From Private Equity Nightmare to Employee Ownership Success: A Concrete Cutting Company's ESOP Journey

Michael Tackett had built something extraordinary. Founded in 1988, B&D Concrete Cutting had grown to become the largest single-owner concrete cutting company in the Southeast, with over 100 employees and two metro Atlanta locations.

But Michael's brief experience with private equity in 1997 left him determined never to subject his employees to that again. When it came time for succession planning, he found a better solution through employee ownership.

Four years after implementing an Employee Stock Ownership Plan (ESOP), the transformation has benefited everyone involved.

Learning from Private Equity Mistakes

Michael's private equity experience was brutal. The firm immediately eliminated half the workforce and reduced employee benefits, showing him the cultural risks of external buyers.

Having worked with some employees for forty years, Michael viewed his team as family. He refused to subject them to another corporate restructuring that prioritized profits over people.

The ESOP structure provided protection for long-term employees while allowing Michael to maintain operational control and achieve his financial objectives.

Dramatic Business Improvements

Four years post-ESOP, B&D demonstrates substantial improvements:

Financial Growth:

• Revenue grew from $20 million to $30 million annually (50% growth)
• Purchased 23 new trucks over two years
• Saves approximately $1 million annually that previously went to taxes

Capital Structure: Previously financed equipment at 8% interest rates, now pays cash for all purchases while earning 5% interest on retained earnings.

Solving the Training Investment Problem

B&D invests up to one year training each helper before they become productive. Previously, competitors would recruit trained employees with small wage increases, forcing expensive retraining cycles.

Since implementing the ESOP, B&D has lost only three employees: one due to out-of-state marriage and two during initial transition. All key personnel remained for four years.

This workforce stability protects substantial training investments while creating financial security for employees who typically lack college education.

Cultural Transformation

The ownership mindset created measurable changes. Phone calls to Michael shifted from 50% problems to 90% positive communications.

Employees regularly review stock account balances, representing their first significant financial assets. The 50-60 employees who previously moved between companies for small wage increases now remain committed to B&D's long-term success.

Tax Benefits for Equipment-Heavy Operations

Operating as a 100% S-corporation ESOP eliminates corporate income taxes, providing substantial cash flow improvements. Retained earnings that previously paid taxes now fund equipment purchases, creating perpetual growth cycles without external financing.

B&D earns 5% interest on retained profits while paying only 3.25% on ESOP debt, creating positive cash flow from the financial structure itself.

Flexible Succession Planning

Unlike traditional sales requiring immediate exit, the ESOP allows Michael to continue operating until he chooses to retire. The structure protects against forced sales due to health issues, ensuring business continuity regardless of Michael's availability.

Key Lessons for Asset-Heavy Contractors

Define your goals clearly. ESOPs can address employee care, financial security, operational control, and legacy preservation simultaneously.

Consider timeline flexibility. ESOPs provide advantages for owners not ready for immediate retirement but seeking financial security.

Protect training investments. Companies requiring extensive employee training particularly benefit from ESOP retention advantages.

Building a Lasting Legacy

"I've been blessed in life and in this business and want to share some of those blessings with the people who have worked so hard through the years in helping me build this company," Michael explains.

For specialized contractors facing succession challenges, B&D's transformation demonstrates that ESOPs offer proven pathways for protecting company culture, rewarding loyal employees, and maintaining business growth while avoiding the risks that come with external buyers.

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