Lazear Capital Partners
New ESOP Helps Owners Stay Involved While Diversifying Their Assets
Plain City, Ohio-based Midwest Molding has entered a new chapter in the life of the company. The plastic injection molding company, which was founded in 2000 and currently has 125 employees, produces custom, high-quality, cost-competitive plastic parts and assemblies. Owners Bill Razor and David Grimm recently worked with the experts at Lazear Capital Partners (LCP) to implement an employee stock ownership plan (ESOP). The transaction will transition ownership of the company to its employees while providing financial flexibility and maximal tax advantages for the sellers.
The ESOP makes it possible for the owners to diversify their assets and still be involved with the company. It's a way to continue working in the business, but without putting all their eggs in one basket. "This allows me to keep the job I love and enjoy," Razor said. "But I also won't have all of my financial future tied up in injection molding."
They also view the ESOP as a way to reward and motivate the employees. "Our employees work hard, and this creates a more direct correlation between the results of the company and what the employees will get out of it," Razor said. An ESOP rewards the employees for the role they've played so far while further incentivizing them to grow the company.
Razor and Grimm did their homework before choosing an ESOP. "We did some exploring as far as selling the company," Grimm said. "But we realized that wasn't the path for us. We would most likely lose all decision-making control, and we may be passing it on to someone who would not care for the people who have been taking care of us for years." With an ESOP, the owners retain some control, and the employees are taken care of for a long period of time.
More growth is in the future. "We have experienced plastic veterans and young, talented engineers who are ready to run with this. The team wants to see it grow," Grimm said. "On the back end, we are reaping the benefits of that as well." In addition to facilitating growth, they believe the ESOP will help with employee recruitment and retention down the road.
To implement the transaction, the owners worked with Todd Goldman, managing director at LCP. "We loved working with Todd and the rest of the team at Lazear. He was very responsive and able to complete the transition in a timely manner. Even after the close, he's still available to answer questions and give advice," Razor said. "It's apparent that Todd and Lazear care about the ongoing success of Midwest Molding."