The Future of PFSbrands
After 18 years of blood, sweat, and tears Julie and I have sold Pro Food Systems (PFSbrands). Those of you that have owned, or do own, a company realize the hard work it takes to make it successful. Julie and I have put everything we have into PFSbrands. We are extremely proud of the fact that we created jobs and opportunities for over 120 families.
A rapidly growing company like PFSbrands was, and is, a great candidate for a larger company or private equity group to acquire. However, over the past 18 years I’ve been asked this question a lot: “What is it that makes you (PFSbrands) so successful”? My answer has always been, “people”. It sounds cliché, but we are a company dedicated to serving our customers and you can’t be a service company without great people.
PFSbrands has made a significant impact to the small town of Holts Summit where our national headquarters is located. We’ve worked hard over the past 18 years at taking care of our employees and developing a world class culture. We believe wholly in our Mission Statement which starts with “We exist to empower our employees and allow them the opportunity to build their futures…”
All of this is why it made perfect sense to create an Employee Stock Ownership Plan (ESOP) and sell PFSbrands to our employees. We’ve educated our entire team, through open book management and extensive PFS University classes, how to think and act like owners. And now our biggest assets, our PEOPLE, are now employee owners!
I’ve been intrigued by, and I’ve been studying the ESOP concept for over 7 years. In 2015 I established our ESOP with the intent of selling 10% of the company each year to the employees over a 10 year period. However, as Julie and I learned more about the ESOP model we began to consider selling a larger percentage. Further, the Missouri House of Representatives and Senators created a bipartisan bill in 2016 that provides capital gains tax incentives to business owners that sell 30% or more of their company to an ESOP. Despite the fact that our outgoing Governor, Jay Nixon, vetoed the bill, both the House of Representatives and the Senate voted unanimously to override the veto. The new law went into effect on January 1, 2017 and this played a major part in our decision making process. Julie and I ultimately made the decision to sell 100% of the company to the ESOP. That transaction occurred earlier this week on January 3rd.
The ESOP is a confusing, and somewhat ‘unknown’, business model. An ESOP is actually a qualified retirement plan and the concept was created back in 1973. To this day, ESOPs receive bipartisan support from both Republicans and Democrats at all levels of government.
After studying ESOPs in depth, and attending numerous educational conferences across the country, I fully believe it is the best way to structure a business. The ESOP provides selling shareholders a way to receive value for their privately held stock while allowing employees the opportunity to earn shares of company stock as they continue to work for the company. Even better, the employees do not have to invest any money nor do they have to assume any risk for the stock they receive. The shares are distributed without discrimination to all employees based upon their annual payroll as it relates to overall company payroll. There’s A LOT more to an ESOP, but it’s a true WIN-WIN business structure.
So what’s next? Well, don’t expect to see much change at PFSbrands. At age 46 I’m not going anywhere and I absolutely love what I do. We’ve got great people and great customers all over the country. PFSbrands has big growth plans and I’m excited to lead this team into the future. I’m even more excited to see the stock value grow for our new employee owners. Thanks to our open book management approach and the outstanding culture we’ve created, we have been recognized within the state of Missouri for their annual Fast Track Award. We have also been recognized nationally the past two years as a Great Place To Work. Everyone at PFSbrands has fun, they care about each other and our customers, and they enjoy being held accountable to our high expectations.
It’s an exciting time around here! Don’t expect things to slow down. Unlike many companies that establish an ESOP in an effort to improve the culture, PFSbrands has established an ESOP within a company that already thinks and acts like owners. The ESOP is the ultimate “icing on the cake” that provides every single employee owner an opportunity to earn stock and make an impact on the value of that stock.
There’s a saying out there that I like, “If you can’t run with the big dogs, stay on the porch”. PFSbrands is not the right fit for everyone. We expect a lot, but we also believe in capitalism and rewarding people based on results. We are going to continue to “Think Big and Act Small” as we scale up. You don’t have to come in as a “big dog”, but we want people that are willing to learn and continuously improve. If you have a positive attitude, if you like a fast-paced environment, if you like change, and if you have a competitive drive, you can run with us.
Thanks to all of the PFSbrands employees that have contributed to the journey over the last 18 years and congratulations to all of the new employee owners at PFSbrands! We have nothing but great opportunities ahead of us.
If you have any questions about PFSbrands, Champs Chicken or our business approach please reach out to me here.