Release Date: 
04/28/19

Matt Wienke started his professional-services consulting company Infoverity from scratch, building it into a company with clients around the world.

Now he has handed ownership of the company over to his employees.

Wienke and Dublin-based Infoverity have formed what's called an Employee Stock Ownership Plan, or ESOP, in which a trust holds the shares of the company and distributes them to employees over time.

For Wienke, 48, the decision was about sharing the young company's success with those who made it successful.

"Everything we accomplish is a result of people dedicating their careers, especially in the early stages when we didn't have a brand and there was not a lot of momentum. People are taking risks to come and join us and be part of this. This is just a natural evolution for us," Wienke said.

While Wienke received fair market value for the company when he sold it in January to the ESOP, he likely gave up a chunk of money in the process.

Wienke could have probably gotten more money if he sold Infoverity outright to another company or if he had waited a few more years, given the company's rapid growth, said Brian Bornino, who runs the ESOP program for Columbus-based GBQ Consulting and handled the Infoverity ESOP.

Also, Wienke basically loaned the money to the ESOP to finance the transaction, meaning that if the company's finances were to weaken, he could be out the money.

"He's a little bit unique. With a business growing this fast, he's an owner willing to give up the upside for the benefit of his employees," Bornino said.

"He wanted to retain and attract top talent," Bornino said. "The company is depending on talent."

For employees, Weinke's action formalizes how they look at the company already, said Jocelyn Biltgen, a managing consultant with the company and part of the company's leadership team.

"We already feel we literally own the company," she said.

She believes creating the ESOP makes the company more attractive to applicants.

"Matt talks a lot about who we are, of growing the company, maintaining the value of the culture. ... This really demonstrates that," said Biltgen.

How it works

Employees who work for ESOPs own the company, and the company's shares are controlled and distributed to employees by a trust.

Since there is no public market where the shares can be bought and sold, a third party determines the value of the company, typically once a year.

The trust hands out shares to workers over a period of time and workers get annual statements that show how much their shares are worth.

When workers retire or leave, they typically sell their shares back to the trust for future use, allowing the trust to, in essence, recycle those shares. The trust is financed by the company's revenue.

Studies have shown employee-owned companies are more productive, have lower turnover and, when hard times hit, lay off fewer workers, Bornino said. Also, there are tax advantages to ESOPs that can help them grow, he said.

"There is just a pride factor when there is an employee owner," he said.

ESOPs also tend to be more forthcoming about the company's finances and revenue and profit goals than other companies, said Tammy Basham, vice president of the Ohio-Kentucky chapter of the ESOP Association and a director at Crowe accounting and consulting company in Columbus, which is administering the Infoverity ESOP.

"You know what you have to contribute to make it successful," she said.

One reason to form an ESOP is to keep the company together by protecting it from being dismantled by a new owner, she said.

"Selling it to the employees is a great way to leave a legacy," she said.

As of 2015, the most recent data available, there were 6,669 ESOPs in the U.S. with assets of $1.3 trillion, according to the National Center for Employee Ownership. The plans cover 14 million people, including 10.8 million active workers.

Besides Infoverity, local companies that are ESOPs include CTL Engineering, Hy-Tek Material Handling, Big Sandy Furniture, Contract Sweepers & Equipment, and Palmer-Donavin, Bornino said.

Infoverity

Infoverity, formed in 2011, employs more than 100 workers, most of them at the company's offices in Dublin. Its main European office is in Valencia, Spain.

The company works mostly with large multinational companies in a variety of industries, helping them maximize the value of their data by sorting and organizing it and providing context for what it means.

The company's name comes from the idea that information is truth, and the company's idea that data is the currency of the 21st century.

Wienke said Infoverity depends on highly skilled, high-performing workers for the rapidly growing company.

"Our asset is our people," he said. "We're really trying to build something lasting, to run a business that will scale, that is fiscally responsible, that is fair and equitable to our people."

 

As seen in The Columbus Dispatch and written by Mark Williams.