“Bill [Hake of FocusCFO] helped take us from cash-basis accounting into the world of ESOPs and was instrumental in the process because it was new for all of us. Bill was able to help us focus on what was really important, and with his help, we were able to elevate and upgrade our processes and systems to align with advanced financial practices.”
– Todd A. Pardon, CEO, French Associates, Inc.
The Backstory: French's Legacy and the Decision to Transition
For more than 50 years, French Associates, Inc. has provided architectural, engineering, planning, consulting, and interior design services in Michigan, with the bulk of its work focused on K-12 education.
For much of its existence, French Associates was family-owned. Then, in 1999, the business was passed to two longtime employees.
Several years ago, these employees-turned-owners made another important decision in the life of the company: They opted to transition the closely held business to one owned by its employees.
Such a structural change is becoming increasingly common in the business world, with more than 10 million employees in the U.S. participating in employee stock ownership plans (better known as ESOPs). For French, it represented a recognition of how vital the collective efforts of the firm had been in building its success over time.
The Challenge: Complexities of ESOP Implementation
Executing such a transition, however, can be highly complex. The owners knew they would need additional resources, so they brought in Bill Hake, a fractional CFO based in Detroit, to help.
Hake has more than 30 years of experience serving as CFO for family-owned companies, and he is now in his third year of supporting French through the transition from privately held business to ESOP, said Todd A. Pardon, CEO of French Associates.
“Bill was used to running full financials for larger companies and understood the next level of accounting needs that went into that,” Pardon said. “He was able to help us focus on what was really important, and with his help, we were able to elevate and upgrade our processes and systems to align with advanced financial practices.”
The Solution: FocusCFO's Expertise and Guidance
The structural transition for the business took about two years. Now, in the firm’s third year as an ESOP, Pardon said it is still navigating new experiences and requirements.
“Once you have an ESOP set up, it’s basically a retirement plan, and at some point, people are eligible to begin withdrawing. Our work now is to make sure we have the right planning and strategy to meet the obligations of our distributions,” Pardon said.
And Hake continues to be a trusted and valued resource, most recently spearheading the process of updating its ERP system to ensure French is well-supported over the long term.
“One of the most important things about Bill in general is that he is just an outstanding cultural fit for our firm,” Pardon said. “We never saw him as anything other than a French team member from day one. That was very helpful because we had total comfort and trust in Bill. He has truly been one of our closest confidants and friends through this whole thing, and I hope we stay close friends for a long time.”
Moving forward, French has ambitious goals, Pardon said.
“Our pipeline is as robust as it’s ever been, and we are planning on several more years of significant growth,” Pardon said. “We’re building our infrastructure to support that growth, and FocusCFO was helpful in getting us to this point. Bill has been the bridge between walking and running.”
Like French Associates, many businesses face complex transitions. If you're considering an ESOP or exploring other exit strategies, don't navigate it alone. A fractional CFO from FocusCFO can help you make informed decisions and ensure a smooth transition. Contact us today to discuss your transition planning needs.
