In 1993, Jim Sramek, was connected with an opportunity in the St. Louis market with a distributorship, Midwest Equipment Company, that needed help. When he took over the business, it had a little less than $1 million in revenue and seven employees
Over time, Sramek built up the company and the team, improving its capabilities and growing, even gaining recognition as a model distributorship. But the team didn’t only grow bigger, it also grew together.
“They knew that we cared about each other and cared about the company all together and it really became — I always say it's our DNA,” he says.
Sramek and his team grew the company to 76 employees and $20 million in annual revenue. Then it came time to answer the question: what next?
“We're just doing all our things,” he says. “It never came to that question of, ‘Well, what are you going to do with this thing?”
Heading into the company’s 25th anniversary and his 65th birthday, friends and family began asking him about his succession plan.
“I’d say, ‘I don't know,’” Sramek says “’I'm busy going to work every day. I'll work on that later on. We'll try and figure out something that we'll do with it.’”
He got the idea of transitioning to an ESOP on a flight to New York and met a friend on the plane who told him a decision on his and the company’s future would need to make a decision.
“And if you get hit by a proverbial bus, what happens then?,” he says. “Who takes over? Who's in charge? Ann (Bueler, Midwest Equipment Company president) and other people certainly can, but there's got to be a plan laid out.”
His friend connected him with an investment banker and they discussed exit and succession options — acquisitions, ESOPs, etc. But ultimately Sramek needed to decide. So he studied his options, continued to have discussions with his team, and ultimately the concept of an ESOP was the most appealing.
“The whole idea of the company when I built the company was to build it for the employees, to let them have that,” Sramek says.
He says although he had other offers, he didn't feel comfortable selling it to anybody because he didn't think it was the right thing to do at the time.
“I figured I'd just sit around and wait and see what happened,” he says. “And it turned out to be a really good thing that we did that because at the end, we got to bring it into an ESOP and have all these 70-some people own the company together and all work together on it.”
At the recent St. Louis Smart Business Dealmakers Conference, Sramek, along with Rose Thompson, ButcherJoseph & Co. COO; Ann Bueler, Midwest Equipment Company president; Marie Carlie, BDO USA LLP tax partner; Rick Hennessey, ButcherJoseph vice president; and Michael Zeller, Moore & Van Allen PLLC attorney at law, shared his story of transferring his company to and ESOP. Hit play on the video above to catch the full panel discussion.