collateral typically don't have much for that guy but we can try to work around things yeah and and talk through how we're going to accelerate the loan payment things of that nature, my boss always used to tell me that you have to make to sales you have to make the sale to the the company to sell the bank from that perspective and they have to sell it internally as well and it's a lot of times they're two completely different sales pitches it's not easy and not only not only that, the competition is fierce I would I would imagine so speak to that a little bit because you guys are, you're in Elk Grove which is Chicago but you're doing deals all over the country is that correct. [11:19] Yeah yeah so the competition I would say absent flows as the economy as absent flows right now we're in a cycle where there's just a substantial amount of. Liquidity within the market there's a substantial amount of capital that a lot of these Banks and what they're looking to do is try to put it to work so instead of trying to steal a customer from another customer they're trying to come up with new ways to lend money so in a lot of cases these banks are at the same spot we were. 20-plus years ago, so he can go to some of these conferences and you've got 25 or 30 Banks there instead of having three or four and it'll come back down again the first time that a that any sample goes bad or if the the. [12:05] The economy goes into some sort of a recession or some sort of pull back and they'll be a pullback on banks only line in the Esau space again but what we've learned and being in it as long as we have is that you have to keep going you have to keep attending you have to keep making loans because that shows that your ability there's always going to be somebody that can can go out and provide. Quarter point less than an interest rate but if you show that you're willing and dedicate the same space for a long time that speaks volumes to a group that's a, a pretty loyal collection individualism as I'm sure you've run across yeah yeah you tend to, kind of speaking into that a little bit you tend in the ESOP world we talked about this at the beginning is small I mean the community is small even though we're all over the place in terms of geographically you know I'm in Florida and, you guys are in Chicago but you tend to end up working with groups of people and they sent they tend to stick together so which I think is. It really good aspect of the ESOP Community is that people are very loyal to working together and you tend to feel like you can really start to trust people and know what people are going to do as you start to develop those. Does teams in a sense. [13:20] It's the closing school a lot better I know I'm as well and a lot cheaper General may also yeah so people kind of have yeah it's stay in the same lane or the lane that you're you should be in but, you want it you want the client you know as I go from there to the clients perspective you just want the client. To not have any major surprises I mean that's one of the goals that I have in being a sell-side advisor. Is really helping them to understand what's going to happen before it happens so that you don't have. The issue of a client getting really just upset with the whole process and wanting to say you know just forget it you know and it's too much. And there are times in the East a process where it can you know even for me it can feel like too much and so one thought I had for a question for you Jamie is just, from a client's perspective you know I can definitely see like what the bank has to do to get comfortable with an ESOP deal and that's challenging from a client's perspective. What's difficult to the client to deal with the bank you know and have you thought through those types of things. [14:23] Yeah the thing that I've seen a lot of is a lot of our client bases like service-based companies these are professional engineering firms architecture firms environmental Consultants whatever it might be. [14:36] A lot of times when they're going into an ESOP transaction they've never had borrow any money before and their lives there there a cash basis tax returns, or internally prepared statements they really don't have to rely on their account and all that much maybe their accountant is a former brother-in-law or something like that the bank is never. Come to them and say hey we really need to dig into these numbers so that that can be a bit of a culture shock as well, and most people once they understand the importance of having a good financial advisor a good accountant, unhand that can help them provide some substantial benefits to the company they eventually come around but that on top of putting an ESOP in place can be. Overwhelming but like you mentioned it's just one thing on top of another oh I got to pay for this or I'll what's got to do this now while that ultimately creates a more professional organization that's more likely to be able to sustain in the long run. [15:34] That does present as a as a challenge up front at the other big thing especially on the deals that we typically look at because we're on the smaller end we're not we're not. National Bank that's looking at 100 million dollar transactions we're looking at the probably 22 to 25 million dollar esab deal from a lending perspective. A lot of those companies that they have. Donor who's The Rainmaker who's the everything and the company that's the individual who started the business it's a guy who's the primary sales individual he's running the aberrations anything else from that perspective. The difficulty there is that the only way that you can create value within your business is if you can create a business that can run without you. And that's a that's a huge challenge for a lot of these individuals because the thing that made them successful the thing that made the business successful beginning was, kind of taking everything out of themselves and being able to hand that off or find a individual that they can, they can trust to run the company moving forward is a is a significant challenge so asking those sorts of questions people have to, come to grips with their own mortality in some cases that that okay maybe I'm not going to be the main guy named Gail running this forever, maybe I need to bring some other people along here but it's just. [16:58] Any sort of ownership transition creates those types of questions but then any sound is no different from from that perspective that is true, you know and one of the things and I'm glad you mentioned like this the range of what you guys deal with and I see I'm in that range to is you they really have to start early in the process of transitioning the responsibilities of the company and so it's. I always said I always kind of separate ownership transition in management transition because although they all kind of seem to work together. They're a little bit like you could start one before you even start the other right so I can start the management transition plan way earlier than I start my ownership transition plan and, and I think that's super healthy to do that I think it's super hard sometimes especially if you don't have something on the ownership side to get people, you know more interested you know and an ESOP do is beautiful in the sense that it does operate in a way that provides flexibility to to Really layer those together so that I don't need my owner to leave immediately on a transaction, you know it's they can start to phase themselves out but we have to prove me and the client and of course you guys have to see this. That the client the company could run in a way that really effectively with. Out that person and what year are we looking at you know in terms of who's who's in that rank-and-file or who's in that leadership team and how are we going to incent them how we're going to keep them so that's a real big part of it you know if doing. [18:28] I always like to look at it and he said because I mean when you're looking at ISA and you're you know this from talking to your clients. Maybe then just looking at these steps are also looking at a private Equity sailor that looking at a strategic. Some of those are transactions it's where you can kind of wipe your hands and walk away I look at an ESOP more as a transition as opposed to a transaction obviously there's some cash. And they won that you get but that's not where that's not where it ends is typically a five to seven year three to seven year Runway for those individuals to fully transition that on because because most individuals like you mentioned, haven't started that process yet yeah but they want to be able to gain some liquidity and take some chips off the table and that's the beauty of a nice job you can do it all at once. Well and kind of go back into the banking side they're going to be there behind you guys there are subordinated so they have a they have a stake in this that they got to get paid their seller note. The seller know is going to be subordinate to the bank's note the bank's going to get paid before they get paid and so they need that company too. To thrive they need it to continue to have success so they're going to be as engaged maybe as much as they were before in a lot of ways you know it's not just hey, I can now forget about it because how you going to get how you're going to get your seller note paid if the company doesn't achieve its goals and objectives. [19:52] It's aligning everyone's interested I mean this is the the banker the skeptical Banker in me but obviously there's a lot of different parties that are involved in it and he needs to transaction, once once everything closes I mean it's ultimately it's the bank and it's the trustee and the company and those are the people that you got to get comfortable with the next 5 10 15 20 years you want to make sure that you're starting out that relationship on good footing. Exactly and I'm glad you mentioned relationship to because I think the key to the key that I really look for is as I said transactions. But you got to build a relationship with a bank in the people that you're going to do business with after the closing so that you feel comfortable as the as the client saying hey I've got everything I need, I didn't just you know manage a transaction so for instance if you need a line of credit that needs to be underwritten if you need you know, other types of financing because your business is growing so fast that needs to be addressed early in the process and, and then all the other stuff about a banking relationship that people don't send to think about as much you know what's the treasury Services look like what, you know what is it going to look like who am I going to deal with is it going to be somebody nice like Jamie or am I going to deal with you know I mean credit guy which we can we could be mean to the credit people because this is you know this is our show so we can do whatever we want. So so with all of that you know I guess. [21:16] You know when I think about some of the challenges you guys face is you're doing business in other states where you may not have an office. Describe that a little bit like if you have a client that you actually don't have an office in their in their state how does that work from building. [21:33] Yeah it's definitely a challenge more so from that perspective more so getting the client over that. [21:40] That mental hurdle I would say I don't know about you but I work in a bank I don't remember the last time I'm going to Branch that's true right. Yeah it's a client that we've got clients that are across the street from Branch here locally and they've never been inside of it but. If you close that Branch or you took it away then all of a sudden people lose oh well it used to just be right down the streets like yeah but you never went in it but but that's that's a hurdle to get over but I guess the the. Turning 20 years ago or 25 years ago we put this in place was a lot more of a challenge than it is now technology has really helped that a lot through online banking remote deposit capture we're based out of like you said chicago-o'hare if you can get a flight pretty much anywhere anytime of day, to be able to make a stop what I found the most interesting especially in the clients that. [22:38] Sighs that we deal with I showed him to a client in Fresno California once and to the the small P sub transaction for a client out there who walked into their office. [22:51] And they're like oh my God this is the first time a bank has ever been in her office I mean this is a 20 25 year old client Vanquish, literally down the street their Banker had never you're kidding wow visited though he kind of fit that is that's banking 101 right I mean how do I even know what they do and less I go out to. To check out their place so that's hilarious, yeah it's sort of shocking so maybe it go to some of these places we've got clients in California who are obviously two hour time difference for their clients and Florida New Jersey who are an hour ahead from where we're at it's just about creating that, personal field that the pandemic obviously created some issues from that perspective this summer I kind of went on a Goodwill tour visiting clients that we hadn't seen in a year and a half because the travel restrictions the things like that. It goes a long way I mean we're in it for a relationship we're looking in it for the long term we're not looking for. Just a two or three-year transaction something like that we want to we want to have long-term clients that's the way the banks thought process is always been. And that's what it'll continue to be whether it's a nice a private Equity deal commercial real estate whatever it is. It's kind of applying those same those same things and you kind of you mentioned it leading into this question as well is kind of looking pull picture when you're structuring these sorts of transactions as well, obviously the big focus is how much cash can I get on day one. [24:20] But if you create a loan that's too large and too cumbersome than all of a sudden you can't make those equipment purchases that you wanted to make or you can't take a look at that acquisition that you might might have had on the hopper for a period of time, so it's it's setting the amortization setting the loan amount setting the structure, so it allows you to be able to succeed as business because the East entrance, he's up itself is like I said there's a banker would refer to it as non-productive death you're not buying equipment you're not becoming more efficient anything like that obviously there's some substantial tax advantages but it's adding debt but it's not, it said significantly benefiting the operations of the business so you need to make sure that you don't lose sight of what makes the company great, and what flexibility company may need going forward exactly. [25:11] Now good point all right so let me throw out something very specific just to kind of get people a people like numbers and it helps him to see things or in their heads it may be a little bit so just throw it out to you like if you have a service based company. There's going to do a case study on the Fly service based company they got no assets like they got a are right they don't have any real assets it's their do on the last five year average they did on average 2 million dollars in ibadah. [25:40] Any bit of for everybody that doesn't know it is earnings before interest taxes depreciation and amortization so it's just your cash flow to million dollars on average, very like there's never a down year it's just always pretty predictable which fingers love. Now we do a forecast and we go in we're going to do the ESOP deal we do a forecast in the forecast shows a three million dollar average ibadah. [26:03] So and then we come and say we're going to we're going to sell this thing for as much as we possibly can let's just say three times say we're going to go for a 20 million dollar Enterprise Value. [26:15] Started out how much how much could you guys lend on that deal. And then what would be what would be the particular structure because you're really in an unsecured. You know are ball situation where there's really not a lot of collateral so your collateral guide your committees little ticked off at you, so just give me like give us like the particulars you know and in and out. You know just consider this is a good company and a good industry they've got in you really feel good about the forecast to I mean like you see that they've grown the business and you know 3 million dollar ibadah is very achievable. [26:53] Yeah so that that's typically where the separation happens obviously you're valuing business you're looking at kind of a discounted cash flow method you're looking forecast you're looking at those sorts of things your underwriting a transaction you're looking at the history so given, the consistency I would say that we push us a lot closer to our three times multiple as far as the historically but dust when a 2.2 million dollars obviously that gets you, is he up to six especially considering the consistency of those cash flows, considering the lack of hard assets the lack of fixed assets are long-term assets to match up with long-term debt we would likely push it to a anywhere from a five to seven year amortization the probably push a cash flow recapture. [27:38] In place probably around fifty percent of excess cash flow to turn that fiber 7 year amortization and to perhaps a three to five year amortization what we've had a lot of success with our clients and doing and it's somewhat more difficult to convince upfront, is to take a more manageable chunk at the beginning. And then 12 to 18 months down the road and say the company is did go from two million dollars and even to the three million dollars and even in the first year and so we. [28:10] Again four numbers so we started lending them six million dollars, a year in there even to went from two million to 3 million and they were able to accelerate pay down on that debt so at the end of year 1 instead of 6 million dollars in outstanding debt they're sitting on four million dollars, so right now a new two to three times even three million dollar either to company is up to nine million dollars and we only have four outstanding so 12 to 18 months in, we might add another five million dollars that to get it back up to that that three million out level cool and then that sets the. The. [28:47] Sets it up so that a lot of clients are a lot of selling shareholders kind of have maybe a 10 to 15 year time Horizon for everything to get paid off, they have that seller jet that's outstanding that they think that they can't touch until the senior does paid off but if you can continue to kind of scoop over a little bit. [29:05] A little bit of the time as the company performs then you can you can really work that down a lot more quickly. Yeah and I kind of left out there 100% ESOP it's an S corp so you're going to get a complete tax exemption to so you know. But that's good I think that helps people to kind of see that you walk through now now you've done all your stuff we've got a term sheet or like yeah we like First American Bank to the best bank. We select you go to Commitment you get you go to the committee and get your commitment letter done. And so now we're ready to get this thing closed all the stuff that's happened with the trustees done they've negotiated the price. And all the attorneys on that side are all good everybody's good so the banks coming in to do the closing walk through the closing process like from a documentation standpoint because you're going to have a legal counsel that basically manages your closing in. They're particularly not just any attorney that does Bank closings there they ask they have to be a an attorney firm that understands Aesop's as well that's true right. [30:07] Yeah absolutely I would say that's key number one with a bullet is is make sure that you bring in somebody that does not need to be educated as part of the. As part of the transaction that's where things tend to get expensive somebody wants described it to me as the closing cost for transaction being like a balloon so you put together balloon animal or something like that so you got this long balloon if you squeeze one end. [30:31] The other side's get bigger so if you're using a like that big Council and you're paying a very small amount but. Who else is going to have to pay the other advisors in there quite a bit more because they're educating that guy so that cheap individual. Pushed up the the overall cause for the transaction because you needed to, to get them educated me to bring up speed so that's something we learned very early on is make sure that you're represented by Capital counsel. So that's been the big big piece on that the diligence process and the step towards closing really just all depends on the collateral so if it's a heavy asset-based maybe a field exam that might need to be performed. It's real estate involved obviously need to do some sort of appraisal environmental but in the scenario that you talked about where there's it's a. Environmental service firm perhaps or some sort of Professional Services firm where there's no collateral, that then it's ultimately just reviewing the ESOP documents that have been completed to this point by the trustee and Company Council and trustees Council and making sure that has the proper Provisions in that as well. And then just working towards closing. [31:51] You can definitely tell a difference with a transaction that has kind of a clear leader who's going through it somebody who's really driving the pace and setting the calls. Those deals tend to get done quicker and on time as opposed to sometimes it can be a little bit rudderless so on occasion our attorneys have had to step in the. [32:13] To direct the ship a little bit but if there is a transaction that does have a kind of a proper quarterback, and those things tend to go a little bit more smoothly because it's somebody that's kind of looking after the whole transaction to make sure that you have everybody still working towards a close. Yeah I think that's a good that's a good point you know what you know in what in your mind. Who should be you know in the closing step process who should be leading the charge in that because it does tend to gravitate towards to me like two different people sometimes. [32:48] Yeah so I mean if you have an investment banker obviously that's what they're getting paid for their getting paid to get this thing closed and that's usually the individual takes charge some firms. If you don't necessarily have somebody who's doing like a pulls like a cell site advisory where they're shopping this thing out a lot of people will just lean on somebody who's doing the administration or somebody who's doing something else like that, where were they kind of have more limited role and then in that case those people are. Less willing to step up into that role because they're perhaps it's not something they're comfortable with maybe it's not something that was factored into whatever their fee might be, But ultimately somebody needs to cut a take-charge along the way and I've seen it from the company side and seeing it on the bank side I've seen it from, the trustees side it's just whoever kind of feels more most comfortable perhaps who's been in it the longest and understands the whole process. I think that's important because I can the worst thing is a frustration create is created because you're not on track to close you know having a good building bait and then everybody working towards that closing date and then your. [34:02] You know I think one of the things I would describe it as a sword early chaos because you do have so many people. Involved and I was telling Jamie I've got two calls today for to closings before the end of the year and I want to say we probably have 15 people on these calls each one of them. [34:18] Because the attorney firms probably have five people you know several bankers. Several you know people on the ESOP attorneys on and then you have the trustees on and then you have the it's just and then we're going to put the TPA onto just goes just you know to make sure everybody's there but it's just a lot you know and so sir, expensive phone calls who's on what yeah what's on first it's like yeah so you do have to have a little bit I kind of tend to like to lean heavy on the ESOP attorney. To move things through because a lot of the documents are generated from their place in making sure they're there. Staying on top of it all but it's it is definitely different probably for each deal depending on the personalities and the people that you're dealing with so with a client I usually just say let's let's get a closing date. And make sure we've communicated that to everybody involved and every time we get something going on we need to make sure we coming back to the timing of the closing date, you know so that we can keep it keep it moving and I think partly we do want to do that because of the expenses the expense of a closing can like you said it can go crazy, depending on who's getting what done or what documents have to be read. You know re-reviewed or whatever if you know you have people that are putting together documents that that have not had a lot of experience in the Aesop's so. So those are so those are things that I think are points that we could hopefully glean to to avoid frustration in an ESOP deal. [35:45] And the longer those things tend to drag out the more expensive they tend to be so keeping everybody on track is very important. So we're almost ready to kind of close I guess the I guess the final question would just be kind of what would you say you know in your experience were issues that you were like. You know from Annie from going through the ESOP process with it with a new opportunity or a client. That you know could have been avoided or would have been just kind of pit avoiding pitfalls or things that you've seen just an experience that might be helpful for people to be thinking about you know early on in the process. [36:26] Yeah I think. Make sure that you give yourself time to understand that pull transition in the pictures really important try to Jam these things through at least people with kind of. Misunderstandings whatever that might be the case and being as transparent as possible throughout the entire process as well. Just so you don't get to closing and I mean it's an emotional time as it is selling company everything else going like that. [36:52] You get an unexpected bill or something else that might be coming along just to make sure that your, continue to communicate throughout the process as far as what's what's what's happening who's who's going on they always say Bankers hate surprises I think most people hate surprises, it's just a matter of making sure that you're working with the team that you're comfortable with that you're confident. Share good news bad news and different whatever it might be so you can kind of work through these things together, the last thing that you want some people do this just to kind of posture for their clients as they. Really upset about something or try to make a bigger deal out of something that it is as opposed to approaching it with kind of a level-headedness this kind of say okay, this is an issue we're having is there some middle ground that we can come to as opposed to. Throwing a tantrum in front of everybody just to try to make it seem like you're earning money for your client so yeah that can. Make it an emotional yeah appeal to just yeah I mean it is it's a deal making Itself by itself like it without an ESOP or whether it's still still getting a deal done you know so there's there's certain aspects of that. [38:01] That are just principles I think that should be followed and partly the the complex part about an ESOP is that there's so many people involved you know where. In some other deals it's just a simple you know more a lot more straightforward when you have less personalities involved. So and honestly I think partly the clients that are not educated really well in the front end they can come off they just don't know and then like you said they're surprised but they really shouldn't be surprised because we we all have the job of educating them and that's really what this podcast is about is to help you know explore some of these you know maybe difficult questions or thoughts that they might be thinking or they need to be thinking about or asking those questions early on so they don't get into that situation in and, who knows they might just enjoy the ESOP closing you know I might be there Christmas to be happy it should be a happy time because here's some money coming right and if it was all done correctly so. So anyway I like I just want to say thank you so much for your time today Jamie I was really helpful you know for people to understand a little bit more. About how your world works and so I appreciate you being on the podcast. [39:08] Thanks for having me I really appreciate it, so with that I just wanted to say thank you thanks everybody for listening today and joining us on this podcast and have a Merry Christmas have a happy New Year and we'll see you on our next step on this journey to an ESOP.

All content © 2022 The Journey to an ESOP.