Ownership Transition – Selling to the Next Generation-Ownership Transition

Ownership Transition – Selling to the Next Generation Slides

Pdf Summary

The document presents a comprehensive overview of ownership transition strategies tailored for the next generation within private engineering firms, exemplified by Pare Corporation. Co-presented by Larry Riggs, Chairman & President of Pare Corporation, and Tim Cleary, Managing Director at Chartwell, the educational session focuses on aligning ownership and compensation philosophies to design effective, sustainable transition plans.<br /><br />Pare Corporation, established in 1970 with 130 employees including licensed engineers and specialists, operates in multiple divisions across the Eastern U.S. The ownership transition involved redeeming stock from selling shareholders via promissory notes, followed by selling shares to emerging leaders at discounted or fair market values structured through notes payable with future cash bonuses.<br /><br />A key part of the strategy emphasizes evaluating who should own stock next—whether individuals or an Employee Stock Ownership Plan (ESOP)—and tailoring programs to different employee groups including current leaders, next-generation leaders, and key project managers. Multiple equity-based compensation alternatives were explored, such as ESOPs, stock bonuses, restricted stock units (RSUs), stock options (both incentive and nonqualified), phantom stock, and stock appreciation rights. These tools serve to retain talent, incentivize performance, and enable gradual equity transfer while balancing tax implications and company cash flow.<br /><br />Best practices include thorough qualitative and quantitative analysis, employee input to gain support, and multi-layered structures to meet company-specific needs. Pare’s plan incorporates targeted equity grants and ongoing stock bonuses, helping finance shareholder buyouts and business growth.<br /><br />The session concludes that successful ownership transition requires aligning ownership and compensation philosophies through diverse strategies uniquely suited to company culture and goals, often necessitating expert guidance.<br /><br />Biographies highlight Tim Cleary's deep expertise in ESOP and ownership transition advisory and Larry Riggs' leadership in cultivating Pare’s culture of excellence and guiding seamless management succession.

Keywords

ownership transition

next generation leadership

private engineering firms

Pare Corporation

equity compensation

ESOP

stock options

employee retention

succession planning

management buyout