Total Truck Parts, a six-location independent parts distribution and service business in Florida, has formally completed its conversion into a 100 percent employee stock ownership plan (ESOP) operation.
Total Truck Parts' associates will own 100 percent of the company's stock effective at the end of the month.
Tom Gibson and Marc Karon, current owners, have always had the intent of making this transition. It took several years to develop both a strong leadership team to guide the company into the future, and to secure the financial structure necessary to support the ESOP as it continues to grow and serve its expanding customer base.
Converting to an ESOP is not an easy process. It is expensive and time consuming. But other than selling the business to another company, an ESOP is about the only other alternative.
“This is all about what is the best choice for the employees and the best strategy for the company," says Karon. "The employees made this company successful and deserve to receive the reward that comes from ownership. In addition, our continued success will require that the culture, strategy, tactics and brand of the company be maintained. In addition, we are seeing a changing environment for employees. Employees today need to feel more connected to their employer and the ESOP accomplishes that.”
The current owners will continue to be involved and play key roles in the business, but decision making for Total Truck Parts will now be made by an advisory board composed of key managers as well as past owners.
The earnings of the company will drive the stock value, which should increase each year. That stock, owned by the employees, will then be sold back to the company upon their retirement and add to the employee 401K and other accumulated retirement funds, the company says.
Karon also will be joining with Michael Callison of Midwest Wheel and Brian Rieger of ConMet, two other ESOP operations, to speak on the topic of ESOPs at the upcoming CVSN Aftermarket Distribution Summit in June.