1. TRAINING AND EDUCATION FOR EMPLOYEE BUYOUTS FIFTH EUROPEAN MEETING OF EMPLOYEE OWNERSHIP Brussels 16, 17, 18 June 2005 European Federation of Employee Share Ownership Dan Bell (dbell@kent.edu) OHIO EMPLOYEE OWNERSHIP CENTER Kent State University

2. About the OEOC Since 1987 Assisted: 485 companies, 93,000 employees Results: 71 firms employing 14,000 Cost to Taxpayers: $250 per job http://dept.kent.edu/oeoc/

3. USES OF EMPLOYEE OWNERSHIP Owner Driven –Succession Planning –Competitiveness Strategy –Tax Advantaged Corporate Financing Employee Driven –Averting a Plant Shutdown http://dept.kent.edu/oeoc/BuyoutAssistance/ WhenEOMakesSense.htmhttp://dept.kent.edu/oeoc/BuyoutAssistance/ WhenEOMakesSense.htm

4. Education for Seller: Why Employee Ownership Diversify Concentrated Wealth Flexible Multiple Year Transition Out Tax Savings vs Strategic Buyer Price

5. Education for Seller: How to Do the Deal Acceptable Valuation before Going Public Get Commitment (Vote) from Employees Involve Employees in Design Finding Experienced Professionals Grant Money if Job Loss Threatened

6. Education for Seller: Design Issues Administration Cost vs Tax Savings Potential Conflict of Interest as Trustee Repurchase Liability Employee Benefit vs Ownership Culture

7. Education for Buyers Steps In a Buyout Factors to Consider How ESOP or Cooperative Works Design & Structuring Issues

8. Education for Buyers: Steps in Doing a Buyout Education about the buyout Establish a buyout committee Preliminary feasibility assessment Business Plan Negotiate sales agreement with seller Arrange financing Close deal and CELEBRATE!

9. Education for Buyers: Key Factors to Consider Is the current owner willing to sell? Do the employees want to buy? Is there enough time for a buyout? Is the plant competitive? Is competent management available? Is financing available? Will labor-management relations hinder success?

10. Education for Buyers: How ESOPs Work How Does the ESOP Buy the Company? How Do I Get in the ESOP? How Do I Get Stock in My Account? How Do I Get My Money? What Rights Do I Have? –Voting –Information

11. How Do ESOPs Buy Stock? ESOP Company Original Owners Employees Bank LOAN A LOAN BPAYMENT Stock Employee Owners

12. How Do ESOPs Repay the Loan? ESOP Company Employee Owners Bank Retirement Contribution LOAN A Payment LOAN B Payment

13. How Do I Get Stock in My Account? Company Retirement Contributions Individual Accounts

14. How Do I Get Stock in My Account? Suspense Account (Holds Shares as Collateral on Unpaid Portion of ESOP Loan) Individual Accounts (Uses ESOP Allocation to Repay Loan and Receive Released Shares)

15. Education for Buyers: Design & Structuring Issues Wage Concession / Pension Rollover Shared Governance Individual vs Group Interests Future Employees – Also Owners? Equity Partners

16. OEOC Web Site Resources http://dept.kent.edu/oeoc/BuyoutAssistance/StepsinBu yout.htmhttp://dept.kent.edu/oeoc/BuyoutAssistance/StepsinBu yout.htm http://dept.kent.edu/oeoc/BuyoutAssistance/Preliminary Feasibility.htmhttp://dept.kent.edu/oeoc/BuyoutAssistance/Preliminary Feasibility.htm http://dept.kent.edu/oeoc/BuyoutAssistance/KeyQuesti ons.htmhttp://dept.kent.edu/oeoc/BuyoutAssistance/KeyQuesti ons.htm http://dept.kent.edu/oeoc/commonwealthbrochure.pdf http://dept.kent.edu/oeoc/BuyoutAssistance/WhatIsES OP.htmhttp://dept.kent.edu/oeoc/BuyoutAssistance/WhatIsES OP.htm http://dept.kent.edu/oeoc/BuyoutAssistance/CreatingAn OwnershipCulture.htmhttp://dept.kent.edu/oeoc/BuyoutAssistance/CreatingAn OwnershipCulture.htm