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W W W. M A I N E B I Z . B I Z 11 O C T O B E R 2 0 , 2 0 2 5 W hile ESOPs are not a new concept, they continue to attract companies across industries and of all sizes. There are 6,548 ESOPs in the United States, holding more than $1.8 trillion in assets, according to the National Center for Employee Ownership, a nonprofit member- ship organization based in Oakland, Calif. e plans represent a signifi- cant share of the labor market, with 14.9 million participants, including 10.8 million active employees work- ing at ESOP companies. Although becoming employee- owned offers many advantages, experts caution that it is not a cure-all. A company with a strong foun- dation is more likely to thrive under an ESOP structure, while a business already struggling without internal supports will continue to face chal- lenges even after the transition. As a result, careful due diligence and the guidance of trusted advisors are essential as companies navigate the shift to employee ownership. The power of preparation While ESOPs are applicable for almost any business, they are often selected by family businesses in which the next generation of the company cannot, or does not want to, continue running the company. In order to preserve the com- pany culture and their commitment to their long-term employees, they opt for an employee-owned structure. e number of employees, pref- erably at least 20, and company earn- ings are the first two factors that are evaluated during an initial ESOP assessment, according to Laura Pfeiffenberger, senior vice president and ESOP client advisor at Spin- naker Trust. "ESOPs range in all different sizes," Pfeiffenberger says. "You have fairly large companies that might have operations across the U.S., and you have smaller mom-and-pop opera- tions. For companies that are on the smaller side, if they are set on doing the ESOP because they think it's the right thing to do, they can do it. Nobody is going to say this isn't a good idea for you, but we will lay out the transaction costs." She says part of the job of an ESOP advisor is to have a detailed conversation about what's ahead. "I think part of our discussion with prospective ESOP companies is to explain to them not only what an ESOP transaction entails, but that there's a lot that gets done after the transaction on an annual basis," Pfei- ffenberger says. During the transaction process, when a company negotiates its sale to its employees, advisors such as Spinnaker help streamline the pro- cess. Although collaborative, it is also a true negotiation, with a term sheet moving back and forth between the represented parties, Pfeiffenberger explains. As the firm representing the participants of the trust being estab- lished, Spinnaker plays a key role in ensuring fairness throughout the deal. Once both sides reach an agree- ment, the transaction closes. How- ever, that is not the end. ESOPs are subject to annual reporting to ensure compliance, which is when Spinna- ker is often engaged as an external trustee. Because of these ongoing responsibilities, Pfeiffenberger advises companies to seek out trusted advisors and involve them early in the process. Unlike typical acquisitions and mergers, Pfeiffenberger finds the ESOP transition to be a more collaborative structure based on mutual success. "I think the ESOP transaction space is a bit different because under- lying all of the negotiations is the sim- ple fact that both sides are going to be involved with the company after the transaction, and so neither side wants to set the other up for failure," she says. Succession in action Zachau Construction in Freeport is an example of a successful transi- tion from family-owned business to 100% employee-owned. e 56-year- old construction management com- pany announced the change in May. Zachau ranks No. 6 among Maine's largest construction firms, with 50 employees and $96 million in reve- nue, according to the 2025 Mainebiz Book of Lists. Construction is one of the leading industries turning to ESOPs, with 16% of all plans nationwide coming from this sector, highlighting the indus- try's reliance on employee ownership as a succession tool, according to the national trade association. As a client of Spinnaker Trust, Zachau stood out for the preparation and commitment of its CEO, Jeff Zachau. Determined to preserve the legacy of the business his father, Earle Zachau, founded in 1969, Jeff came to the table already well versed in ESOPs. "His answers were beyond what we typically encounter for some- body who wants to seriously explore becoming an ESOP. He had clearly done his homework, and he was basi- cally already speaking our language," recalls Pfeiffenberger. Transparency also defined the pro- cess. By engaging employees early, Zachau's leadership fostered buy in and eased the transition. Structuring for success How one Maine company navigated the ESOP process B y S l o a n e M . P e r r o n C ONTI NU ED ON FOLLOWI NG PAGE » P H O T O / C O U R T E S Y O F S P I N N A K E R T R U S T Although becoming employee-owned offers many advantages, experts like Laura Pfeiffenberger at Spinnaker Trust caution that it is not a cure-all. ESOPs range in all different sizes. You have fairly large companies that might have operations across the U.S., and you have smaller mom-and- pop operations. — Laura Pfeiffenberger Spinnaker Trust

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