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W W W. M A I N E B I Z . B I Z 15 O C T O B E R 2 0 , 2 0 2 5 O ver the past decade, Maine has had a surge of compa- nies converting to employee ownership under the Employee Stock Ownership Plan structure. In 2013, the Pine Tree State had 15 designated ESOPs. By 2024, that number grew to 86 ESOPs, with more expected as interest in the structure continues to grow. Originally created in 1956 by econ- omist Louis Kelso, the ESOP struc- ture has become a popular tool for business succession and an alternative to a sale, merger and acquisition. In addition to allowing employees and management teams to stay intact, the ESOP tax benefits, especially tax- exempt status for S-corporations, also offer further incentive for com- panies to explore ESOPs. The inner workings of employee-owned To become a viable ESOP, a busi- ness must be the right size, have sta- ble finances and be able to shoulder the administrative costs. e process is complicated with transaction negotiations and rigid compliance measures oftentimes requiring a team of external advi- sors which is where financial advi- sory firms such as Bellview Associ- ates in Ellsworth step in. "I like to think of it almost like you have an orchestra, and the advi- sor is really the conductor. And so, we're hired by the client, being the business owner who wants to sell their company to their employees in an ESOP transaction," says omas Flynn, COO and managing partner at Bellview Associates. The first step is determining whether a company has the founda- tion for long-term success as an ESOP. If administrative costs outweigh prof- itability, the model may not be sus- tainable. But if the company clears this hurdle, it can move forward with the transition to employee ownership. Advantages e benefits of ESOPs are twofold: financial gain and legacy protection. For subchapter S Corporations, most of which are small businesses, becoming tax exempt means money once spent on taxes can be reinvested in the business — a powerful incentive. "e government is really inter- ested in doing that, especially as a bul- wark against private equity or other options that might involve even shut- ting down the business or selling to a strategic firm that might fire employ- ees," Flynn says. "Private equity is kind of the big 800-pound gorilla in the room that ESOPs are counteracting." Succession planning is another key motivator. ESOPs allow an owner to retire or step away while preserving the company's culture and manage- ment structure, a priority for many family-owned businesses that feel loyal to employees. One of the misconceptions is that ESOPs are a last resort for when a com- pany cannot find a suitable buyer. Flynn noted that ESOPs are in fact a compet- itive option that often closes faster than private equity deals and avoids job losses. Even if an ESOP later chooses to sell to private equity, that option remains on the table, with the difference being that profits are distributed among employ- ees rather than a single owner. Maine has become a particularly strong market for ESOPs. In fact, half of the ESOP transactions Bellview Associates has overseen are based in the state. From initial set up to long- term maintenance, the firm works with companies throughout the entire pro- cess, including clients it has advised for more than 20 years. Part of ESOPs growing appeal may lie in Maine's strong community ethos. "It's a very community-oriented state. When a business owner goes to bed at night, I think they feel really good about the decision to have done an ESOP. ey took care of their peo- ple, and that matters for a lot of folks in Maine," says Flynn. A vision for future leadership Blaze Partners, a full-service market- ing agency in Falmouth, this past sum- mer became 100% employee-owned, coinciding with its 10 th anniversary. It was a feat that took time and dedication, as Blaze Partners used a thoughtful approach as it transi- tioned the team of 19 employees to an ESOP structure. For Blaze Partners, succession planning started early since the com- pany's three partners are at varied ages with different retirement time- lines, according to Jenna Klein Jons- son principal and managing director at Blaze Partners. e leadership team began look- ing at future options such as selling to venture capital, being acquired, bring- ing on new partners or even possibly closing. But none of those choices aligned with the agency's mission or long-term goals. Taking the next step Six years ago, Jonsson attended a webi- nar featuring a law firm specializing in ESOPs and knew that was the right path for Blaze Partners. Although the idea of an ESOP started to take root, the reality was that the Blaze team was too small to successfully pivot to an ESOP model. rough strategic planning and winning several large contracts, Blaze Partners was able to scale up and add five more people to the team last year alone. In addition to thoughtful growth, the team also did its homework, while cre- ating an informal ESOP board of advi- sors that included an ESOP attorney. After years of financial planning and relying on trusted advisors, the firm was ready to formally pursue the transaction. e ESOP transi- tion started in January 2025 and was completed at the end of July. Along with becoming 100% employee owned, Blaze Partners also achieved certifi- cation as a B Corporation. Transparency was central through- out the process. While employees had heard of ESOPs, many did not fully understand how they worked. "One of the hard things about ESOPs is that they're simple in con- cept. It's about transferring owner- ship to the employees of the organiza- tion. However, the mechanics of how C ONTI NU ED ON FOLLOWI NG PAGE » The ESOP movement Maine has seen a growing number of companies convert to employee ownership B y S l o a n e M . P e r r o n P H O T O / C O U R T E S Y O F B E L LV I E W A S S O C I AT E S I like to think of it almost like you have an orchestra, and the advisor is really the conductor. — Thomas Flynn Bellview Associates

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