Tag Archive for: ESOP

NCEO 2025 Annual Employee Ownership Conference

NCEO Annual Employee Ownership Conference 2025

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Presentation Topic

Matthew Drake from BaseRock Partners and Leah Turnball from BMO present, Building the Future: The Rise of ESOPs in the Construction Industry on April 16, 2025 at the 2025 NCEO Annual Employee Ownership Conference.

About the Session

The construction industry is experiencing a rapid shift toward employee ownership through employee stock ownership plans (ESOPs), now accounting for 30% of all new ESOPs in the US. Despite representing just 16% of total ESOPs, construction companies are leading the way in this transformative trend.

In this session, Matthew Drake and Leah Turnbull explore the driving forces behind the industry’s adoption of ESOPs, supported by exclusive data and expert insights from industry stakeholders, including lenders, sureties, and CPAs. Attendees will gain a deep understanding of why ESOPs are becoming a preferred ownership transition strategy in construction and how this shift is reshaping the future of the industry.

Don’t miss this opportunity to learn how ESOPs can secure the legacy of your company while creating long-term value for employees. Click here to learn more about the conference.

Meet the Speaker

Picture of Matthew Drake | Partner

Matthew Drake | Partner

mdrake@baserockpartners.com
(312) 882-7649

BaseRock Partners Advises Allied Construction Services On Its Sale To An ESOP

BaseRock Partners Advises Allied Construction Services On Its Sale To An ESOP

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Denver, CO (March 13, 2025) – BaseRock Partners is pleased to announce the sale of Allied Construction Services (“Allied”) to an Employee Stock Ownership Plan (ESOP). BaseRock Partners (“BaseRock”) served as the exclusive financial advisor to Allied Construction Services throughout this process.

Founded in 1950 in Des Moines, Iowa by Robert Maddox, Allied Construction Services has built a reputation as one of the Midwest’s most trusted interior construction companies. With over 70 years of experience, Allied partners with general contractors, architects, developers, and building owners to deliver high-quality construction solutions. To support its continued growth, the company has expanded across Iowa, Illinois, Nebraska, and Kansas. In the early 1970s, Allied acquired Color Inc., now one of the largest painting contractors in the Midwest.

“Pursuing an ESOP was a natural choice for our company. We wanted to ensure our founder’s legacy lived on while preserving the culture and reputation that set us apart. Selling to an outside buyer couldn’t guarantee that continuity but transitioning ownership to the very people who helped build our success did,” said Bob Maddox, Chairman of Allied Construction. 

“Our accounting firm introduced us to BaseRock Partners, and from day one, they instilled confidence in us,” Maddox added.

“Their deep expertise and ability to clearly outline each step of the process made all the difference. The BaseRock team was with us every step of the way; educating, advising, and ensuring we had everything in place to achieve a successful outcome. Their professionalism and strategic guidance were invaluable. We couldn’t be more pleased with our experience and would highly recommend BaseRock to any company considering an ESOP.”

About BaseRock Partners

BaseRock Partners is an investment bank built to serve the engineering and construction industry. BaseRock advises clients using a team-oriented approach that combines decades of industry expertise, deep industry relationships, and unique transaction capabilities specifically designed to meet the needs of engineering and construction companies.

Contact BaseRock Partners

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Matthew Drake

Partner & Co-Founder
312.882.7649

Email Matt
BaseRock Partners Advises Key Construction On Its Sale To An ESOP

BaseRock Partners Advises Key Construction On Its Sale To An ESOP

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Denver, CO (February 20, 2025) – BaseRock Partners is pleased to announce the sale of Key Construction, an ENR Top 400 Contractor, to an employee stock ownership plan (ESOP). BaseRock Partners (“BaseRock”) acted as the exclusive financial advisor to Key Construction in this transaction. Founded in 1978 by brothers Ken and Dave Wells, Key Construction has grown to operate in nearly 40 states, with offices in Kansas, Oklahoma, and Texas.  

“Choosing the ESOP path as part of our succession plan was an obvious choice for Key Construction. From the beginning, we knew that our dedicated employees were rightful owners given their role in building Key Construction to the company that it is today,” said Dave Wells, President of Key Construction. “As owners, we were honored to pass the ownership torch to employees and work to help them achieve their long-term retirement goals.” 

Wells continued, “The team at BaseRock are at the top of their class! Their professionalism and expertise were instrumental in our successful ESOP transition.

The BaseRock team took time to explain each phase of the process in a clear and understandable way. I truly believe without them on our team we wouldn’t have realized the exceptional transaction that resulted. We would not hesitate to recommend BaseRock to any owners considering an ESOP or any other type of sale transaction.” 

The establishment of the ESOP underscores Key Construction’s commitment to its workforce, recognizing employees as its most valuable asset. This move is anticipated to enhance employee engagement and drive the company’s future success. 

 

About BaseRock Partners

BaseRock Partners is an investment bank built to serve the engineering and construction industry. BaseRock advises clients using a team-oriented approach that combines decades of industry expertise, deep industry relationships, and unique transaction capabilities specifically designed to meet the needs of engineering and construction companies.

 

BaseRock Partners Contact

Picture of Matthew Drake
Matthew Drake

Partner & Co-Founder
312.882.7649

Email Matt
American Structural Concrete has sold to an employee stock ownership plan

BaseRock Partners Advises American Structural Concrete On Its Sale To An ESOP

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Denver, CO (January 31, 2025) — BaseRock Partners is pleased to announce the sale of American Structural Concrete (“ASC”) to an Employee Stock Ownership Plan (ESOP). BaseRock Partners (“BaseRock”) served as the exclusive financial advisor to ASC throughout the transaction process. 

Founded over 30 years ago, American Structural Concrete has established itself as a leader in structural concrete solutions across the Southern United States. The company has contributed to some of the region’s most iconic projects, including the Faena Art Center in Miami, FL, and SunTrust Park in Atlanta, GA. ASC’s expertise spans Traditional Form and Turnkey Frame, Hybrid Parking Deck, Tilt-Up, Industrial, and Precast structural solutions. 

“At American Structural Concrete, we spent several years developing a sustainable business including being certain of the management’s capabilities in the event something happened to the owners. Included in our definition of a sustainable business was the concept of the company’s culture,” said Brack Maggard, President & Partner of ASC.

“After a considerable amount of thought given to the various other potential buyers, it became obvious that selling to the employees was the only way forward in order to maintain the Company’s culture which is integral to the success of the Company.” 

Chris Alexander, COO & Partner of ASC, shared,

“Selling to an ESOP is not like a typical M&A transaction. Through their significant experience, BaseRock Partners navigated the requirements related to an ESOP transaction with ease. Not only did they (very patiently) explain the vast differences between an M&A transaction and an ESOP, they helped crystalize our thoughts regarding other potential buyers.”

“As a group, BaseRock was not only highly professional and knowledgeable, they were fun to work with.  It left you feeling like you made a bunch of new friends. I would not hesitate to recommend BaseRock Partners for any type of sale transaction. Their advice was invaluable.”  

The ESOP transition solidifies ASC’s commitment to its workforce and positions the company for long-term stability and growth under the stewardship of its skilled team. This employee ownership model ensures the company’s values and mission remain intact while rewarding employees for their dedication and contributions. 

 

BaseRock Partners Contact

Picture of Matthew Drake
Matthew Drake

Partner & Co-Founder
312.882.7649

Email Matt

BaseRock Partners Advises New England Finish Systems On Its Sale To An ESOP

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Denver, CO (January 15, 2025) – BaseRock Partners announces the sale of New England Finish Systems to an Employee Stock Ownership Plan (ESOP). BaseRock Partners (“BaseRock”) served as the exclusive financial advisor to New England Finish Systems (“NEFS”). 

Founded in 1985, NEFS has grown into one of the largest specialty contractors in New England. Known for its quality craftsmanship and adherence to strict deadlines, NEFS is a trusted partner in the specialty contracting industry. With over 300 carpenters, NEFS serves a diverse range of projects, including high-end tenant fit-outs, biopharmaceutical lab spaces, and ground-up residential high-rises in Boston, Massachusetts. 

“I am so proud of the company we’ve built together, the quality of our work, and commitment to the projects we have always delivered,” said Jon Marquis, owner of NEFS.

“BaseRock worked closely with us to evaluate the best transaction options and provided valuable guidance and expertise throughout the complex ESOP process. Thanks to their extensive experience in the construction industry, we achieved a transaction that significantly benefits our employees and positions our company for long-term success.” 

NEFS’s transition to employee ownership underscores its commitment to its workforce as its most important asset. This ESOP ensures the company’s stability and continued growth under the leadership of its skilled and loyal team. 

About BaseRock Partners

BaseRock Partners is an investment bank built to serve the engineering and construction industry. BaseRock advises clients using a team-oriented approach that combines decades of industry expertise, deep industry relationships, and unique transaction capabilities specifically designed to meet the needs of engineering and construction companies.

 

BaseRock Partners Contacts

Picture of Matthew Drake
Matthew Drake

Partner & Co-Founder
312.882.7649

Email Matt
Picture of John Steinegger
John Steinegger

Managing Director
720.853.4235

Email John
esop article

ESOPs: The Emerging Ownership Model for Heavy Civil and General Contractors

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Are you thinking about selling your heavy civil construction or general contracting company? If so, you may be wondering what your best options are for succession and transition. In the majority of industries, business owners are often confronted with one of two options– a sale to a strategic acquirer or to a financial buyer (e.g., private equity).

However, for heavy civil and general contractors, the buyer pool is often more limited, primarily consisting of large, well-capitalized public strategics. This is because heavy civil and general contractors don’t align well with the leveraged acquisition strategies that financial buyers typically employ.

M&A Realities

While public strategics may have significant reserves of cash, they are often reluctant to pursue acquisitions proactively, preferring to maintain liquidity in case of industry downturns.

Even when acquisition opportunities do arise, these large players tend to be slow to act, adopting increasingly conservative approaches to both valuation and the transaction process.

Adding to the complexity, surety bond obligations make M&A in this industry more challenging, which further diminishes private equity interest in the sector.

A surety company’s underwriters evaluate the business’s financial health by examining its capital position, liquidity, and the stability of the management team.

If a proposed acquisition results in excessive debt on the balance sheet or leads to the departure of key leadership, the surety company may be unwilling to underwrite bonds. This reluctance stems from concerns about the business’s financial viability and the continuity of its management, both of which are critical to securing bonding.

engineering and construction M&A deal activity by sector

(1) NCEO; BaseRock Analysis

ESOPs by the Numbers

As a result, the M&A market in the heavy civil and general contracting industry tends to be sluggish, with owners looking to sell often relying on favorable timing and circumstances.

These conditions have led heavy civil and general contractor owners to identify Employee Stock Ownership Plans (ESOPs) as a compelling solution, with significant advantages for both owners and employees.

  • •  Over the past decade, contractors have become the fastest-growing ESOP segment.
  •  
  • •  Construction companies account for 16%-17% of ESOPs in the US.
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  • •  As of 2021, approximately 30% of newly formed ESOPs in the US are in the construction sector.
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  • •  Across all industries, ~15 million employees participate in ESOPs, with 250+ plans established annually.
Segment of ESOP-Owned Companies chart

(1) NCEO; BaseRock Analysis

What is an Employee Stock Ownership Plan, and Why are they an Attractive Option?

Given the various mechanics of an ESOP transaction, it’s crucial to understand why these plans are gaining popularity in the heavy civil and general contracting industry and how they can be a valuable component of a company’s succession planning strategy.

An ESOP is a type of qualified retirement plan, similar to a 401(k) or profit-sharing plan, designed to provide employees with retirement income over time. What makes an ESOP unique is its dual function, not only offering retirement benefits but also facilitating the transfer of business ownership to future leaders.

In an ESOP, the current owner sells either a portion or all of their ownership interest in the business to the plan, allowing employees to become participants in the ownership structure.

Importantly, the owner is not obligated to divest their entire stake at once; there is no minimum percentage of company stock an ESOP must hold when established. In the construction industry, owners typically structure ESOPs to include between 30% and 100% of the company’s shares.

While most new ESOP transactions involve a 100% sale, it’s also common for owners to transition ownership gradually through a series of smaller sales over time. For sellers, an ESOP also affords value built over decades, enables tax-efficient estate planning, and helps preserve the company’s culture and legacy.

Advantages of the ESOP Structure¹

ESOPs can offer selling shareholders the opportunity to defer or even eliminate capital gains taxes on the proceeds from the sale. Additionally, 100% ESOP-owned S-Corporations are exempt from most if not all state and federal income taxes, which can significantly boost cash flow.

ESOPs maintain the existing management and operational structures, minimizing disruptions for employees and customers while helping to secure the company’s legacy.

ESOPs provide employees with additional retirement benefits at no extra cost to the company, making them a valuable tool for attracting and retaining talent.

Data from NCEO shows that companies with ESOPs are 25% more likely to remain in business, highlighting their role in fostering long-term stability.

Employees in ESOP-owned companies typically have 2.5 times more retirement savings compared to workers in non-ESOP firms, driving significant wealth creation for the workforce.

(1) NECO

Is an ESOP Right for You and Your Construction Business?

While an ESOP offers numerous benefits, it’s essential to assess whether this ownership transition method is a good fit for your heavy civil construction or general contracting business.

The following considerations are critical to keep in mind:

    • →   Strong Company Culture
      • ESOPs are designed to enhance employee alignment and engagement, but they can’t create cohesion where it doesn’t already exist. For an ESOP to succeed, employee engagement is critical. In companies with high turnover or strained employee relations, this can be a significant challenge.

    • →   Established Business with Stable Cash Flows
      • Since ESOPs are often financed through debt, companies with unstable cash flows may face heightened risks. Heavy civil and general contractors with consistent, stable cash flow are better positioned for successful ESOP transactions. An experienced advisor can help structure the deal to safeguard the company through industry cycles, ensuring a smoother transition.

    • →   Bonding Requirements
      • Surety bonds may introduce financial covenants or conditions that can complicate ESOP transactions. While bonding requirements don’t necessarily exclude a company from pursuing an ESOP, those with significant bonding needs must carefully structure the transaction and communicate proactively with sureties to avoid any disruptions in coverage that could affect business performance.

    • →   Patient Capital
      • Sellers in an ESOP transaction typically receive a combination of cash, seller notes, and equity in the form of warrants. Depending on the company’s ability to secure external senior debt, a significant portion of the proceeds may come from seller notes, with repayment terms extending over 7–10 years. A long-term perspective is crucial for sellers in this type of transaction.

    • →   Estate Planning Opportunities
      • There are many estate planning opportunities for ESOPs, including leveraging Section 1042 for deferral of capital gains and potential step-up in basis for permanent tax avoidance, as well as gifting warrants at a reduced price for future economic benefit.

Choose BaseRock Partners as Your ESOP Advisor for Your Construction Company

For construction company owners considering an ESOP as a transition strategy, BaseRock Partners is a recognized, trusted advisor. With extensive expertise in the heavy civil construction and general contracting industries, we design sustainable ESOPs that provide lasting benefits for both owners and employees.

Our team is well-versed in the unique challenges of the construction industry, including surety, licensing, bonding, lending requirements, and M&A complexities. We leverage this knowledge to:

    1. Guide business owners through the decision-making process, helping determine whether an ESOP is the best path to achieving their personal and business goals.

    2. Design tailored ESOP transactions that align with the unique needs of all parties involved, ensuring an optimal outcome for the owner, the company, and its employees.

We also collaborate closely with the essential partners in the ESOP process, including CPAs, attorneys, and trustees. We understand the critical role each party plays in structuring the deal to maximize advantages for everyone involved.

Contact BaseRock Partners to discuss your business ownership transition goals and learn about the advantages of an ESOP for your construction company.

Download the Article

“BaseRock Partners provided exceptional insight and advice as we navigated a very difficult decision-making process,” said Dick Ghilotti, Founder, Ghilotti Construction Company, one of the nation’s largest heavy civil construction firms. “Their leadership, market knowledge, and financial acumen were critically important to our owners and executive team. BaseRock will continue to be trusted advisors to our firm as we enter our next 100 years as an employee-owned company.”

BaseRock client testimonial profiles

Dick Ghilotti

Founder, Ghilotti Construction Company

“At Brix Paving Northwest, we believe in the incredible talent and dedication of our team. That’s why we decided to sell the company to our employees through an ESOP. They have contributed so much to our success, and now they get to write the next chapter,” said Billy Stimpson, President of Brix. “We’re grateful to BaseRock Partners for partnering with us on this process. We couldn’t have done it without their expertise. Their reputation as a leader in this field is well-deserved.

Untitled design (9)

Billy Stimpson

President of Brix Paving Northwest

“BaseRock Partners came highly recommended to us within the construction industry, and their reputation as a leader in this field is well-deserved,” said Doug McAninch, owner of McAninch Corporation. Their guidance and expertise were instrumental in helping us navigate the complex process of transitioning to an ESOP. BaseRock not only provided valuable insight but also led us with precision through each step of the journey. We couldn’t have asked for a more capable partner during this pivotal time for McAninch Corporation.”

McAninch (1)

Doug McAninch

Owner of McAninch Corporation

Contact BaseRock Partners

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Matthew Drake
Co-Founder & Partner
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Jay Rolader
Associate
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BaseRock Partners Advises SunWest Builders On Its Sale To An ESOP

BaseRock Partners Advises SunWest Builders On Its Sale To An ESOP

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Denver, CO (November 5, 2024) – BaseRock Partners announces the successful sale of SunWest Builders to an Employee Stock Ownership Plan (ESOP). BaseRock Partners (“BaseRock”) served as the exclusive financial advisor to SunWest Builders. 

SunWest Builders, founded in 1989 and headquartered in Oregon, has been a trusted name in Central Oregon’s construction industry for over 35 years. Known for delivering high-quality projects, from small-scale remodels to multi-million-dollar campus expansions, SunWest Builders consistently meets the highest standards of craftsmanship and customer service. The company’s stability and success are built on strong client relationships, with recommendations and referrals serving as a testament to its long-standing commitment to client satisfaction.

Under the leadership of President and owner Steve Buettner, who has been active in the region’s construction sector since the early 1980s, the company has earned a reputation for delivering high-quality, durable projects across a wide range of sizes and types.

Reflecting on this new chapter, Buettner shared, “I have always believed in the talent, dedication, and heart of our team. Transitioning to an ESOP reflects my confidence in our people and honors the collective effort that has driven our success. I couldn’t envision a better legacy than empowering our employees to shape the future of SunWest Builders.” Buettner shared,

“BaseRock Partners came highly recommended to us, and they lived up to their reputation as leaders in construction company ESOP formations. Their expertise and guidance were crucial as we navigated the complexities of transitioning to an ESOP.

With their insightful support and step-by-step leadership, BaseRock proved to be the ideal partner during this transformative period for SunWest Builders.”

 

About BaseRock Partners

BaseRock Partners is an investment bank built to serve the engineering and construction industry. BaseRock advises clients using a team-oriented approach that combines decades of industry expertise, deep industry relationships, and unique transaction capabilities specifically designed to meet the needs of engineering and construction companies.

BaseRock Partners Contact

matt-drake

Matthew Drake
Partner & Co-Founder
Email Matthew
312.882.7649

ESOP Association (TEA) Employee Owned Conference 2024

ESOP Association (TEA) Employee Owned Conference 2024

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Meet us at the ESOP Association (TEA) Employee Owned Conference in Las Vegas, NV November 13-15, 2024.

The Employee Owned Conference, attended annually by more than 2,000 employee-owners, thought leaders, and professional advisors, is the largest ESOP conference in the world. Make sure to join us in Las Vegas for collaboration, networking, and multiple learning tracks designed to help you get the information you need.

Click here to learn more.

Meet Our Team

Picture of Matthew Drake | Partner

Matthew Drake | Partner

mdrake@baserockpartners.com
(312) 882-7649

Picture of John Steinegger | Managing Director

John Steinegger | Managing Director

jsteinegger@baserockpartners.com
(720) 853-4235

ESOP Association (TEA) Professionals' Forum 2024

ESOP Association (TEA) Professionals’ Forum 2024

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Meet us at the upcoming ESOP Association (TEA) Professionals’ Forum in New Orleans, LA on February 7th-9th, 2024.

The ESOP Association’s Professionals’ Forum is designed exclusively for high-level professionals who provide technical, financial, and legal assistance to ESOP companies. The Forum is a unique opportunity for professionals to gather with their peers for a collaborative learning experience. And because the Forum is a meeting of professionals for professionals, attendees can take full advantage of programming without the pressure of servicing or attending to client needs at our larger, national events.

Click here to learn more.

Meet Our Team

Picture of Matthew Drake | Partner

Matthew Drake | Partner

mdrake@baserockpartners.com
(312) 882-7649

Picture of John Steinegger | Managing Director

John Steinegger | Managing Director

jsteinegger@baserockpartners.com
(720) 853-4235

Brix RLC Tombstone

BaseRock Partners Advises Brix Paving Northwest Inc. and RLC, On Their Sale To An ESOP

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Denver, CO (January 30, 2024) – BaseRock Partners is pleased to announce the sale of Brix Paving Northwest Inc. and Roger Langeliers Construction Co., subsidiaries of WWS Holdings, Inc., to an employee stock ownership plan (ESOP). BaseRock Partners (“BaseRock”) acted as the exclusive financial advisor to Brix Paving Northwest Inc. (“Brix”) and Roger Langeliers Construction Co. (“RLC”) in this transaction.

For over 25 years, Brix Paving Northwest Inc. has provided its customers with the resources, equipment, and, most importantly, the people to complete paving projects of all calibers. From small residential driveways to mainline interstate paving and full parking lot restorations, Brix has developed a reputation for integrity, quality, and safety.

Founded in 1995, Roger Langeliers Construction Co. specializes in the placement, finish, sawing, and joint sealing of Portland cement concrete for roadways, driveways, sidewalks, and other residential and commercial projects. Over its nearly 30-year history, the company and its employees have developed trusted partnerships with clients, including construction companies and local governments, by delivering high-quality results on time and budget.

“At Brix Paving Northwest, we believe in the incredible talent and dedication of our team. That’s why we decided to sell the company to our employees through an ESOP. They have contributed so much to our success, and now they get to write the next chapter,” said Billy Stimpson, President of Brix. “We’re grateful to BaseRock Partners for partnering with us on this process. We couldn’t have done it without their expertise. Their reputation as a leader in this field is well-deserved.”

Web Langeliers, President of RLC added, “BaseRock Partners came highly recommended to us within the construction industry, and we couldn’t have asked for a more capable partner during this pivotal time for RLC. Their insight and support gave us complete confidence as we worked through a pretty complex process.”

BaseRock Partners is an investment bank built to serve the engineering and construction industry. BaseRock advises clients using a team-oriented approach that combines decades of industry expertise, deep industry relationships, and unique transaction capabilities specifically designed to meet the needs of engineering and construction companies.  For more information about ESOP advisory or about our investment banking services, contact us.

BaseRock Partners Contact

matt-drake

Matthew Drake
Partner
mdrake@baserockpartners.com
312.882.7649

 

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