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strategy while maintaining operational efficiency and regulatory compliance.


Diverse Applications Across Firm Sizes ESOPs are not exclusive to large construc- tion enterprises. Small and medium-sized firms are also leveraging ESOPs to foster employee loyalty, manage succession planning, and differentiate themselves in a competitive market. Tis democratization of ownership underscores the versatility and scalability of ESOPs as a strategic instrument for enhancing organizational resilience, employee engagement, and sustainable growth across the construction industry.


Is an ESOP Worth It? Not every construction company will be an ideal candidate for an ESOP. Here are a few considerations to evaluate when exploring this option: • Te company’s desire for ownership transition


• Existing succession planning efforts • A history of stable earnings • A strong pipeline of future growth prospects


• Low levels of debt • At least 25 non-union employees • A willingness to embrace broad-based equity ownership


Educational Initiatives and Adoption Recognizing the transformative potential of ESOPs, industry associations and ESOP advisors are increasingly focusing on educational efforts tailored to construc- tion companies. Tese initiatives aim to raise awareness about the benefits and mechanics of ESOPs, encouraging more firms — regardless of size — to explore ESOPs as a strategic tool for ownership succession, employee retention and long-term financial stability. By disseminating knowledge and best


practices, these educational endeavors empower construction firms to make


FMI Partner To Speak at Construct 2024


Mike Clancy, a partner at FMI who leads the company’s strategy practice, is slated to speak at AGC of California’s Construct 2024 this October. Clancy will present FMI’s forecast of engineering and


construction spending, which includes market trends across the built environment in the United States, and specifically what these insights mean for California contractors. At- tendees will learn how to navigate the current business and


economic environment. With a strong background in construction operations and strategy consulting


experience, Clancy brings a unique viewpoint to his client work that focuses on how to convert strategies developed in the boardroom into operational plans to be executed in the field. To sign up for Construct 2024, visit www.agc-ca.org/sites/construct2024/.


informed decisions that align with their specific business objectives and growth aspirations.


Getting Started Initiating an ESOP sale involves several key steps. Here is a general outline to guide you through the process: • Understand ESOP Basics: Familiarize yourself with what an ESOP is and how it works. Setting up an ESOP can be a major undertaking, so it is important to educate yourself on the essential factors in establishing one successfully.


• Consult with Professionals: Engage with ESOP advisors, such as lawyers, accountants and financial advisors who specialize in ESOPs. They can provide detailed guidance and help navigate the legal and financial complexities.


• Conduct a Feasibility Study: Determine if an ESOP is a viable option for your company by conducting a feasibility study. Tis involves financial analysis, assessing the company’s value, and understanding the implications for both the company and its employees.


Conclusion ESOPs represent more than just a fi- nancial transaction; they embody a strategic approach to securing the future of construction firms while empowering their workforce. By addressing critical challenges such as succession planning, skilled labor retention, financial stabil- ity, and cultural reinforcement, ESOPs enable construction companies to nav- igate uncertainties with confidence and capitalize on opportunities for sustained growth and innovation. As the construction industry contin- ues to evolve, ESOPs remain a relevant and powerful tactic for fostering stability, engagement, and prosperity within the workforce and beyond.


Nathan Perkins is a managing director with FMI Capital Advisors who is an expert in employee stock ownership plans (ESOPs). He regularly speaks to industry groups about the value of these transactions for employees and as a liquidity strategy for business owners. He has advised on more than 300 ESOP M&A deals representing billions in value during his more than 20-year career.


CALIFORNIA CONSTRUCTOR SEPTEMBER/OCTOBER 2024


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