Across the independent distribution landscape, succession planning remains one of the most important—and often most challenging— priorities for company leaders. For many family- and privately-owned businesses, the question isn’t if a transition will occur, but how to do it in a way that preserves company culture, rewards loyal employees and positions the organization for long-term success.

One model gaining significant momentum is the Employee Stock Ownership Plan, or ESOP. Increasingly, IMARK members are exploring employee ownership as a strategic, cultural and financial solution— one that benefits both outgoing owners and the teams that helped build the business.

To provide firsthand perspective, IMARK spoke with two member leaders who have successfully navigated ESOP transitions:

James Calvert, vice president of sales & marketing at Mountainland Supply Company (Utah), a leading regional distributor serving plumbing, waterworks, irrigation and HVAC markets throughout the western United States.

Brent Beeson, director of operations & purchasing at Barry Company (Indiana), a respected, family-founded distributor serving plumbing, PVF and related markets across Indiana.

What Is an ESOP? A Closer Look

An ESOP is a qualified retirement plan designed to invest primarily in the stock of the sponsoring employer. Unlike traditional retirement plans, ESOPs are structured specifically to transfer ownership to employees over time.

At a high level:

• The company establishes an ESOP trust
• The trust acquires company shares through contributions or financing
• Employees receive allocations of shares based on a defined formula
• As the company’s value grows, so does the value of each employee’s ownership stake

While the structure involves legal and financial complexity, the purpose is straightforward: to give employees a meaningful ownership interest in the company they help build every day.

Why Companies Choose ESOPs

For many distributors, the decision to pursue an ESOP extends well beyond financial strategy. Common drivers include:

Preserving Legacy and Independence

Unlike a sale to private equity or a competitor, ESOPs allow companies to remain independent while preserving culture, values and long-standing relationships.

Rewarding and Empowering Employees

Employee ownership often leads to higher engagement, stronger retention and deeper alignment with company goals.

Enhancing Retirement Benefits

ESOPs typically complement existing retirement plans, creating a competitive and attractive benefits package.

Tax and Financial Advantages

Depending on structure, ESOPs can offer tax efficiencies that support both owners and the business through the transition.

Q&A with IMARK ESOP Leaders

What were the primary motivations for converting your company into an ESOP?

James Calvert – Mountainland Supply Company

Mountainland’s transition to an ESOP was driven primarily by the need to buy out large stakeholders who were approaching retirement. A traditional buyout would have come at the cost of losing control— often leading to shifts in company goals, workforce reductions and ultimately, a negative impact on customer service.

Mountainland’s leadership, led by Brent Anderson—then chairman of IMARK—spent considerable time researching alternatives and ultimately chose a path that prioritized taking care of the people who helped build the company.

Brent Beeson – Barry Company

At Barry Company, the ESOP was designed to create a long-term succession plan for Tom and Dave Barry while preserving the company’s legacy and values. The ESOP provided a controlled and flexible exit strategy for ownership, while creating a meaningful retirement benefit for employees at no personal cost—reinforcing retention, motivation and long-term commitment.

How did leadership determine an ESOP was the right succession or ownership strategy?

Mountainland Supply Company

The goal was to achieve a 100% ESOP, which required buy-in from every stakeholder—large and small. While many had a vested interest in the company’s success, others were less engaged or unaware of their ownership. Gaining alignment across such a broad group proved challenging but ultimately resulted in complete organizational alignment.

Barry Company

Barry Company conducted a comprehensive feasibility study that evaluated financial capacity, operational performance and cultural alignment. This process ensured the company could support ESOP obligations while maintaining its long-term vision and meeting ownership’s personal goals.

What alternatives were considered, and why were they set aside?

Mountainland Supply Company

Mountainland chose to create its own ESOP—a long, complex and expensive process. While the company partnered with experienced ESOP advisors, leadership acknowledges that others may benefit from merging with an existing ESOP to reduce complexity while still achieving employee ownership.

Barry Company

Alternatives included selling to private equity firms or strategic buyers such as Ferguson or Winnelson. While financially viable, those options were set aside in favor of maintaining independence, preserving company culture and rewarding employees through ownership.

What were the most significant challenges during implementation?

Mountainland Supply Company

The biggest challenge was achieving consensus across a diverse group of stakeholders, some of whom had little involvement in day-to-day operations. However, that effort ultimately led to full alignment and clarity of purpose.

Barry Company

Barry Company faced the complexity of ESOP structure, advisor coordination and long-term financial obligations. Educating leadership and employees and setting realistic expectations required significant time and effort, but strong planning and advisory support ensured a successful transition.

How did you communicate the transition to employees?

Mountainland Supply Company

Mountainland communicated the ESOP transition through weekly company-wide meetings using its Entrepreneurial Operating System (EOS) leadership framework. These collaborative discussions encouraged transparency and feedback and led to an immediate cultural shift—from “their company” to “our company.”

Barry Company

The ESOP was announced during a company-wide beginning-of-year kickoff event that served as the organization’s State of the Union. With trustees and advisors present, leadership explained the ESOP in depth, building trust through transparency and face-to-face communication.

What advice would you give to IMARK members considering an ESOP?

Mountainland Supply Company

Companies considering a buyout should seriously evaluate the ESOP option—whether by forming a new ESOP or joining an existing one. In many cases, the benefits outweigh those of a traditional buyout and help preserve the legacy that has been built.

Barry Company

Begin with a thorough feasibility study and assemble a team of advisors with ESOP expertise. While ESOPs offer significant benefits, they also involve upfront costs, ongoing administration and long-term commitments. Understanding both sides of the equation is essential for long-term success.

The Human Impact of Employee Ownership

While financial strategy is central to ESOPs, the most profound impact often appears at the human level. Employee-owners frequently report:

• A stronger sense of purpose
• Increased collaboration
• Higher engagement
• A renewed focus on customer experience
• Long-term commitment to the organization

For many ESOP companies, these cultural benefits become just as valuable as the financial ones.

A Growing Trend Within the IMARK Community

As IMARK members plan for leadership transitions and long-term stability, ESOPs continue to emerge as a compelling option. They offer a way to honor legacy, empower employees and strengthen businesses for generations to come.

The experiences shared by Mountainland Supply Company and Barry Company provide a thoughtful roadmap for other IMARK members considering what their next chapter may look like.

For additional perspective on ESOPs, please refer to an article submission by Brad Williams, managing director of The Beringer Group, on page 44.