SES ESOP Strategies and Apis & Heritage Capital Partners Tackle Wealth Inequity Through ESOP Transformations

BALA CYNWYD, PA, April 29, 2024 – SES ESOP Strategies is proud to announce its third and fourth “employee-led buy out” (ELBO©) transactions with Apis & Heritage Capital Partners (A&H), a Black-led investment fund dedicated to closing racial and blue-collar wealth gaps by financing and facilitating employee ownership of businesses.

A&H utilizes its novel ELBO structure to underwrite and simplify the transition into 100% employee-ownership for owners seeking to sell their businesses. A&H provides financing so that the seller generally receives 90% of the enterprise value on day one, rather than carrying up to 60% seller’s notes as in a traditional Employee Stock Ownership Plan (ESOP) conversion. With SES’s expertise and assistance, A&H also provides support to the seller to navigate the ESOP conversion with the ESOP trustee, the valuation process, ESOP plan creation and administration, and then A&H stays on to coach the company in ownership culture, governance and growth.

“We seek to diversify the wealth-building power of business ownership to the folks who show up every day, whether they are in the C-suite or the front line,” said Todd Leverette, Founding Managing Partner of A&H. “Giving workers a stake in the business is not just a path to financial security for workers, but it makes for better and more resilient businesses.”

In their most recent tandem efforts, SES and A&H have guided Blooming Nursery, an Oregon-based wholesale nursery known for its quality perennials and shrubs, in its conversion to a 100% ESOP conversion. The December 2023 transaction provides more than 100 minority and blue-collar workers with a direct investment in and benefits from the long-term growth of the company, while the company owner benefited from a key liquidity event while maintaining her company’s culture and values.

In another ESOP transaction closed in mid-March, SES advised A&H on the conversion of Denver-based construction firm Sky Blue Builders into a 100% employee-owned business for more than 40 employees that included a highly diverse senior management team and a significant number of low-income workers of color.

Through its position and expertise as a national ESOP consulting firm, SES ESOP Strategies provided financial, investment banking and legal guidance that complemented the financing and governance provided by A&H. The SES team, along with legal services provided by affiliated law firm Stevens & Lee, delivered key financial due diligence and assisted with the legal frameworks of preparing the ESOP plan, all transaction documents and reorganizing the companies into S-Corporations that benefit from key federal and state income tax exemptions.

“SES and A&H have teamed up to make it easier for owners to achieve their business succession goals, which is to hand off their company to the people who made it valuable,” said Sean-Tamba Mathew of SES ESOP Strategies. “And with A&H’s focus on companies that have significant numbers of low-income workers and workers of color, we will help drive more resources and wealth over time into communities that have for so long been left behind.”

According to 2022 data from the Federal Reserve’s Survey of Consumer Finances, racial and working class wealth gaps have widened since the COVID-19 pandemic despite overall wealth gains. Additionally, economic mobility into higher wealth ranks has stagnated as wage disparities affecting the working class, and the millennial workforce in particular, have increased notably across the past three decades. An ESOP creates a win-win business transition between owners committed to employee wellbeing and the workers who drive company success. By allowing workers to earn (rather than pay for) company equity, an ESOP has proven to be a transformative tool for equitable wealth building, enhancing productivity through employee investment and bolstering workforce-minded company cultures and legacies.

About Apis & Heritage

Apis & Heritage Capital uses a novel “employee-led buyout” (ELBO©) structure to provide workers in essential industries with the most powerful wealth building tool in the nation: equity in a thriving business. A&H finances the acquisition of great companies from retiring owners/founders and converts them into 100% employee-owned enterprises. Because A&H is dedicated to closing the racial wealth gap, it searches for companies that have large workforces of color, and low and moderate income workers generally, so that the benefits of ownership will be broadly realized. A&H’s ELBO© structure utilizes an employee stock ownership plan (ESOP) model for employee ownership, which has over 50 years of bipartisan political and regulatory support.

About SES ESOP Strategies

SES ESOP Strategies is a national ESOP firm that combines the expertise of ESOP consulting, financial, investment banking and legal professionals to assist companies in creating and maintaining successful, sustainable employee ownership results throughout the entire ESOP lifecycle. We balance the needs of owners, managers, the company and its employees to ensure long-term corporate sustainability with substantial employee ownership. Our cross-disciplinary approach integrates legal, finance, banking, tax and ERISA expertise, allowing SES ESOP Strategies to deliver a full range of ESOP consulting, design, legal and financial services.