Matt Middendorp knows from firsthand experience how different the culture of a company can be when employees have a financial stake in the success of that company. That experience comes from working nights at an ESOP-owned (Employee Stock Ownership Plan) publishing company to put himself through college and then a decade in banking, commercial lending and working as bank executive.
In each case, Matt noticed that the attention to the company's success was different, because for the first time the financial goals of the employees and the financial goals of the company were pointed in the same direction. It wasn't until he was in banking, watching ESOP companies from the client side, that he saw the data confirm it: ESOP companies consistently outgrew and outperformed their non-ESOP counterparts. Years later, when he sold his own consulting business, he sat with the same kind of decision he'd spent his career advising other people on, calling it the biggest decision he'd ever made.
"For the most part, selling is something that happens to businesses and it's not on purpose."
What Matt keeps coming back to isn't about ESOPs specifically, it's about the absence of a decision. Most sellers don't make a deliberate choice about how they exit. Owners get an offer and even they don't fully understand what they're trying to accomplish, they take it.
Matt shares the story of a construction company owner who sold to private equity in 2017, stepped back, and watched the company he'd built come apart. Foremen resigned, customers left after prices went up and eventually the new owners called him back and asked if he'd buy it back. He did, for pennies on the dollar, rebuilt it, and is now going through a second exit, this time as an ESOP, because the first one never sat right with him.
"It never felt right what he did. It never felt like he was doing the right thing for all the people that helped him build this company from nothing to worth millions."
If you're even a few years out from your own exit, the concrete move Matt points to isn't complicated: before you talk to a broker or take a call from a buyer, write down what you actually want from the sale, beyond the number. Control, legacy, what happens to the people who helped you build it. That list is what determines which kind of exit fits, and deciding it on purpose is the difference between an exit that happens to you and one you choose.
Melissa’s Take:
Begin with the end in mind. Easy to say in a leadership seminar, much harder to actually do with your own company, and Matt's story is proof that even the person who advises everyone else on this still has to sit with it himself.
Here's the analogy I keep coming back to. Building a company is like building a house you plan to live in for thirty years, but never once thinking about who moves in after you. You pour the foundation, you frame it, you finish every room exactly the way you want it. Then one day you get an offer on the house and you realize you never actually decided what happens to it once you're not the one living there.
Does it get torn down and rebuilt into something else?
Does it get rented out and stripped for cash?
Does it stay a home?
You built the whole thing without ever answering that, because for thirty years the question didn't feel urgent. It only becomes urgent the day someone's standing in your driveway with a check.
That's what happened to Matt's construction company owner. He built something incredible, sold it without deciding what he actually wanted the house to become, and watched the new owners gut it. Foremen left, customers left, prices went up, and the place he'd spent his life building started coming apart in front of him because nobody, including him, had decided in advance what was supposed to survive the sale.
The fix isn't complicated, but it does need to happen before the offer, not after. Walk through your own house today and decide, room by room, what you'd want to still be true if you handed someone the keys tomorrow. The culture in the break room. The people who've been there since the beginning. The way customers get treated when something goes wrong. That's your list. It's not the sale price, it's the blueprint for what the sale price is supposed to protect. Decide that now, while you're still the one living in it, not after someone else already has the keys.
There's a lot more in the full conversation, including how the tax treatment on an ESOP transaction actually compares to a private equity sale, and what Matt looks for in the first thirty minutes with a business owner to know whether ESOP is even the right fit.
The Full Executive Brief goes deeper into every conversation on the podcast, with the context, numbers, and follow-up you won't get from the audio alone. Subscribers also get access to the Maverick Test, a short diagnostic built to show you where your own leadership or exit strategy has gaps you haven't named yet.