In 1946, Carroll Johnson founded Ringland-Johnson Construction. In 1971, Carroll Johnson handed control of the company to his son, Larry. In 1996, Larry Johnson handed control to his son, Brent. And in 2019, Brent Johnson began the process of handing control of Ringland-Johnson Construction to its employees.
Ringland Johnson Construction’s Newest Employee-Owners
Menke & Associates assisted Ringland-Johnson, the largest commercial/industrial construction company in Northern Illinois, with beginning the transition to employee ownership by facilitating the sale of one-third of the owner’s privately held company stock to an employee stock ownership plan. The ESOP transaction closed at the end of September, 2019, and took less than eight months from start to finish.
Over the last 73 years, Ringland-Johnson has built everything from schools to projects at nuclear power plants. But the most important thing they have ever built—at least from the Johnson family’s perspective—is their legacy.
As Ringland-Johnson president and majority shareholder Brent Johnson started to think about retiring in five to ten years and began weighing his options for ownership transition, he knew he wanted to protect both his family’s legacy and the employees who helped him build it. He realized that, unlike selling the company to a competitor, creating an ESOP would allow him to keep his family’s legacy going strong even after the company no longer had a member of the Johnson family at its helm. And instead of jeopardizing the jobs of his employees, it would give him the chance to reward them for all their hard work and loyalty.
“I have employees who are in their twenties, and who are looking at me and wondering if they’ll have to look for a new job when I retire,” Johnson said. “Now they know the answer is no. The company will live on, the ESOP will live on, and they will get to be a part of that.”
Ringland-Johnson chose Menke & Associates to create the ESOP and manage the 33% sale because of their expertise, clear communication, and understanding of the demands of the construction industry. To oversee the trust, Ringland-Johnson selected a trustee who also had an intimate understanding of construction, having previously run his own family-owned construction company, which he had sold to an ESOP. Utilizing both consultants and a trustee with such industry expertise was instrumental to closing this transaction with such efficiency.
Menke managing director of investment banking Matthew Nels worked closely with Ringland-Johnson’s leadership team throughout the entire process.
“Matt was absolutely wonderful,” said Ringland-Johnson CFO Lauren Spencer. “He was available any time of day, quick to respond, and a great educator. We were really impressed with Menke’s support and follow-through.”
“ESOPs are a complex process, Johnson added. “But working with Menke, the complexity is navigable. They made it understandable and achievable through every stage of the process.”
Along with Menke’s highly experienced legal and financial advisors, Nels worked diligently to ensure that the deal achieved all of Ringland-Johnson’s goals:
Implementing the ESOP and closing the transaction before the end of their 2019 Third Quarter.
- Structuring the transaction to provide the seller with an immediate, significant cash payment for his shares, enabling him to diversify into other investment vehicles.
- Keeping the company intact in a way that ensures it will continue on beyond the careers of the current leadership, protecting the Johnson family’s legacy.
- Rewarding current management and employees for their contributions toward building the company’s reputation.
- Promoting retention of talent by providing an additional tax-sheltered retirement benefit that gives employees a stake in the company’s success.
Beyond the significant financial benefit to employees who become fully vested, the ESOP will give Ringland-Johnson’s employees that all-important pride of ownership that studies show boosts productivity and makes employees more likely to stay with a company for the long term.
“I think employee ownership will allow people to view their work as more than a job—It’s a career,” said Spencer. “Now they have a stake in the game. Ringland’s success is also their success. People start to look beyond their own roles and think about their commitment to each other, and how honoring that commitment will not only help the company, but will also help them individually.”
That pride of ownership benefits Ringland-Johnson’s clients, as well, Johnson explained. “When a customer is dealing with a project manager, and they know that project manager is an owner of the company, they know the level of care they’re going to bring to the project will be that much higher.”
Johnson also views the move toward employee ownership as an important symbolic message to send to his employees. Plenty of companies say they consider their employees to be family. For family-owned businesses like Ringland-Johnson, that relationship is not invoked lightly. Even so, when it comes to making important financial decisions, talk of family is often trumped by the realities of the bottom line. With their ESOP, Johnson wants to make it clear that Ringland-Johnson’s commitment to its employees is a part of the very structure of the company.
“What better way to demonstrate to my employees that they’re really a part of my extended family than to make them partners in the family business?” he said.
Menke & Associates is proud to have helped keep the Johnson family legacy firmly intact. With its new status as an employee-owned company, the future of Ringland-Johnson is brighter than ever. The day that the company told its employees that they now had ownership stakes in its future, Ringland-Johnson was awarded the contract to build the upcoming Hard Rock Casino in Rockford, IL—just one example of the way Ringland-Johnson will continue to shape the skylines of the greater Rockford area, and all the communities they serve, for generations to come.
Menke & Associates, Inc. has helped over 3,500 companies successfully transition to employee ownership. Our holistic ESOP approach enables a positive outcome for the company, its employees and its shareholders. We believe ownership is powerful.
