“Benesch was critical during the evaluation and eventual sale of our company and enabled us to break new ground. I appreciate the personal touch and access we receive and the fact they’re so focused on our work.”
Bettcher Industries, Inc.
Honoring its 70-year legacy of innovation and its employees’ loyalty and engagement is a priority for Bettcher. So when it was considering a buyout from a private equity firm, it didn’t want to completely lose its current employee stock ownership structure. Benesch was able to devise an innovative structure that enabled Bettcher to continue as an ESOP while welcoming the infusion of resources the new owners bring.
From corporate governance and ownership to regulatory and employment matters and beyond, Benesch can help your business stay true to its past while clearing the way to a bright future.
Founded in 1944, Bettcher Industries, Inc. is a leading supplier of equipment for the meat, poultry and seafood processing industries—primarily handheld cutting tools that trim and cut meat. In addition, Bettcher manufactures products used in the foodservice industry, including automated batter breading machines, sifter tables and electric gyro knives. A subsidiary, Gainco, Inc., manufactures various kinds of equipment and systems for sizing, weighing and sorting food products in processing plants. In recent years Bettcher has expanded into other markets—most notably the formation of Exsurco Medical, an ISO 13485-certified and FDA-registered company that has successfully commercialized innovative devices used for excision and debridement in tissue banking and surgical procedures.
Bettcher has been an employee-owned company since 2011 and, although it was bought by a private equity firm in 2017, still retains 20 percent employee ownership, thanks to an innovative solution by Benesch, which continues to work with Bettcher on matters related to ERISA and employee stock ownership.
Below is a testimonial from Don Esch, CEO of Bettcher Industries, Inc.
How long have you been with Bettcher?
Nearly 17 years. I came in as VP of sales & marketing in 2001 and then took on a role leading our Gainco division in Georgia as president, and then became COO of Bettcher and later president and finally CEO.
How long have you been working with Benesch? At what point did that relationship start?
We first worked with Benesch in 2011, born out of a relationship with one of the partners at Benesch, Jim Hill, whom I got to know many years ago. In 2011, a grandson of the founder wanted to exit the business, and we consulted with Benesch about different options available to us to purchase his interest in the company. That’s when we first met our current Benesch attorney, Shaylor Steele. We ended up going a different route and formed an employee stock ownership plan and had that ESOP purchase the shares from the grandson of the founder.
What does Benesch work with you on now?
As the years went by, we kept in touch with Shaylor and would reach out to him when we had questions around ERISA matters and matters specific to the ESOP itself and related corporate governance issues. In 2015, we got into a dispute that caused us to actively engage Benesch to help us understand the risk and the issues. The matter was never litigated, I believe thanks to Shaylor and his team’s deep understanding of ERISA matters and ESOP specifically.
The thing we found to be very valuable in that relationship was the fact that Benesch had the right experience for our issues. I felt that nothing was going to get by them; no one was going to blow any smoke or attempt anything that would create a guise for having a position. Benesch and Shaylor were critical in framing and driving discussions—sometimes very difficult and direct discussions—with the opposite side.
Are you still working with Benesch?
That dispute is what got us moving from a more consulting ad hoc relationship to a direct engagement with Benesch. After that we began to use Benesch as our company ESOP counsel, and Shaylor has helped us with various plan design changes and amendments to our ESOP as the company grew and circumstances changed a bit. He still acts in that capacity for us.
Then, in early 2017, the ESOP was approached by a potential private equity buyer, and Shaylor helped us through that sale process, where we sold the company in October 2017. That was a substantial transaction, and we were very deeply engaged with Benesch providing counsel and Shaylor himself being on our deal team to help us bring about this change. He was instrumental in the process.
In fact, we are still researching this, but we may have broken some new ground here, and I’m going to credit Shaylor for this: PE companies often buy employee-owned companies, but we have not yet found one where an ESOP has been sold to a private equity company and the ESOP continued. But in our case, that’s exactly what happened. We wanted the ESOP to continue to own an equity portion of the company, and it does indeed own 20 percent of the equity in Bettcher Industries today, along with the private equity company and their partners, who own 80 percent of that equity.
This allows us to continue the culture of employee ownership we had, and our employee-owners continue to be engaged in working for their own company. That was a critical thing for us, but it was tricky from a legal standpoint. There are certain aspects of the ESOP requirements and ERISA law that conflict with a traditional private equity buyer’s approach..
Shaylor was the one who actually first came up with a novel structure that balanced the interests of both sides. That structure allowed us to pull this off and keep the ESOP engaged in the equity of the new company. So, today we have a company that is 20 percent owned by the ESOP and 80 percent owned by others. The ESOP continues and the legacy of employee ownership of the company continues, and it’s a great thing.
It sounds like nothing else material changed about the company?
We are of a size that we are going to be a platform company within the equity group, and we’re not being merged in or folded into anybody else. Having PE backing behind us now gives us the opportunity to continue to grow, and in fact accelerate our growth in the future. It’s been very strong over the past years, but now we’re looking for greater things as we go forward with broader capital resources and other resources to help us grow, particularly through acquisition.
It’s interesting to read about your subsidiaries and Innovation Center—it sounds like you’re very focused on that growth and innovation mode.
Yes, we are. It’s been very much a hallmark of who Bettcher has been. That’s evident in the company we created and brought to life—Exsurco Medical. For a very old-line, somewhat stodgy 70-year-old company making products for the industrial meat processing market to then create this very high-tech, very innovative medical device company is really quite unique.
What do you like about working with Benesch?
I really appreciate the personal touch and the access I have to Shaylor and the fact that he’s focused on our work. He understands us. He knows us well. We’ve developed a good relationship and a sense of trust over the years we’ve worked together. I can pick up the phone at any time, and Shaylor’s going to answer or call or text back immediately. He’s really available to me at any time, and that was critical during the last several months as we went through the evaluation and eventual sale of the company. That was going on 24/7, and Shaylor was there at the ready. That’s vitally important to us.
And even if we hadn’t been going through a sale, Shaylor’s had that sort of connection to us in the past before this deal came about. Our theory in business management is to essentially hire the attorney and not the law firm, and in the case of Benesch it’s been mostly Shaylor. But as some other people have come to work on our team with Shaylor, we found them to be of the same like mind and like operation as Shaylor—very focused on our needs and on understanding what we’re doing.
Any final thoughts?
We have dealt with a number of other law firms in different areas, and there some very fine firms and lawyers out there. But when you’re a mid-sized entrepreneurial company and you’re focused on winning in business every day, the last thing you want to do is call somebody up and the next day have to explain an issue to an associate and then maybe two days later explain it to a different associate because it’s gotten passed around the firm. That’s not Benesch, and frankly not a firm we would do business with