How Exits Impact Employee-Owners: an Interview With Michelle Waterhouse of Hopkins Printing

Thomas Dudley



The common thread that connects all corners of the employee ownership community is wealth building for working people. Broad-based ownership gives every employee the opportunity to earn the benefits of business ownership, namely access to profit sharing and shares of company stock. Shares in particular represent a major opportunity because they can grow exponentially through compounding. 

To utilize the wealth they have built, employee-owners must eventually turn their shares into cash. That typically happens in one of two ways. At companies that are operating as employee-owned in perpetuity, the company will buy shares back from employees when they leave or retire. But if an employee-owned company ever decides to sell, employee shares are purchased as part of the acquisition. While the sale means one less employee-owned business, it also means access to potentially life-changing wealth for the employee-owners. 

To highlight the dynamics involved in the sale of an employee-owned business, we connected with Michelle Waterhouse, the HR Director of Hopkins Printing, an employee-owned company that was sold January 31, 2022 after nearly 15 years as an ESOP.  

TD: Thank you for taking the time to share your story with us. Why don’t we start with a bit of background on the company.

MW: Hopkins Printing started in the garage of Jim and Arnie Hopkins in the mid 1970’s.  They opened a copy center in downtown Columbus and then moved into color printing in the 80’s. From there they grew to their current location with a 100,000 square foot facility, operating 3 shifts with 100 employees. 

TD: How & when did you get involved in the company?

MW: My parents are Jim and Arnie Hopkins, so I have worked at the company since I was a teenager.  After graduating college in 1990, I took an office role.  As our employee count kept growing, I moved more into an HR role.  I also brought back a new husband from college, Roy Waterhouse.  He and my dad got along well and he has been here 32 years as well.  Roy was the president and CEO before the sale, focusing on sales and marketing.

TD: And when did you first consider employee ownership? 

MW: In 2007 we had entered into an LOI with a publicly traded printing company.  We soon figured out that it would not be a good fit for our employees. My father Jim had already heard of ESOPs and saw it as a way to reward the employees who had helped build the company from the early days. So we reached out to a well-known ESOP attorney here in Columbus to learn more about what it would mean for our company and our employees. 

TD: How did becoming employee-owned impact your business?

MW: Looking back, I would say the most notable impact was employee retention.  Employees realized that they had skin in the game here. This was a stock that they owned and they could help impact the share price every year.  Low turnover is very good for a business in terms of employee knowledge and the cost of training new employees. 

TD: When did you first start thinking about a sale?

MW: We were approached in May of 2021 by a company that owns another very large printing company in the United States because they wanted to get into the type of commercial work that Hopkins Printing does.  Our first concern was: what will this mean for our employees?  We asked to see their employee handbook and their benefit package.  I’m sure this was different than any other merger in their history because we wanted to talk about employees before we talked about money.  We were pleasantly surprised that their handbook was very similar to ours and they provided more PTO than we did.  And their benefits were much better than we were able to provide for our employees.  After we learned these two things, we started moving forward with the process. 

TD: What was the consideration process like?

MW: It was a good process. We spent 5 months working out the details with the new company before we announced anything to the employees.  Both sides spent those 5 months exchanging information to make sure it was going to be a good fit. Our ESOP Trustee and ESOP attorneys helped bridge the gap and helped us navigate all the considerations needed to sell an ESOP company. 

In November we called an all-employee meeting on a Tuesday afternoon.  Our president explained to everyone about the call he received in May and he also explained a little about the company that was buying us and what they were looking for.  Our founder, who was 81 at the time, told the employees why he thought it was a good idea.  He explained how it’s hard to be a small business right now with everyone trying to recover from the impact of the pandemic, all of the regulations, rising health care costs, and so on.  He explained that the next generation of leadership is in their 50’s and will be able to continue and help make it a smooth transition.  

As HR Director, I shared that the new company’s CEO told us that all employees would keep their jobs and that I had been tasked with hiring 25 additional employees to help with the increased work they planned on sending to our plant. I also explained the main perks of their benefit package.  Our COO then explained what it would mean for their ESOP accounts and that they would all have a vote in this transaction.  If they all decided that they didn’t want to sell the company, we would continue being an ESOP and being in business together doing great things.  If we did sell the company, all shareholders would receive 95% of their share value around 90 days after the transaction closed at a premium over our most recent share price that was calculated as of 12/31/2020.  

We then handed every employee a 16 page document that detailed the financial aspects of the sale and their ESOP accounts. All shareholders had one week to research the new company and ask us any questions. We then had a follow up meeting with all employees and our Trustee to answer any questions.  They all then had one week to send their vote to our Trustee.  We have 30,000 shares and the vote was 29,922 yes and 78 no. 

TD: How has the sale impacted your people and your company? 

MW: Many employees owned stock worth hundreds of thousands of dollars. Our concern was that they would get their money and quit their jobs, so we spent the next few months coaching about saving, investing, tax penalties for taking it out early, etc.  We brought in our 401k advisor as an option for employees to be able to talk with someone they have known for years.  Everyone was finding financial advisors and planning for this large influx of money. 

 Shareholders received 95% of their account value as a distribution in mid-May.  They will receive the remaining amount due after the company has closed out all financial issues and collects the 5% holdback from the sale.  We were very happy that no one quit their job!  Most everyone saw it as an opportunity to set their retirement up and transferred the money to another retirement vehicle to avoid taxes and penalties.  Some of our employees had debts that had been hanging over their heads for years, or wanted to pay off credit cards, their car, or their house. Those employees took out some of the money to set themselves up better financially in the present, and then moved the rest aside for a more comfortable retirement. 

 Because we were such a strong company here in our city, the new company kept our name, so we are still Hopkins Printing. They have been sending us work for our plant and their benefits have been amazing.  In addition, their support with HR, IT, production, supplies, and safety, to name a few, has been a big help to us as a small company.  It’s fun being part of a growing, large company.  The key to this sale was that we didn’t need to sell and we took the time to make sure it was win-win-win. It really did work out well for our ESOP, for the new company, and for everyone’s future. 

The above questions and answers were exchanged via email in July 2022. Some answers have been edited for clarity and brevity.

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