Overview
Based in Horsham, PA, LabRepCo provides consultative laboratory equipment to customers in the scientific marketplace. The company was founded in 1978. With teams of sales professionals and operations and support personnel, LabRepCo has 51 employees.
Situation
The multiple owners of LabRepCo sought to sell their shares, but also planned to continue on with the business and believed strongly that the Company should remain independent. The Company also wanted to begin planning management succession for the majority shareholder. The shareholders also felt strongly that employee ownership would be an important incentive and reward and would make the Company an even better and more successful enterprise.
Solution
Professionals from SES ESOP Strategies performed a transaction analysis to ensure that the stakeholders understood the actual value of the company and could make informed decisions about the optimal ESOP structure. With the benefit of this analysis, LabRepCo and the owners decided to pursue a 100-percent ESOP transaction. Professionals from SES ESOP Strategies, acting through SES’ affiliated law firm, provided legal counsel to assist in restructuring the company from an LLC to an S Corporation, negotiating the transaction with the independent ESOP trustee and its advisors, and successfully closing the transaction.
LabRepCo is now a 100-percent ESOP-owned company and the shareholders are continuing in their management roles with the help of several new independent directors. As an S corporation and now a 100-percent ESOP-owned company, LabRepCo and its shareholders pay no current federal or state income taxes and Company can use these tax savings to fund the ESOP buyout and grow the Company. The transaction closed December 28, 2018.
“With the assistance of SES ESOP Strategies professionals, our company can now ensure that all of our team members benefit from the success of LabRepCo. Employee stock ownership is a great way to reward all of those who have helped us prosper and I know our employee owners will continue to help us grow and succeed,” said Richard Dougherty, LabRepCo CEO.
For more information on this transaction, please contact Jim Steiker, president and CEO, at 215.508.5643.