Brookfield-based
QPS Employment Group is now an employee-owned company after completing an employee stock ownership plan transaction last week.
Employees were informed of the transaction on Wednesday.
A staffing and recruiting firm, QPS was founded in Franklin in 1985 by Scott Mayer. The company has since grown to 54 office locations in seven states throughout the Midwest and Mid-Atlantic. It specializes in industrial, skilled trade, office, clerical and professional staffing.
The company has around 350 internal employees and upwards of 7,000 associate employees that work with around 1,800 companies. The internal employees are the ones taking 100% ownership of QPS.
Shortly after founding the company, Mayer was joined by Mark Immekus and a few years later by Dan McNulty, both of whom eventually had ownership stakes in the business.
Immekus
passed away unexpectedly in 2018, pushing Mayer and McNulty to think about the future of the company.
“It kind of taught me a lesson,” Mayer said. “We’re not going to live forever and I need to figure out what I’m going to do with the company.”
With no next generation of family interested or ready to take over ownership, the options for a transition began to be narrowed down.
Mayer wasn’t interested in selling to a private equity buyer.
“I refuse to sell to private equity,” he said. “I just have personal beliefs that I don’t think it’s best for the employees.”
Selling to a strategic buyer also wasn’t attractive, even with a major one located so close in the form of ManpowerGroup.
“Another thing I’m never going to do is sell to Manpower,” Mayer said. “All the hard work that we’ve put in, we would roll into their company and you’d never know we existed and a lot of key people would have been let go.”
An ESOP was the most attractive of the remaining choices for Mayer and McNulty.
“I could have gotten more from Manpower or private equity, but it was not about money, it was about taking care of our employees,” Mayer said. “The employees bleed QPS blue, they love the company like it’s their own and you know, why not let them be the owners?”
“We have so many long-term employees that are 10, 15, 25 years and we just really wanted to reward them,” Mayer added. “This seemed like the perfect thing to do to help enrich every employee in the company and a chance to own it and be impactful and make a difference.”
The actual process of establishing the ESOP and completing the transaction took around a year, McNulty said.
Mayer and Ryan Festerling, president of QPS, focused on the day-to-day operations of the company while McNulty and Keith Jochims, chief financial officer of QPS, worked through the deal.
McNulty said the company had to work through finding an attorney, capital advisor and trustee and bank to work with for the deal.
While in a traditional sale process, the capital advisor marketing the company would be tasked with maximizing value, McNulty said it was important to find someone that understand what he and Mayer were looking to accomplish.
“Yeah, we want to go out there and get a fair price, but above and beyond that, it was more important to pass on something to everybody else in the company,” McNulty said.
Similarly, QPS needed to find a good fit for a trustee that would hold the company stock and represent employees.
“We really wanted someone that we felt matched our culture and would understand us and would do their best to protect what we built,” McNulty said, noting there is a range of firms available from small to large institutional ones.
Finally, McNulty said the company needed to find a bank with experience in ESOP transactions to ensure a smooth process.
While the specific transaction process took place over the last year, the idea of transitioning with an ESOP dates back much longer. McNulty couldn’t recall exactly when the work started, but said it could have been a decade ago when he and Immekus began exploring the possibility.
The two joined ESOP associations, went to conferences and classes and began networking with others who had done it to get an idea of what to expect.
Now that the transaction is done, McNulty said one of the benefits is that when he and Mayer decide to move on, they won’t need to go through the sale process at the same time. Still, deciding to sell a company is never easy.
“It was a hard decision because you’ve got to be willing to move away, you’ve got to be willing to step aside, I guess, while still being involved. I mean, Scott and I aren’t going anywhere,” McNulty said.
There is no immediate change for the company. Mayer remains chairman and CEO and McNulty is also CEO. Both are on the company’s board.
“Technically, somebody could fire me from my own company … but hopefully I don’t do anything to warrant that,” Mayer said.
