Lument recently assisted one of the Midwest’s largest senior living and care owner–operators with an innovative stock ownership plan transaction, the commercial real estate finance firm announced Friday.
The transaction, for which the client remains undisclosed, involved the sale and transition of approximately 36 operating affiliates, consisting of approximately 4,000 licensed beds, to a newly formed employee stock ownership plan. As a result, the company is now 100% employee-owned through its employee stock ownership trust.
“An ESOP is a tax-qualified retirement plan for employees, similar in some ways to a profit-sharing plan,” Laca Wong-Hammond, head of M&A at Lument, told McKnight’s Business Daily. “One of the primary objectives for the creation of this ESOP is to award its loyal employees for their dedicated service.”
ESOP transactions, she added, have been gaining in popularity in recent years and provide firms with benefits such as fair valuation, a path to liquidity, liability management, estate planning and tax advantages, while also establishing company legacy via employee retention and ownership. Because they are regulated by the Department of Labor, they must follow Employee Retirement Income Security Act rules.
The privately held company that completed the ESOP transaction operates more than 30 skilled nursing and rehabilitation locations, as well as several assisted living communities across the Midwest, according to Lument. The transaction will further strengthen the company’s legacy of providing older adults access to care in local communities, the firm’s former CEO said in a statement provided by Lument.
“Turning over the 45-year legacy of this company to the employees in the form of an ESOP was an easy decision as employee ownership is a natural fit for a profession that is so labor-intensive,” he said.
