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Becoming an Employee-Owned Design-Build Company

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Becoming an Employee-Owned Design-Build Company

One remodeler’s cancer diagnosis changed the way he approached succession planning


By Peter Feinmann May 30, 2024
esop remodeling
Photo: stock.adobe.com
This article first appeared in the May/June 2024 issue of Pro Remodeler.

I founded my design-build company in 1987, and today we have about 30 employees with close to $12 million in revenue for 2023. 

A few years ago, when I was in my mid-60s (I’m 69 now), I started seriously pondering a succession plan. I didn’t have a team member who I saw as a future leader, so I began working with a business broker to sell the company.

After some time spent interviewing people, I realized that option wasn’t right. My team was getting stronger and stronger, and I thought it would be undercutting them to sell to a private buyer.

Around that same time, I was also exploring an Employee Stock Ownership Plan (ESOP). I went to conferences, talked to several experts, and in late 2021, committed to the plan and hired a consultant. I selected the Beyster Institute, which specializes in ESOPs and is part of the University of California, San Diego. 

 

A Curve Ball

In April 2022, I was diagnosed with thyroid cancer on my laryngeal nerve. I went through surgery, radiation, and chemo, and permanently lost use of one of my vocal cords. At a certain point, I could no longer swallow and ended up with a feeding tube for a good part of the past year.

I was already committed to the ESOP, but now my hand was forced, and I needed to move quickly. We closed on December 30, but as a result of my illness, I did not announce the ESOP to the whole team until February 2023. Only the senior managers were aware of the change. 

I was already committed to the ESOP, but now my hand was forced, and I needed to move quickly.

Sharing the News

I enlisted the help of a consultant to announce that we were an ESOP. 

The purpose of the announcement was solely to share the news with the team, as we had the consultant return to explain the details a few weeks later.

We separated employees into three groups and she gave the same presentation to each of them. The groups had team members from management, the field, and the office because I wanted a diversity of talent in the room. 

 

Company Structure 

I will continue to collect a salary through the end of 2025 and am also being paid back for financing the loan for the company. The company will be 100% debt-free by 2031, and we’re working on a plan to get there sooner in order to save them money on the interest. 

We still have the same four-person leadership team, and we are looking for a president to replace me. We also have a separate ESOP board composed of our business manager, my wife, a retired remodeler who was the CEO of an ESOP, and myself. 

 

20/20-Hindsight

In retrospect, I wish I had done this sooner. I made important decisions while on chemo and radiation, and didn’t have the clearest mind. 

In addition, if I started the process at 55, we could have developed the leadership team over time instead of during a health crisis. 

I still have cancer today and am living with the help of new targeted drugs.  

But here’s the thing: Life throws a lot of scary and challenging stuff at you, and because its impact is unpredictable, it’s important to be prepared. 


written by

Peter Feinmann

Peter Feinmann is president of Feinmann, an award-winning design/build firm in eastern Mass. In 2021, he founded Mindful Directions to share his passsion for teaching meditation within the remodeling industry. 


Comments (1)

  • Submitted by Denise Phillips (not verified) on Fri, 05/31/2024 - 15:04

    Permalink

    How do I find out more information on this? I would be interested in educating myself on this for the near future.

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