When OwnersEdge was founded in 2015, it began with a big, bold idea: Acquire diverse, healthy businesses for the long-term benefit of one shared ESOP, while still allowing each operating company to keep its own identity, leadership, and culture.
Ten years and nine acquisitions later, that idea has grown into a portfolio of six operating companies, all united by one shared goal of long-term success.
OwnersEdge CEO Christine Adee and CHRO Lynnette Fritz were featured on a recent episode of the Nuts and Bolts of Leadership podcast. Christine and Lynnette talked about key insights on building a diversified ESOP holding company, scaling leadership across very different industries, and preparing the next generation of owner-minded leaders.
Here are the highlights.
How OwnersEdge Started: One Company, One Big Idea
OwnersEdge was born from the employee owners within one of its current operating companies. CC&N converted to an ESOP structure in the late 1990s and paid off its seller’s note in 2008. After years of profitable growth, the company had accumulated cash on the books and wanted to invest it for further growth. A new ESOP holding company was founded, with CC&N as a legacy company in its portfolio.
CC&N had already started, grew, and successfully divested a second business from scratch within its own industry. The biggest takeaway was that diversification needed to be a priority. A group of about 20 employees brainstormed, considering industries ranging from pet supplies to wastewater management, coming up with 11 industries to target.
Ultimately, OwnersEdge settled on a careful strategy, resulting in the acquisition of nine other businesses, some of which have been tuck-in acquisitions. Now, OwnersEdge has a portfolio of six diverse operating companies, selected not just for their industry and individual value, but also for their potential fit.
Culture Is the First Filter, Not an Afterthought
Initially, OwnersEdge worked with an investment broker to seek out Midwest- and Wisconsin-based acquisition opportunities. But they soon realized that there needed to be a better, more thoughtful approach.
OwnersEdge decided to prioritize potential acquisitions with the right culture and leadership in place, in addition to the financial focus. Traditional due diligence is completed to see if potential acquisitions are a good fit, not just for the ready-made ESOP structure, but within the established culture of an established ESOP holding company. This approach ensures that potential acquisitions maintain their own identity, but also that they will be complementary operating companies.
It’s a benefit to sellers that they don't have to go out and create their own ESOP. They don’t have to figure out the structure and the complicated process. They can come to us because we already have the structure in place.” - Christine Adee, OwnersEdge CEO
Upon acquisition, operating companies become part of the single OwnersEdge ESOP, and their employees become employee owners. This ready-made ESOP structure gives companies the benefit of maintaining a focus on what they do best in their own industries. They remain focused on growing their own business, but they become part of something far bigger.
Building a Strategy Across Very Different Industries
OwnersEdge specifically considered diversification as part of its continued acquisition strategy. Diversification allows operating companies to learn from each other without directly competing, while still tapping into the overall benefits of the ESOP holding company’s shared edge.
For example:
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OwnersEdge HR leaders have the opportunity to sit in on the leadership teams of each operating company to deeply understand skill needs, customer expectations, and culture.
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Ideal sharing and synergies happen across operating businesses.
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Operating companies occasionally collaborate, with one company as the customer and the other as the supplier.
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Employee owners may move from one operating company to another if there is a better skill fit and need.
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When an operating business needs capital, it can look first to OwnersEdge instead of a lending institution.
The connection that all operating companies share helps propel the entire organization forward. This united environment gets the leaders to compete in their respective industries, not across the holding company.
Scaling Leadership in an ESOP Holding Company
OwnersEdge has refined its leadership model in the decade since its inception, but one thing has remained constant: making leadership development a priority. The goal is to support self-aware leaders who understand their teams’ strengths and can lead without OwnersEdge being on-site every day.
In addition to actively leading within their own companies, operating company leaders also model and develop the next generation of leaders through their day-to-day interactions and more formal programming.
“I believe you truly scale leadership when your current leaders are producing other great leaders.” - Lynnette Fritz, OwnersEdge CHRO
OwnersEdge schedules regular lunch-and-learn sessions. These leadership sessions focus on different topics and include internal company speakers and external speakers presenting on varied topics. But there are also more formal leadership programs and processes in place.
All operating companies practice four people-first pillars, designed to be easy to remember, practical, and easy to implement:
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Show you care: Leaders prioritize 1-on-1s with their team members. Leaders aren’t expected to always solve team members’ problems, but rather to teach how to problem-solve.
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Set clear expectations: Leaders are expected to hold themselves and others accountable, which establishes a solid framework.
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Provide candid feedback: Leaders use their expectation framework for planning if a candid conversation is required.
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Practice good decision-making: Leaders are encouraged to listen to others, weigh their input, and thoughtfully make decisions that they can explain.
OwnersEdge views the pillars as an investment of time and attention between employee owners.
The company also prioritizes making leaders stronger by using natural leadership challenges as a way to build resilience.
Next-Level Leadership: “Do Hard Better” for Long-Term Success
On a day-to-day basis, leaders deal with pressure. And sometimes, they can think, “If I just get this done, it's going to be easier.” The goal shouldn’t be to make hard things go away; it should be to build leaders who can navigate hard times with confidence and consistency.
“As leaders, we’re always going to be faced with pressure. That teaches you how to manage through the hard times.” - Christine Adee, OwnersEdge
Continuous leadership growth, especially that developed through challenges, also lends itself to the longer-term vision that ESOPs require. This ownership mindset helps leaders make decisions aligned with OwnersEdge values and the overall capital growth priorities within the ESOP.
Rather than adding headcount, one leader at an OwnersEdge operating company chose to invest in developing an already successful sales team. Instead of assuming more people were the answer, he focused on helping his team perform at an even higher level. By mentoring team members, sharing his sales playbook, and teaching pricing strategies, he equipped them with the tools and confidence to think more strategically. The result was a more engaged team, emerging leaders, and an even stronger sales organization.
Albert Einstein is thought to have said, “Compound interest is the greatest force in the universe.” But that quote doesn’t just apply to money. Christine says it can also apply to people, and this team leader used this situation to compound his energy among his team members. This type of approach also ultimately compounds the OwnersEdge ESOP share value.
The Big Picture: Helping Each Other Win
The OwnersEdge brand promise is: Helping each other win. That promise shows up in how acquisitions are chosen, how leaders are developed throughout the entire organization, and how the OwnersEdge operating companies are growing together.
“Each of our businesses has its own key strategies for what they are going to do in the next five years for their own businesses. But when I think of the people, I wouldn’t start with the spreadsheets and metrics. I think about the talent and energy that comes through it, and how they truly make decisions like an owner.” - Christine Adee, OwnersEdge CEO
The model is also working for OwnersEdge, which plans to add more company acquisitions in the coming years. It's a solid growth trajectory for a company that started as an ESOP, became an ESOP holding company, and continues to bring solid success for its employee owners.
To listen to the full conversation and the insights that Chris and Lynnette shared with the audience, tune in to the Nuts and Bolds podcast. Interested in learning about whether an ESOP holding company and a ready-made ESOP might be the right fit for your company? Contact OwnersEdge to start a confidential conversation.