Owners of a successful, quickly growing engineering firm asked Elliott Davis: “Can you help us present to our key employees the operational and financial implications involved with transitioning from an employee to ownership role?”


  • Mechanical and electrical engineering firm providing services primarily in the Southeast
  • Second generation of leadership, with one legacy owner looking to transition his shares to key employees
  • Challenged with determining the best timing and structure for transferring ownership responsibilities
  • Needed to develop a plan to help key employees understand and evaluate the decision of ownership

Our Approach

  • Focused on aligning the direction of the business with the desires of both senior and junior owners
  • Completed the engagement in two phases:
    • Current governance & areas for improvement, and
    • Equity admission of new partners
  • To understand current gaps, conducted interviews with all three existing owners separately
  • Key areas to help employees understand the equity admission decision were as follows:
    • Finance: Valuation considerations, company outlook, distributions, personal debt amortization
    • Operations: Expanded roles and responsibilities, owner mindset, continued performance of existing responsibilities
    • Governance: Voting power, restrictions of equity

Client Impact

  • Potential new partners understood ownership opportunity including base case and downside risks and the expected potential rates of return on equity
  • Senior partner offered equity to three new junior partners, all of whom decided to purchase equity
  • Client tax team learned about and made informed decisions on tax advantageous ownership transfer structures
  • Client updated Company valuation criteria to facilitate future ownership transfers

We Can Help

For more information on how Elliott Davis can assist you and your business, contact a member of our team.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.