Mitchell/Martin is one of the nation’s largest private staffing companies with offices throughout the U.S., India and the Philippines. They drive success for both people and companies by building strong relationships and developing a deep understanding of the people they work with in order to facilitate the best matches for both sides of the employment equation.
Mitchell/Martin was forged from socially-minded roots and the company’s passion for helping people hasn’t wavered. Founder Eugene Holtzman was a social worker prior to starting the company in 1984. He then decided to combine his desire to help people with his belief that technology was the future of business. Both of these tenets continue to drive Mitchell/Martin and have propelled the organization to being among the leading IT and healthcare staffing firms in the US.
Mr. Holtzman and the Mitchell/Martin team understood the importance of accelerating the company’s expansion as part of his ownership transition strategy. Additionally, Mr. Holtzman desired to remain involved in company operations and lead the company’s acquisition strategy. Mitchell/Martin engaged SES ESOP Strategies to perform a transaction analysis that evaluated multiple ESOP transaction structures to create a long-term benefit for its employees, create liquidity for shareholders, and help grow the company in line with the company’s leadership succession goals.
Based on the company’s business plan and long-term strategy, it was determined that the best solution for Mitchell/Martin was a minority ESOP transaction. SES led the entire life cycle of the transaction, which included modelling various structures, engaging and negotiating the transaction with the ESOP trustee and its financial advisor, raising the necessary third-party bank financing and managing the trustee and bank financial due diligence. SES ran a highly competitive capital raise process, receiving multiple attractive term sheets from potential lenders, despite a difficult banking environment. SES secured an Asset-Based Revolving Credit from a third-party banking institution that produced a favorable outcome for the selling shareholders and company. The legal process was managed by SES’s partners at Stevens & Lee.
Notably, Mitchell/Martin was already a Subchapter S Corporation, and the company remained a Subchapter S Corporation after the completion of the transaction. Since the company is now an S Corporation partially owned by an ESOP, the company will effectively be exempt from corporate income taxes to the extent of the ESOP ownership, and the ESOP’s share of tax distributions previously used to pay federal and state income taxes can now be utilized to pursue business growth strategies.
For more information about this ESOP transaction, please contact SES President and CEO Ed Renenger at 610.478.2238, Managing Director Ken Wanko at 215.285.7190 or Vice President Vince Capone at 215.508.7716.