In 1997, Michael Carty founded the full-service staffing agency, JobConnection Services, Inc., which began in Palmerton, PA with the goal of providing a job for every person who wants one. This goal was driven by his core belief that there is a viable job for every person but not every person is qualified for every job. In 2009, JCS Global Distribution, Inc., a third-party logistics service was established, followed in 2012 by JCS Health Care Services, focusing on non-medical home care. Two years later, JCS Professional Staffing, Inc. was formed under the JobConnection Services, Inc. umbrella, helping businesses find the best executive and management employees. The family of companies now has 56 office employees and approximately 7,500 total employees throughout 12 offices in northeastern Pennsylvania and New Jersey. The employees are credited with building a reliable company that its customers trust.
Carty sought an ownership transition strategy, and was looking for a solution that could pay him fair value, but he also sought a solution that could give back to the employees who have helped build the business and ensure that the JCS Family of Companies would remain in the local communities it serves.
The JCS Family of Companies engaged SES ESOP Strategies to help analyze its current situation, structure an ESOP transaction that would accomplish stakeholder objectives, raise senior debt to provide liquidity to shareholders and working capital for the Company, and negotiate with the ESOP Trustee and work with all of the other transaction professionals to ensure that the transaction stayed on course and closed on time. Prior to the ESOP transaction, JCS merged its operations under one newly formed holding company, JCS Family, Inc., structured as an S Corporation. The JCS Family of Companies also engaged SES’ affiliated law firm, Stevens & Lee, to manage the legal process in selling to an ESOP and the pre-transaction reorganization necessary to facilitate the ESOP transaction.
The holding company purchased all of the shares, which were then sold to the ESOP trust in return for a note. Following the ESOP transaction, which closed Jan. 7, 2020, the company became a 100 percent ESOP-owned S Corporation, enjoying the benefits of operating as a tax-exempt business enterprise due to the tax-exempt status of the ESOP as the company’s sole shareholder.
“Our employees are dedicated to helping our customers meet and exceed their goals, and their dedication and work ethic have led to our success,” said Michael Carty, Founder of JCS Family, Inc. “As part of a 100 percent ESOP-owned company, each employee who has a role in our success now has a piece of the company. The professionals at SES ESOP Strategies were instrumental in structuring a successful ESOP transaction to provide this very valuable benefit for our employees. I thoroughly enjoyed working with this team of dedicated professionals.”
For more information on this transaction, please contact Edward C. Renenger, President and CEO of SES ESOP Strategies, at 610.478.2238 or Mark B. Russell, Senior Managing Director of Griffin Financial Group, at 610.478.2166.