Employees become owners of Southern Fire Protection
ORLANDO--The owners of Southern Fire Protection, a $10 million fire sprinkler company located here, will grow in numbers as the result of a recent sale of a portion of the company to its employees.
The company announced July 18 that it had created an Employee Stock Ownership Plan or "ESOP." An ESOP enables the company to "gain some liquidity... it allows management to get ownership over time and it [gives the company] a great tax- advantaged way to operate going forward," said Will Stewart, an investment banker with PCE, the investment bank that handled the transaction.
Southern Fire Protection was founded in 1990 by Lenny Hollis, Bobby Caldwell and Jackie Tackett. The company has 100 employees and has offices in Sanford and Melbourne, Fla.
"We were looking for the best way to plan for our retirement and we heard about ESOPs and decided to look into it," said Bobby Caldwell, vice president of Southern Fire Protection.
ESOPs were created in the 1970s by the federal government. After meeting several regulatory requirements, an ESOP allows a company to use the money it would normally pay in federal income tax to essentially buy the company for the employees. It works like a 401K, where employees are awarded company stock periodically and become vested over a six-year period.
Caldwell said the owners really like the ESOP model because it allows the "company to keep going with the same employees and gives them an opportunity to gain ownership."