Case Study
November 6, 2023

Helping owners transition shares and prepare the company for continued growth

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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 us.

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.

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