ESOP Radio

ESOP Radio is the official ESOP podcast—where 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. Episodes explore why companies choose ESOPs, how those decisions shape culture and continuity, and what it takes to build durable, long-term ownership structures. Alongside real-world stories, ESOP Radio examines the practical realities behind successful ESOPs, including fiduciary responsibilities, valuation, transaction structure, and regulatory considerations. ESOP Radio is educational in nature and designed for listeners seeking a clear, grounded understanding of employee ownership and long-term succession planning.

ESOP Radio is a arts podcast hosted by Menke, with 30 episodes on record and a Required Pod Score of 80.

Menke hosts ESOP Radio, a arts show with 30 episodes published.

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  Episode #31

  Second Stage ESOP Transactions: Taking a Partial ESOP to 100% Ownership

  Sep 27, 202657 minS1

  Many business owners start with an ESOP that owns a minority stake in the company, then later consider selling the rest. This episode covers second stage ESOP transactions: what they are, how they differ from the initial sale, and what owners, management teams, and CFOs should plan for before taking a partial ESOP to 100%. The discussion follows a Northern California specialty grocery company. It sold 40% to its ESOP in 2016, paid off the related debt over five years, and later moved to 100% ESOP ownership in a process that took about a year. The example is used to explain the shift from minority to control valuation, bank and seller financing, Section 1042 eligibility, S corporation considerations, and how to communicate the change to employees. The episode also covers the board governance changes a trustee typically expects at control. It includes audience questions about the 30% threshold for Section 1042 and whether participants own shares directly. It closes with what comes after 100%: the S corporation tax shield, repurchase obligations, re-leverage, and management incentive plans. Hosted by Ben Spadt and Trevor Gilmore of Menke & Associates. Listeners will come away with a clearer picture of the decisions involved in a second stage transaction and why planning early makes a difference. Key Takeaways A second stage transaction is a sale of additional shares to an existing ESOP, and it most often takes the ESOP from a minority stake to 100% ownership. Because the trust, trustee, and plan are already in place, much of the legal groundwork is done, but most second stage deals still take six months to a year. Valuation shifts from a minority basis, which typically includes a discount for lack of control, to a control basis updated for current results and market data. Financing is often a combination of bank debt, seller notes, and company cash, shaped by the seller's cash flow needs and what the company can support. For C corporation sellers, Section 1042 can remain available on later sales once the ESOP owns at least 30% of the company in aggregate. At control, trustees typically expect a more formal board with one or two independent directors, often phased in over about 12 months. New acquisition debt usually lowers share value for a period after closing, and this should be explained clearly to employees. In a 100% ESOP-owned S corporation, no tax distributions are required, which frees cash for debt repayment, reinvestment, and repurchase obligations. Send us Fan Mail Learn more: ESOP Radio: https://www.menke.com/esop-radio/ ESOP Boot Camp: https://www.menke.com/esop-boot-camp/ Confidential feasibility review: https://www.menke.com

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  Episode #30

  Scaling Past Relationships: Fractional CMO Leadership for AEC Firms with Perryn Olson

  Sep 13, 202644 minS1

  Many architecture, engineering, and construction firms grow on referrals and the personal relationships of their founders and senior leaders. That approach works until a company sets aggressive growth targets, enters a new market, completes an acquisition, or watches its most connected people move toward retirement. This episode of ESOP Radio looks at what it takes to build a marketing function that can support growth beyond relationships alone. Perryn Olson, who provides outsourced chief marketing officer leadership to AEC firms, explains what a fractional CMO does and why marketing in construction is often mistaken for proposals and social media. He walks through his phased approach, why an ideal client profile and scoring system come first, how to align sales and marketing around shared revenue goals, and how CRM lead scoring helps salespeople focus their time. Host Trevor Gilmore, CEO of Menke & Associates, adds perspective from employee-owned companies and from a CPA firm that reviewed its client list each year to identify poor-fit relationships. Examples discussed include a firm that sharpened its sales focus by narrowing broad "healthcare" and "government" categories into specific targets, a roofing contractor whose redesigned website now draws a large share of its traffic from past clients, a trade contractor that improved margins by focusing on the right clients instead of competing on price, and a heavy civil subcontractor that received a large project inquiry through its website. Listeners will come away with a practical framework for deciding which clients to pursue and how to present their firm to those clients. Key Takeaways Proposals are largely a sales function; marketing's strategic job is positioning the firm, attracting the right clients, and earning the opportunity to bid. In many AEC firms, no one clearly owns marketing; it may fall to a CEO with other priorities, a finance leader who sees it only as an expense, a sales leader without marketing experience, or a junior employee. Foundational work on messaging, voice, and the website should come before paid advertising, or ad spend may bring in traffic that does not convert. An ideal client profile, paired with a scoring system similar to a go/no-go bid sheet, gives a firm a consistent way to decide which clients to pursue. Operations teams are a useful source for defining the ideal client, because clients who are a good operational fit tend to close faster, stay longer, and keep employees engaged. When construction sales cycles cannot be shortened, better positioning can reduce the number of competitors a firm faces on each pursuit. CRM lead scoring that combines firm characteristics with activity data helps salespeople focus on the contacts most worth calling this week. As long-time relationship holders retire, firms need clear messaging, a current website, and stories from the field to reach clients who do not already know them. Send us Fan Mail Learn more: ESOP Radio: https://www.menke.com/esop-radio/ ESOP Boot Camp: https://www.menke.com/esop-boot-camp/ Confidential feasibility review: https://www.menke.com

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  Episode #29

  Section 1042: How ESOP Sellers Defer Capital Gains Tax — and Where the Risk Hides

  Aug 30, 202635 minS1

  An owner who sells a C corporation to an ESOP can elect Section 1042 and defer the capital gains tax on the sale, potentially for life. On a $100 million sale with $10 million of basis, a California seller is looking at roughly 37 percent on $90 million of gain — about $33 million — between the 20 percent federal long-term capital gains rate, the 3.8 percent net investment income tax, and California's 13.3 percent state rate. Deferring a number that size is worth understanding in detail before anyone signs. This episode walks through the mechanics: the requirement to be a C corporation at the time of sale, the three-year holding period (time held as an S corporation counts), the 30 percent threshold that can be met by one seller or several, and the 15-month window to purchase qualified replacement property — three months before closing and twelve months after. It also covers what actually qualifies as QRP, why passive assets such as real estate and REITs generally do not, and why most portfolios end up as a mix of long-dated floating rate notes and publicly traded equities. The harder conversation is about leverage. In the working example, a seller who takes $25 million in cash at closing and carries $75 million in seller notes still needs $100 million of QRP. Floating rate notes can be borrowed against heavily, which closes that gap — and creates a margin obligation that can outlive the seller. The discussion covers negative carry, stress testing the margin cost against different rate environments, what a leveraged portfolio means for an estate, and what happens when a seller in their late 40s or 50s outlives a 30-year note. Listeners will come away knowing which questions to put to their wealth advisor, trust attorney, and CPA before electing 1042 — including the one Trevor asks about every strategy: how can this blow up? Key Takeaways Section 1042 defers capital gains tax on a sale to an ESOP; it works in spirit like a 1031 exchange, with the seller swapping private company stock for qualified replacement property rather than paying tax at closing. To qualify, the company must be a C corporation at the time of sale, the seller must have held the stock for at least three years, and at least 30 percent of the company must be sold to the ESOP — collectively, so several shareholders can combine to reach the threshold. Time spent holding the stock while the company was an S corporation counts toward the three-year holding period, which matters for the many companies that convert to C corporation status ahead of a transaction. Qualified replacement property generally means securities of an operating U.S. corporation, and there is a passive income test that typically excludes real estate and REITs. Sellers have 15 months to buy QRP — three months before the closing date and twelve months after — but in practice nearly everyone buys after closing, because that is when the liquidity exists. Most sellers do not receive full cash at closing, so leverage is often used to build the full QRP portfolio; floating rate notes can be leveraged up to roughly 85 to 90 percent. Leverage introduces negative carry: if the margin cost exceeds the interest the bonds pay, the seller covers the difference every year, potentially in perpetuity, which is why the portfolio should be stress tested across different rate environments before closing. Selling QRP ends the deferral and triggers the gain, so the portfolio needs to be designed alongside the seller's estate plan, trust structure, and long-term liquidity needs rather than in isolation. Send us Fan Mail Learn more: ESOP Radio: https://www.menke.com/esop-radio/ ESOP Boot Camp: https://www.menke.com/esop-boot-camp/ Confidential feasibility review: https://www.menke.com

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  Episode #28

  What Actually Makes an ESOP Work: Certified EO's Joe Belsterling on Building an Ownership Culture

  Aug 16, 202642 minS1

  Owning shares in a company and acting like an owner are two different things, and the gap between them is what separates ESOP companies that outperform from ones that quietly underperform. In this episode, Trevor Gilmore talks with Joe Belsterling, CEO of Certified EO, about what actually distinguishes a strong employee ownership culture from a company that simply has the legal paperwork in place. Belsterling explains what the Certified EO designation verifies, why not all forms of employee ownership carry the same value for employees, and why liquidity and percentage of ownership matter as much as the fact of ownership itself. He also walks through the three things he sees consistently in companies that get real performance benefits from employee ownership: whether employees understand how they affect the share price and how it affects them, whether leadership is transparent about company financials, and whether the organization is willing to work through the rough patches that come with building any culture. The conversation includes a real example from Legacy Utility Group, a California-based pipeline construction company that became employee owned for a minority stake in early 2025, where a simple change in driver behavior around idling equipment produced a measurable financial impact. Belsterling also discusses data on productivity and stock price performance in employee-owned companies, and describes the tools Certified EO has built — including an interactive wealth calculator and a job board dedicated to employee-owned employers — to help companies close the gap between having an ESOP and running one well. Listeners will come away with a practical framework for evaluating whether their own company's ownership culture is doing the work it's capable of, or just sitting on the books. Key Takeaways Certified EO's designation verifies that a company meets specific thresholds around the percentage of employee ownership, vesting, and repurchase rights, rather than simply allowing a company to claim it is employee owned. Not all forms of employee ownership carry equal value for employees; share liquidity and the percentage of the company actually owned by employees are major factors in how meaningful that ownership is. ESOP structures differ fundamentally from venture-backed startup equity because ESOPs are built around long-term, compounding wealth building rather than a high-risk, high-reward bet on a single exit. The most consistent driver of outperformance in employee-owned companies is participative management — employees who understand what it means to act and think like an owner, not just the existence of a stock account. A strong ownership culture depends on employees understanding how their actions affect the company's share price and how that share price affects them personally. Financial transparency, even at a simplified level, is necessary for employees to feel and act like real owners; withholding basic information about company performance undermines the culture an ESOP is meant to build. Building an ownership culture is not a one-time event tied to the ESOP transaction; it involves periods of adjustment, and companies should expect and work through those bumps rather than treating early friction as failure. Certified EO has expanded from certification into education and tools — including customized content, an interactive wealth calculator, an engagement measurement toolkit, and a job board for employee-owned companies — to help member companies build and sustain that culture over time. Send us Fan Mail Learn more: ESOP Radio: https://www.menke.com/esop-radio/ ESOP Boot Camp: https://www.menke.com/esop-boot-camp/ Confidential feasibility review: https://www.menke.com

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  Episode #27

  Grading Our 2026 ESOP Predictions: Bank Lending, Private Equity Exits, and What Comes Next

  Aug 2, 202621 minS1

  Six months into 2026, Trevor Gilmore and Ben Spadt sit down together in person to revisit the ten ESOP market predictions they made back in January and check them against what's actually happened in the field. The result is a candid, prediction-by-prediction accounting of where the ESOP market stands at midyear — including which forecasts held up, which are still developing, and what the hosts are watching for the rest of 2026. The conversation covers a competitive bank lending environment for ESOP formations, growing interest from private-equity-owned companies (particularly software firms) looking at ESOPs as an offload strategy, and a specific example of a Washington, D.C.-area boat manufacturer with the Navy as a major client that was sold by its private equity owner to an ESOP as an alternative to a continuation fund. The hosts also discuss the first cannabis company ESOP transaction of 2026 (completed by another advisory firm, in Pennsylvania), a Central Valley Business Times study on job seekers — particularly in construction — actively seeking out employee-owned employers, and how AI is being used by prospects and advisors as a fact-checking and research tool rather than a replacement for relationship-driven deal work. The episode closes with Ben's five predictions for the remainder of 2026, including possible legislative movement on ESOP contribution limits and lending restrictions, continued growth of the 100% S-corp ESOP holding company model, and the potential for longer-term, higher-leverage ESOP financing structures. Listeners will come away with a grounded, midyear read on where ESOP lending, legislation, private equity dynamics, and workforce demand are actually headed — not where they were predicted to go in theory. Key Takeaways Bank lending for ESOP formations has become more competitive in 2026, with top-five and top-six national banks as well as numerous regional banks actively pursuing ESOP-related deals. Private-equity-owned companies, especially in software, are increasingly exploring ESOP sales as an alternative to a traditional exit or a continuation fund, partly driven by aging "zombie fund" portfolios that need liquidity. A Washington, D.C.-area boat manufacturer with the U.S. Navy as a major client was sold by its private equity owner to an ESOP and has performed well since the transition. Gen X business owners are increasingly using partial ESOP transactions to gain liquidity while keeping their companies independent, a trend the hosts expect to accelerate through 2027. The first cannabis company ESOP of 2026 has closed, in Pennsylvania, though valuation remains a complicating factor for cannabis deals generally. A Central Valley Business Times study found that job seekers, particularly in construction, are actively seeking out ESOP-owned employers, and platforms like Certified EO now list ESOP job openings. AI is increasingly used by prospects and their advisors to validate information during ESOP conversations in real time, but the hosts do not see it replacing the relationship-driven, judgment-heavy work of structuring and closing ESOP transactions. Architecture, construction, and engineering companies continue to lead ESOP adoption by industry, though the hosts note deals are increasingly coming from less traditional sectors as well. Building an ownership-oriented culture before implementing an ESOP is becoming more common, with frameworks like EOS (the Entrepreneurial Operating System) cited as one way companies prepare. Ben's outlook for the rest of 2026 includes possible legislative changes to ESOP contribution limits and lending rules, continued growth of the tax-advantaged S-corp ESOP holding company model, and potential innovation in longer-term ESOP financing structures. Send us Fan Mail Learn more: ESOP Radio: https://www.menke.com/esop-radio/ ESOP Boot Camp: https://www.menke.com/esop-boot-camp/ Confidential feasibility review: https://www.menke.com

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