Mission Driven Technology Company Retains Its Faithful Spirit and Supports Growth and Reward with ESOP



Founded in 2009 and based in Texas, Flocknote has become one of the dominant and leading software tools for churches in the United States. With its success combining modern communication channels into an easy-to-use interface designed specifically for church communities, Flocknote is poised to apply its unique “communications-first” approach and award-winning customer service to a new era of continued growth and value add-ons for its customers. The company has spent over 12 years working with over 175,000 church and ministry leaders to help them reach more of their flocks. Now serving over 9,000 churches, the company gives church leaders enterprise level service – resulting in higher attendance, increased stewardship and a more connected church. The founder of Flocknote believes in the dedicated team he has and is fulfilled by the synergistic work that they accomplish for their customers.


Flocknote was wholly owned by its original founder, Matt Warner. As part of his company’s sustainable planning, he was seeking a solution that would create a long-term incentive plan for his employees that would align interest as well as reward employees for their contributions. Flocknote is a mission driven organization, so it was important to have a long-term incentive plan that was united with the company’s mission. Flocknote sought the assistance of SES ESOP Strategies after hearing about employee stock ownership plans (ESOPs), but not knowing the details about how they work and the tax advantages that could be achieved. The founder knew he needed a solid plan to bring his goals to fruition. In short, the goals were to: 1) reward employees for their past and future contributions, 2) fairly compensate the owner for what he had built, 3) maintain capital in the company to support continued growth and 4) create a tax efficient structure to accomplish the goals.


Upon working with SES, the owner of Flocknote decided having an ESOP acquire a minority interest in the company was the best solution. It allowed the company to reward its employees, but still maintained significant benefits for the founder as the company continues its growth trajectory. The owner determined he was willing to do the transaction in a way in which he did not receive any cash consideration upfront, instead funding 100% of the transaction with a seller note. This allowed the company to continue its growth without the need for any new third party debt.

SES got to work structuring the transaction, including helping with projections and cash flow modeling. Our team also assisted with selecting the trustee for the transaction, plus negotiations with the trustee team. SES completed full financial due diligence. There was also employee level benefits analysis and legal documentation for the plan and the transaction. Consequently, a fair price was achieved for the founder, which still allowed significant upside going forward. At the time of the transaction, the company became a state law corporation and remained a Subchapter S Corporation for tax purposes.

“As a mission driven company, creating something sustainable that gives back in the form of an ESOP was the right step for Flocknote, and SES ESOP Strategies helped us successfully finalize the ESOP and make it a reality for our faithful team,” said Founder Matt Warner.

For more information about this ESOP transaction, please contact Mark Russell at 817.566.1013.