Our CEO’s Reflections on Andesa Becoming Employee Owned

As 2020 New Years’ celebrations wind down, my colleagues at Andesa have reason to continue the celebration. In one of the most dramatic decisions in the company’s history, the 165 employees now own 100 percent of Andesa through an employee stock ownership plan (ESOP) transaction.

John Walker, our founder, shared with me that the transfer of ownership to the employees is the realization of the original vision of Andesa and the culmination his life’s work. In a recorded video message to us following the transaction, he noted, “This is one of the most exciting days of my life and I hope you share my excitement. I am excited that we have such a great staff to turn this responsibility over to. I am excited for you and I hope you are excited for the opportunities it will provide you.”

This type of transaction is unusual in the insurance technology sector. A strong venture capital and M&A market exists in the U.S. today and particularly for technology-based companies. While the shareholders had several alternatives to succession after 36 years in business, why did they choose an ESOP? What does this mean for our employees and what does it mean for our clients?

What Is an ESOP? An ESOP is an employee benefit plan which provides company stock to employees as part of their retirement benefit. ESOPs were developed in the US to facilitate the owners of privately held businesses to transfer ownership to their employees over time in a tax efficient manner. They are established to create a market for the shares in a closely held company in a way that preserves the independence of the business and protects employment in the local economy. Research has shown that employee owned companies foster a culture which ultimately leads to increased engagement, innovation, productivity and profitability.

Why an ESOP? In the evaluation of alternatives to succession, Andesa’s owners determined the ESOP provided the best economic model to enhance the firm’s employee-focused culture, align with our life insurance client partners, position the company for future growth and truly live into the Andesa Forever vision we espouse.

Succession in the typical technology investment playbook typically occurs every three to five years, to the detriment of both employees and clients. The usual “innovate, build, scale, sell” lifecycle followed by most technology companies is not an alternative that aligns with our Andesa Forever vision nor does it honor the commitment Andesa makes to its employees or its clients. An ESOP provides the pathway for employees to share in the success of the company which they work so hard to build and prosper. It is more important that we ensure our firm’s values, culture, client relationships and legacy remain intact through succession. This contrasts with what could be realized by a few more, one-time, rate of return basis points if a strategic buyer or alternative investor was engaged. With the ESOP and transfer of ownership to the employees, now more than ever, individual employees at Andesa matter and can make a difference.

I firmly believe the ESOP model offers Andesa the best opportunity to build a company that will last 100 years. The shared ownership allows us to remain private and self-governed. The economic benefit of the enterprise rewards the employees who make our success possible. The ESOP aligns with our collaborative and continuous improvement culture; both of which are critical elements to the growth and sustainability of our company over the long-term.

What does it mean for our employees? What does it mean for our valued customers? In some ways, this change of ownership is a big change for us. In most ways however, Andesa will continue business as usual; focused on building an employee-first environment, providing high quality products and service to our client partners, innovating, continuously improving and striving to build a company with a long-term horizon.

Our goal is to be a shining example of an employee-driven company; recognized for our values-based culture, superior workforce, and superior service. In this regard, we desire that employee ownership be something more than just a retirement planning strategy.

Our employees have been, and will continue to be, the critical factor to our long-term success. An investment in our employee-owners is an investment in our growth. And while everyone who works at Andesa is already committed, ownership puts that commitment on steroids. It builds business acumen and strategic capacity in our teams.

I believe our employees will be more than just owners on paper but will, in fact, be engaged in critical strategic efforts. Many staff have already been involved with the development of Andesa’s 2020-2024 strategic plan and the launch of an intentional CQI initiative. They also conducted research, recommended changes and implemented those changes to Andesa’s, compensation and benefits programs as well a study to recommend future office space alternatives.

Andesa’s employees have already demonstrated a willingness to accept the responsibilities of ownership. I expect this cooperation and teamwork among employee-owners will determine the future of Andesa. This ownership model means our daily decisions impact the quality of our work and our relationships, with our clients and each other, – not only today but into our future as well.

36 years into the company’s history, I am excited for our future and I am honored to be writing the next chapter in the Andesa “people-first” story along with my fellow owners who are here now and who join us on this journey to make Andesa truly live forever.