#326: How ESOPs Work: The Life Cycle, ESOP Acquisitions, and Owner Success Stories with Jim Steiker and Ken Baker

November 10, 2022 01:34:54
#326: How ESOPs Work: The Life Cycle, ESOP Acquisitions, and Owner Success Stories with Jim Steiker and Ken Baker
Intentional Growth
#326: How ESOPs Work: The Life Cycle, ESOP Acquisitions, and Owner Success Stories with Jim Steiker and Ken Baker

Nov 10 2022 | 01:34:54


Hosted By

Ryan Tansom

Show Notes



As we wrap up our four-part mini-series on ESOPs, we’re getting out of the weeds and coming back up for air. 


Today we’re going to be talking about ESOPs acquiring other companies and ESOPs selling to a third party (yes, both are possible!). In the second part of this episode, we finish with an owner's success story about why he turned his company into an ESOP and the amazing things that have happened since.


In part one of this interview, Jim Steiker from SES ESOP shares his story about how hitchhiking led to a multi-decade career promoting ESOPs. He then dives into the full life cycle of an ESOP. He starts the segment with an awesome twist (a strategy that a seller can follow who DOESN’T want to take the time to convert to an ESOP but would like most of the legacy benefits): how a company can sell TO an already-formed ESOP. Jim explains the three reasons why most business owners don’t want to convert to an ESOP and how these reasons can be overcome by selling to one that is already formed. Jim then goes into detail on a few different strategies about how ESOPs can acquire companies and why. Jim finishes the segment by explaining how ESOPs can be sold to third-party buyers, how it works, and what it means to the employees. 


In part two of this interview, Ken Baker, CEO of New Age Industries, shares his owner's success story on how and why he turned his company into an ESOP. He explains–via his own experiences–how to maximize the benefits of the ESOP by ingraining it into your culture through education, strategy, and execution. To date, New Age Industries has created 54 millionaire employees. Ken explains why he believes an ESOP is one of the purest forms of capitalism and business models he has come across. 


Thank you for coming on this ESOP journey with us. We hope this series demystified ESOPs for you and got you up to speed on what they are, how they work, and why an ESOP might be the best fit for your company.


// WATCH THE INTERVIEW ON YOUTUBE: Intentional Growth™ Podcast


What You Will Learn


Part 1:

Part 2:





Jim Steiker

Jim is Chairman of SES ESOP Strategies, an affiliate of the Stevens & Lee Companies. He is a corporate, pension, and tax attorney and financial advisor with more than 35 years of experience in ESOPs and other employee ownership matters. He focuses his practice primarily on ESOP design, transactions, and compliance in entrepreneurial companies.

Jim has served on the ESOP Association Board of Governors and is a past chair of the ESOP Association’s Advisory Committee on Finance. He is also a trustee of the Employee Ownership Foundation and a former member of the Board of Directors of the National Center for Employee Ownership. He is a director of the Employee Ownership Expansion Network and also serves as a director of seven ESOP companies.

A frequent author on ESOP matters, Jim has contributed to numerous National Center for Employee Ownership publications, including ESOPs and Corporate Governance, The ESOP Company Board Handbook, Responding to Acquisition Offers in ESOP Companies, Administrative Issues for ESOP Companies, Seller-Financed ESOP Transactions, Warrants in ESOP Transactions, and Don’t Do That: Common Mistakes in Operating an ESOP and What to Do About Them. He has also authored articles on ESOPs for many trade journals.

Jim presents regularly on ESOP topics to the annual and regional meetings of the ESOP Association and the National Center for Employee Ownership, ESOP state employee ownership center conferences, and to general and professional audiences. Recent presentations include “LLC Structures and ESOPs,” “The Evolving Fiduciary Process: Practical Guidance for Plan Sponsors and Fiduciaries,” “Selling Your Company to an ESOP,” “Highly-Leveraged ESOP Transactions,” “ESOP Transaction Structures,” and “Is an ESOP Right for You.”

Ken Baker:

Ken Baker is the CEO of NewAge Industries, a plastic and rubber tubing and hose manufacturer and RFID tag solutions provider located in Southampton, Pennsylvania. In 2006, Ken established the company’s Employee Stock Ownership Plan (ESOP), and in 2019 he sold his remaining shares to the ESOP, making New Age Industries a 100% employee owned company. He is a founding member and Chairman of Pennsylvania Center for Employee Ownership (PaCEO), and spends time speaking about ESOPs to other CEOs at local and national events. He is a Member of the Foundation board of Montgomery County Community College. Ken is also a generous contributor to local and national charities.


Interview Quotes:

11:54  - “In the ESOP world, we all know that one of the really attractive things about ESOPs, particularly from a tax perspective, is that companies what are S-corporations that sponsor and ESOP have an S-corporation shareholder that doesn’t pay any taxes.” - Jim

19:45  - “You need a sophisticated seller and a sophisticated buyer and, as I said, in each situation there are at least some tax analysis risk to be discussed.” - Jim

29:28  - “‘I built a team but it’s a team that supports me rather than can replace me. I’m not a great ESOP candidate.’” - Jim

37:50  - “‘Gee, do you want to talk to us about selling? These are the things you have to do…’  You can make severe enough obstacles to discourage all but the absolutely intent and intrepid. Before we share information, we want to see your information first.” - Jim

43:06  - “There is a lack of successor managment available. Either the founder has stayed on and has never really managed to find a good successor. Or the successor management has done well but thy have not really found their next generations of management.” - Jim

57:45  - “I remember saying to myself, if I ever get control of this company, I’m going to do an ESOP because that seemed like the best business model ever.” - Ken

01:12:38  - “That’s actually an interesting topic that I’ve been exploring, which is the link between employee ownership and the continued process improvement within a company.” - Ken

01:17:49  - “We have a lot of meetings. We have quarterly meetings, and then when there is big changes in the organization, we have town hall meetings. Communicate. Communicate. Communicate.” - Ken

01:21:32  - “You really have to tug on the heartstrings and make sure they understand that what we’re doing is very very important and if we’re not doing it, who’s going to do it?” - Ken


Links and Resources:

Jim Steiker


James’ email: [email protected]


Ken Baker




Arkona Website

The 5 Intentional Growth™ Principles (5 Videos to Help Clarify Your Vision)

Intentional Growth™ Financial Assessment

Fractional CFO Services


You can also reach out to me via email at [email protected], or on my LinkedIn.

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