Overview
Next Evolution Group (Next Evolution) and its operating entities, Comprehensive Fire Technologies, Inc. (ComTec) and Wesco HMB, Inc. (Wesco), are a specialty fire suppression system integrator and Halon recycler. ComTec was founded in 2003 as a full-service, highly specialized fire protection company based in Southeastern Pennsylvania. With a team of service and installation experts, ComTec offers a holistic suite of non-water-based fire suppression system design, installation, maintenance and repair to meet every client’s unique fire protection needs. Wesco is one of the country’s premier recyclers and suppliers of specialty hazard fire-suppression chemicals. Wesco, headquartered in the Central New Jersey market, recycles Halon and Halon alternatives to the highest standard of quality and supplies fire suppression gases around the world.
Situation
Next Evolution’s owners sought an exit plan that would give back to the employees who helped build the Company’s success, attract and retain employees in a competitive labor market and maintain the Company’s core values. After seeing several of their competitors selling out to private equity-led industry consolidators and the impact the sale of the business had on the company and employees, the owners sought another alternative for exiting their ownership of the Company. A holistic evaluation of different business transition strategies led the owners to determine that a 100% employee stock ownership plan (ESOP) would achieve their goals and objectives.
Solution
ComTec and Wesco engaged SES ESOP Strategies (SES) and its affiliated law firm, Stevens & Lee, to perform a transaction analysis to help the shareholders in deciding the best path forward to achieve their ESOP goals. During the transaction analysis, SES devised a corporate restructuring plan to tax efficiently combine the entities, determined a range of values for the transaction and suggested various financing scenarios and ESOP structures.
SES led a transaction process with the ESOP trustee during which SES conducted financial due diligence, modeled the proposed ESOP plan and executed a capital raise process to assist with financing. Attorneys from Stevens & Lee helped implement the restructuring, prepare the ESOP and the related transaction documents and design and implement a management incentive plan to attract, motivate and retain key employees. Next Evolution Group became a 100% ESOP-owned S Corporation, effectively exempt from corporate federal and state income taxes.
“Our employees are the driving force of our success and future growth. The ESOP allows us to reward the team for their critical contributions to our success by providing company ownership to retain and attract the best industry talent,” said Steve Foulk, President of ComTec. “The SES and Stevens & Lee team helped us navigate through this journey with best-in class service and expertise to help us achieve our goals and objectives.”
For more information on this transaction, please contact Steve Greenapple at 215.508.5634, Mark Russell, Head of Finance, at 817.566.1013, or Vince Capone, Vice President, at 215.508.7716.