Last November, the architecture and engineering firm Guidon – a Krieg DeVault client – became partially employee-owned through an Employee Ownership Trust, or EOT. Guidon’s general counsel, Sonya Seeder, joins Brian Heaton, a longtime Krieg DeVault partner who helps middle- and lower-middle market corporate clients solve problems, to explore this emerging alternative to ESOPs. As they explain to host George Lepeniotis, EOTs operate through an employee ownership trust agreement, as opposed to an ESOP, which is governed by ERISA. Tune in as Brian and Sonya detail implications of the EOT mechanism, post-implementation employee education strategies, and ways that a firm like Krieg DeVault helps companies navigate the EOT process.

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Welcome back to the Krieg DeVault

podcast. I'm your host, George Lepeniotis.

I am joined today in a nice twist

of fate and change of pace for our

podcast by my partner, Brian Heaton,

but also by one of our

outside clients and friends.

I am joined by Sonya Seeder, general

counsel of, and I want to say this right,

it's Guidon, correct?

Yes.

Architects and engineers here

at a regional architectural

and engineering firm

here in Indianapolis. Sonya,

let me give you the floor first.

Tell me a little bit about your background

and how you came to be a general

counsel at Guidon.

Well, I have had a long

and winding career.

I started off as a child

support prosecutor right

out of law school and then

became a deputy prosecutor and worked

for the Public Defender Agency,

switched sides.

And then I went to go work for the

City of Indianapolis and the Office of

Corporation Council, and then

more embedded into agencies.

So business and neighborhood services

where I was over permitting and licensing

and then the Office of Finance and

Management where I handled all of the real

estate for the city,

including the financing and design and

building of a lot of municipal buildings.

That experience put me pretty

squarely into the construction world.

And I then transitioned out and

started working for A&E firms.

So when we do our episode

on thankless legal jobs,

we'll have you back as the star

of the show given your resume.

I've had them all, yes.

Well, very good. And Brian,

you're no stranger to the podcast.

You're no stranger to Krieg DeVault

You serve on the executive committee.

You've been at Krieg, I believe,

your entire legal career,

but give us a little bit of background

because even now I am amazed at the

breadth of your practice.

It seemed to be very capable

at doing almost anything.

That's very kind, George. I have been

at Krieg DeVault my entire career,

starting as a summer associate way back

in the day and have been here now about

20 years, which makes me a lot

closer to then to the beginning,

which is hard to believe,

but it's been a lot of fun.

My practice is pretty wide ranging, but

it's really working in middle market,

lower middle market, helping

people solve problems.

Driving is kind of an outside strategic

advisor on the corporate side.

I have a finance undergrad and an MBA,

and so I just love getting involved

with businesses and helping them with

transactions,

strategic planning and ventures and

things that they're doing on the corporate

side of things. If I'm in a

courtroom, something's wrong,

so I don't go that far, but

yeah, it's been a great ride.

Well, and really that middle item

that you talked about, planning,

corporate planning, it's

part of my practice. It's

part of your practice. Sonya,

we know it's part of your world.

And that's really what we're

here talking a little bit about.

I have been amazed in recent years at

the various structures that now exist for

business ownership and how those are

being utilized in modern business,

not only for what I'll call the

motivational or the organizational

strength that they can provide,

but also as unique succession planning

opportunities. So today,

I think we're going to focus

a little bit on the EOT,

which is an employee ownership trust.

Many of our viewers are probably familiar

with the ESOP or the employee stock

ownership program concept made famous,

I like to say made famous by

Harley Davidson many years ago.

I think they had an employee

ownership component. Sonya,

tell us a little bit about an EOT

and what that has to do with Guidon,

because I think there's a direct

correlation there, isn't there?

Yeah. So on November 1st, 2025,

Guidon became partially employee

owned through an employee ownership

trust.

An employee ownership trust is an employee

ownership mechanism that's created

through a trust agreement instead

of an ESOP is governed by ERISA.

So this is literally just a trust

agreement and it allows for the employees

to own a portion of the company.

So that's where we're at.

You say that it's governed by the

trust agreement as opposed to ERISA.

There's some interesting

reasons for that, right? I mean,

ERISA can be rigid and

cumbersome and have some strict

regulations to it, if

I understand it well.

And I'm not claiming to

be an expert in ERISA,

but is that one of the reasons that you

might look to an EOT instead of an ESOP?

Absolutely.

An ESOP is governed by ERISA and it

creates a defined benefit, right?

An EOT does not create a defined

benefit is a perpetual purpose trust.

It's created for a purpose.

That purpose is most likely for the

benefit of the employees and where our

financial benefit to our employees is in

profit sharing as opposed to a defined

retirement benefit.

Which would be the case in ESOP, a

defined retirement benefit. Here,

let's delve into that a little bit more.

Are there limits to what those financial

incentives can be for the employees

through an EOT?

No. The limit does not exist

in the words of mean girls.

I see Brian nodding or shaking

his head. So Brian, I mean,

that provides a lot of

flexibility, doesn't it?

It does. I think there's a lot of

differences between an ESOP and an EOT.

There's still the mechanism

is to allow for continuity,

stability into the future as opposed

to being more short-term focused.

And we work on a lot of

different transaction types.

I think an EOT is an exciting alternative

to an ESOP that may not be in place.

It is a little simpler. When it comes to

what you compensate through as an ESOP,

you're really looking at participating

based on your ownership of shares

through the plan.

And there can be a lot of variation

for employees and what that looks like.

When you have an EOT in place,

employees are typically more

compensated through profits,

through a profit sharing. They

can be paid through bonuses.

If they are being paid through

the trust and distributions,

then that is more affected by something

that's maybe like hours worked. It's

more evenly spread across the employees.

But the trust stewardship committee,

and we can talk about what that role does,

is responsible for really looking at

the organization and protecting the

organization and maintaining it

into the future for the long term,

for the benefit of all employees,

and not necessarily staggering that

among different levels of ownership.

So it has some of the

same features as an ESOP,

but it's a little more consistent in

terms of what the rights are financially,

but it's really up to that stewardship

committee to decide what's best for the

organization in the short term,

which includes what is paid out

to the employees and how much.

Okay.

And so I think I can understand it from

an employee perspective in the sense

that it provides opportunity in a more

evenly applied fashion without necessarily

the tiers that we sometimes see in

ESOPs. But what would be the benefit,

the initial benefit from

either an owners or a founder

or even an organization that maybe

has a different ownership structure?

Why look at the EOT? What is the

benefits? What are the benefits?

Yeah. Sunny,

I'll jump in and then you can correct me

if I have anything that's different for

you all, specifically at GuideOne. We

work on a lot of standard transactions,

financial buyers, strategic buyers.

There's plenty of private equity firms

and growth-minded companies out there

looking to make investments. And so for

our clients of closely held businesses,

they're looking at those

alternatives, but for a lot of them,

these businesses that they've created

and their employees are like a second

family in and of themselves.

And so how do you keep that family feel?

And ESOP has been an

alternative in the past,

but that still involves a lot of times

bringing in outside investors and things

like that. And from a debt standpoint,

it's more of a financial transaction.

You still have a single buyer

or group taking control,

and there can be more of a

focus on maximizing returns

and trying to justify the

investment you just made.

On an EOT,

by keeping the ownership

within the employees,

with the trust for the

benefit of the employees,

you're really more prioritizing long-term

sustainability and employee engagement

over those short-term gains.

We do have a number of clients who have

historically had family businesses that

have been long-term,

third generation business where they

don't have a fourth generation now to look

to. And so they're saying, "Well,

the employees are kind of the family

and maybe they can step in and do this.

" And it can create a

situation where if the seller,

the current owner wants

to maximize their dollars,

it may not be the best fit for them.

There's other tools that might be that,

but if they're really looking at long-term

impact and legacy and some of those

kind of things, then an EOT

is a really appealing option.

And it really just depends on what the

owner wants and what they prioritize. And

I think for here, for Guidon and

for its owners, it was a good fit.

And Sonya, has that been

what has happened at Guidon?

Was Guidon at a point where it was

looking for another successive generation,

or were there other motivational

factors for the EOT?

There were a couple of motivational

factors. Our founder and president,

Luke Lysing, is fairly young. He's 50.

I hope he doesn't mind me saying that.

So he's going to be around for a

while, but we are a service disabled,

veteran-owned, small business

as a federal designation.

And as we look towards the future, Guidon

will not always be a small business.

So at some point we will

break our size standard,

and there was a lot of

look to when that happens,

what does the company look like? How are

we structured? Who's going to come in?

And at some point, Luke will

step back from the company.

So we were looking for succession

planning and EOT was a great option for

us. And I think that Brian hit the nail

on the head when he said to protect our

legacy.

Luke has really built something here and

he wants to protect that legacy. He's

been able to through the EOT.

And I can tell you one thing

he really liked about it too,

is just that it got ... Well,

we'll be getting money into the hands of

our employees faster than an ESOP will,

and it's going to keep us

competitive. Theoretically,

we are a profitable company. We should

be paying more than our competitors soon.

Yeah. Yeah. Well, I've often thought

that even about the ESOP structure,

EOT structure,

all employee ownership structures are

motivational in the sense that we know

that owners work with a different

mentality and a different motivational

structure than non-owners. It's just

the nature of a capitalist society.

But focusing a little bit on that and

not playing a little bit of the devil's

advocate,

one of the reasons that

we see entrepreneurs start

businesses is obviously the

financial windfall that can sometimes

come when the business is sold in a

traditional manner. How do

you solve that with an EOT?

What is the benefit financially to someone

like Luke who has built something and

is expecting or might be expecting

that payoff? We know in an ESOP,

there are ways to get both, right?

Is that the same with an EOT?

Well, Sony can speak specifically as to

what Luke's motivations may have been,

but there's still a sale. There's

still a sale of ownership to the trust.

There's a valuation done.

And so there's still a

absolute exchange of value.

And so I think that when you look

at it that way, an owner who says,

"I've made my financial goals for me and

my family," and I think you can still

get there. Luke is still going to

be part of their company again.

And the other thing I don't think we've

talked about yet is that this can be

done in stages as well.

And so can start the process while not

fully selling out to the trust yet.

And so it's a really good way to

maybe take some chips off the table,

get this planning done,

and then still make some compensation

through the company and really have a lot

of flexibility in how you have that set

up. For someone who's just looking to

get the most maximum turn of EBITDA

back and then be able to walk

away, this is not the structure,

but a lot of our clients are not

really looking for that these days.

Yeah. Yeah. And we've

seen, not to cut Sonya off,

but we've seen that that has sometimes

failure written on the far side of it for

a business when they lose some of those

founding principles that sometimes

private equity funds can

... Unfortunately, that's

just the nature of it.

So Sonya,

talking about that legacy and then

talking a little bit about Brian's hybrid

approach, because it's a trust, it

can be any amount, correct? I mean,

it can be a portion of the business,

it can be the entirety of the business.

The trust offers a lot of

flexibility, I'm assuming.

Absolutely. So you can do it in portions.

I think there are certain

recommended portions,

but I've heard of businesses that are

talking about doing one and 2% to phase

in. I don't know if that's

good or not, but yeah,

we did a portion of

the business. And also,

I think it's important to say

we're still service disabled,

better known at this time. Luke

still owns a majority of the company,

so we do still carry that

federal qualification as

well as being employee owned.

And we don't know what

the future holds, right?

But we do hope that in the future,

we would be able to go to 100% employee

owned. Obviously at that point,

we would no longer be veteran owned,

but we don't know. We have flexibility,

we have options moving forward,

and I think that's really

the beauty of the structure.

Yeah. Yeah. Let's talk a little bit

about how you go about it, right? I mean,

this has been fascinating. These

usually go about 20 minutes.

We're already 15 minutes in and

just talking about the concept,

but let's talk about the structure,

the nuts and bolts of it. Sonya,

this wasn't just something that you

... I know Krieg helped you some,

but there were other resources you

brought to bear. Talk a little bit about,

you just finished in November, what

did that process look like for you?

So we got an outside

consultant, CommonTrust,

who kind of helped us along the way,

helped us figure out if this

was the right structure for us,

how we were going to structure the deal,

what kind of the ins and outs looked like.

We also used Bill Freeman from Everbridge

Law Group out in Seattle to help

us with the trust portion,

and then obviously Criggable on the

transaction side and the corporate side.

This is a new form of employee ownership

and there's not a ton of case law

or established forms out

there to kick this off.

So every decision that we made, we had

to go through and back check it and say,

"Okay, does this have a tax implication?

Does this have an estate implication?

Does this have a corporate implication?"

And anytime we changed decision,

we had to go back through. And it

was really slow and methodical,

but I think we all, when

we closed the transaction,

felt like we had a good transaction.

And Brian, I mean,

it's rare that we do something

that the size of Krieg DeVault,

our breadth of experience, our years.

I mean, I saw an anniversary coming up.

I mean, we're a hundred plus

years of practicing law.

It's rare that we come up with something

that we don't have a lot of experience

in. These are fairly new.

They are. And I think our ESOP

practice helps from a mentality.

We've got an established ESOP

practice here. And George,

you've done plenty of podcasts with

those guys, and if anyone's interested,

those are good listens.

But having that mentality of

understanding the motivations behind a

seller/owner who wants to focus on

their employees makes us really well

suited to do this.

And then also having a strong trust

in estates department as well.

We've done this with

other clients as well.

Sony's just our favorite to come

in and talk to you all the day,

but had done this with other clients

as well where we have handled the trust

component. And at the end of

the day, it's really about,

and something I think our firm prides

itself on is being a good communicator

with all advisors for the

clients because like Sonya said,

it takes a team effort to do this.

It's valuation, it's legal,

it's accounting, it's all those different

things. Tax. Tax. Yeah, exactly.

And especially it can be a

change of control of the company.

So you're looking at contracts.

If you're in a regulated industry,

you've got to look at licensing.

And because if you're in an industry

where you have to have individual who's

licensed to own it, guess

what? The EOT is not licensed.

So working through all those kind of

issues, and I think it just ... Our role,

and really it was Sonya was

kind of the quarterback.

We were kind of the assistant coach

coming in to help her was having a really

good organized list of

what we needed to get done,

what had to happen first after the

next, and really staying on top of that.

And those are the skills we have

across all types of projects,

but it helped us, I think,

be effective in an area that is new and

exciting and that we're working towards.

And I think hopefully Sonya would

say it worked out pretty well,

even though it took us as a team effort,

a decent amount of time to get through it.

Well, at least on the podcast, she's

going to say it worked out great.

We don't know what she's saying

behind your back. No. Sonya,

your description of it as a

methodical process is the right one.

There are a lot of things I think that

three attorneys in a room will turn into

methodical processes, but this is

one that truly deserves the moniker.

So I can sympathize with what

you've gone through. So okay,

you need the right team, right?

You need the right motivation,

you need the right circumstances. This

isn't going to work for every business.

And then you need the right

team in place to execute.

Let's talk about post-execution

because now you're living with a trust,

ownership, expectations of employees,

explanations with employees,

different communications systems,

regimes. I know it's early.

I know you've only been

at it since November,

but tell me a little bit about how has

life been post implementation? It's.

Really exciting to get to talk freely

about this transaction to people outside

of our company and people

inside of our company.

I work for architects and engineers.

They tend to be much more

transparent than attorneys are.

So we started having conversations with

our employees in springtime of last year

when I did not even know if

this was going to happen.

And that was maybe not the

most comfortable for me,

but we kind of put it out there

that this transaction might happen.

And we started education

almost a year ago.

So we've continued to

educate our employees.

We had a big employee celebration

day. It was a whole day of different,

not super technical trainings,

but just kind of like,

"Here's how we read financials. Here's

what profit sharing will look like.

Here's what it means to be an

owner." If you book a cheaper

flight, it helps everybody.

If you don't stay at the Ritz-Carlton,

it helps our profit share. And really

to implement that ownership mindset,

that's what we've been working on

since we closed the transaction.

I do like to joke that the EOT is no

longer my issue. It's HR's issue now,

but I've been trying to help

them on the implementation.

That's very optimistic of you,

Sonya. Very optimistic of you. So,

all right. Well, and as you

look at the structure, I mean,

the benefits moving forward seem

obvious to me. They seem like, look,

you're right. Efficiencies in costs,

but also increases in production.

Someone who knows that they're going to

directly benefit from the performance of

the organization reacts differently

like we talked about earlier,

but there's more to it than that.

Isn't there? I mean, retaining talent,

recruiting talent, especially in a,

what I'll call a talent deficit market

like the Midwest, especially Indiana,

you've got kind of a lot of room ahead

of you to grow into this thing and really

utilize it to leverage it, I'll say,

to grow the business, don't you?

Absolutely. I mean, our company has

just been growing like Gangbusters,

and I'm so excited to see how we can

grow into this EOT model and what that

means for talent attraction and just for

the culture of our company as we move

forward.

Well, that's cool. Well, with that, thank

you, Sonya, for joining us. Thank you,

Brian, for being here.

For more information on

corporate structures and how

Krieg DeVault can help you

find the right structure

for your business,

take a look at our website

at kriegdevault.com.

You'll find more information on our

entire business acquisition and securities

practice group, including

Brian's bio, my own bio,

and bios of other professionals in our

firm that can help find that right,

perfect entity and

organizational structure.

For more information on

Guidon, its principles,

its theme and what it does, you

can look to guideondesign.com.

Very interesting story, Sonya. I looked

at the website earlier, very cool.

So thanks again to both

of you for being with us.

Thanks to the listener for

joining. Have a great day.

Thank you for joining us on this episode

of the Krieg DeVault podcast series,

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leading business-focused law firm.

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