St. Louis-Based Mortgage Firm Answers Wake-Up Call with ESOP

Oct 12, 2018 | Timothy L. Stewart

As described in this St. Louis Post-Dispatch article, the owner of USA Mortgage, Doug Schukar, became concerned when some of his top producers resigned. Their reason? Employees feared the instability that comes without an announced and certain succession plan. Employees had seen what happened to local competitor, Cornerstone Mortgage, when its CEO died suddenly. Cornerstone would later be sold to a mortgage company out of California.

Schukar stated: “Competitors were recruiting the heck out of our team, saying ‘What happens if Doug isn’t here anymore?’”

So, in February 2018, Schukar announced that he had implemented an ESOP as part of his succession plan. Following the announcement, Schukar noticed that people started coming to him with helpful ideas about how to make the business better and more efficient.

It is important to note that implementation of an ESOP does not automatically resolve the succession planning question. Even if a business owner sells 100% of her company to an ESOP, she nevertheless has to determine who the future leaders of the company will be. That is, unlike potentially a competitor, the buyer in an ESOP transaction (the ESOP Trustee) is not going to run the company in place of the seller.

About The Author

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Tim is President & Managing Partner of DeWitt. He is also a partner in the Greater Milwaukee office specializing in Employee Stock Ownership Plans (ESOPs) and Employee Benefits. He can be reached at 262-754-2869.

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