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139: From TVF to Empowered Ventures

Bret Keisling is joined by Chris Fredericks, CEO of TVF and Empowered Ventures, who shares both companies' origin stories, the path from TVF to Empowered Ventures, how an EO holding company considers acquisitions, and his EO A-Ha Moment.


Episode 139 Transcript

Bitsy McCann: 00:03 Welcome to The EO Podcast, where we amplify and celebrate all forms of employee ownership.

Bret Keisling: 00:12 Hello, my friends. Thanks for listening. My name is Bret Keisling and as it says on my business cards, I'm a passionate advocate for employee ownership. Last Friday, on Episode 121 of the EsOp Mini-cast, we brought you an excerpt from this full conversation with Chris Fredericks. I'll introduce Chris in just a moment.

Bret Keisling: 00:32 We're going to cover a number of cool topics in our conversation. We get the origin stories of both TVF and Empowered Ventures. We'll see the interplay between a traditional employee owned company and the acquisition and holding company that sprang from the original success, and we get another "A-ha Moment" to share with you. Stay tuned.

Bret Keisling: 00:58 At the end of the episode, I'll share an exclusive discount code that will save you $25 on registration for NCEO's virtual annual conference in April, 2021. I hope you enjoy this conversation.


Bret Keisling: 01:12 I'm joined on the podcast today by Chris Fredericks who is the CEO of TVF, formerly known as Top Value Fabrics, and also the CEO of Empowered Ventures, which is an exciting new acquisition company. Chris, how are you today?

Chris Fredericks: 01:29 I'm great. Thank you so much for having me on the podcast, Bret.

Bret Keisling: 01:32 It's absolutely my pleasure. You and I have gotten to know each other on Twitter and social media and it's just great to have you on and share the connections. So Chris, if it's okay with you, we're going to talk about TVF, we're going to talk about Empowered Ventures, but a lot of us in employee ownership have what I've taken to call the EO "A-ha Moment." Not the moment when we heard about employee ownership, but the moment where we said, holy moly, this is something different. Do you have an EO A-ha Moment?

Chris Fredericks: 01:59 Yeah, definitely. So for me it was 2010. I was the CFO of Top Value Fabrics at the time. And I had been asked by the founder and owner to help him figure out his succession planning for the company. And I had heard of employee ownership and ESOPs at some point before that, but I didn't know much about them. And even at that point, it's not necessarily what immediately came to mind. But the way it transpired, I was handed a large stack of envelopes and like manila envelopes and papers and stuff that the former president of the company had accumulated as he had worked on succession planning options. And I just started digging through this pile of papers and one of the manila envelopes was labeled ESOP. I dug into it and I thought, this is interesting. And just the way it worked out, the paperwork included some contact information, which is for a person who worked for the accounting firm that we worked with and I ended up calling him up and learning more about ESOPs. And from that, it was pretty quickly I realized with a lot of excitement that this was probably, you know, the solution for Dick Hanzel the seller potential seller.

Chris Fredericks: 03:21 But for me personally, it was a huge "A-ha" because I had always had a really big interest in working for a great place to work and being part of something special and big. And I felt like I was still finding -- looking for that, you know, in my career. And I very quickly, when I read that I got very excited because I thought, you know, this could be something I could get really excited about. So lucky for me Dick Hanzel was also interested and supportive and that basically led us down the path to where we are today.

Bret Keisling: 03:58 That is excellent. And what I like Chris is it's not just what you saw it do for Dick, but it was what you recognized as the own, your own potential on your own career path and where you want it to be. That's very powerful. I love that.

Chris Fredericks: 04:13 Yeah. Thank you.

Bret Keisling: 04:14 Chris, professionally, before you joined TVF how did you how did you come to find yourself at TVF? Give us a little bit about your background.

Chris Fredericks: 04:23 Oh yeah, definitely. So coming out of high school, I took a personality test -- one of those career personality tests -- and it basically said that I should be an accountant and I don't know why it just seemed like it fit. So lucky for me, there's a good university nearby where I grew up here in central Indiana, Indiana University has a really strong business program. And so I went to college just thinking I would be probably an accountant. And I was one of the few people who once I took an "Intro to Accounting" class, I actually liked it. So I ended up sticking to the path.

Chris Fredericks: 05:00 I graduated and went to work for a public accounting firm, a regional firm called BKD. And then I spent my first four years in audit, basically working on non-profit organizations. And I found that really interesting. I enjoyed it, but I started having the thought that a lot of people have, which is I'm probably not going to stay in public accounting for my entire career. So I just started looking at opportunities and very quickly, I got lucky and a recruiter called with an opportunity at Top Value Fabrics. It was kind of a mid-level accounting job and it seemed interesting that it was, you know, seemed like a good company and a solid future long, strong background as a business. So I basically just took it with the hopes that it would be, you know, a good career move and lucky for me, I think it was.

Bret Keisling: 05:52 What's also interesting is that BKD is actually in the employee ownership space. And there are certainly any number of other accounting firms where, but for the twist of fate, you could have easily been on the audit side or even moved over to the valuation side and still worked in employee ownership, but your path was different.

Bret Keisling: 06:11 Yeah. So TVF has a really cool story. We're going to include links to your website on our show notes. Before you tell us about the products or that sort of thing, can you just give us a thumbnail of the history I know from the "A-ha moment, it was 2010 when you guys transitioned or started it. But tell us a little bit about that history.

Chris Fredericks: 06:31 Yeah, so it's a, it was a company started in 1974 by two guys, both named Dick, Dick Hanzel and Dick Leventhal. They had been working for a textile supplier in Indianapolis at the time, a family owned company, but they were not family and, but they both had aspirations to be owners and leaders, you know, take on more leadership at that company. It became apparent that the son of the owner was not going to be open to that.

Chris Fredericks: 07:04 So Dick and Dick chose to basically go start a company on their own and the way they did that is the classic kind of out of your garage story. They literally went and put a card table in one of their garages. They put two phones on it and they bought a bale of canvas, a giant bale of canvas, and they started selling it.

Chris Fredericks: 07:27 So that was kind of the start of TVF and they did a great job and, you know, over the course of, probably about, well, up until 2000, they worked together. They hired, they grew, and they built a nice business together.

Bret Keisling: 07:44 Chris, one of the interesting things, and we'll get back to TVF in just a moment, but essentially your two founders started TVF because they didn't like their bosses' succession plan. I mean, it ties into employee ownership that they wanted something better for themselves and it's the mirror opposite of what you did or similar to what you did, wanting a better opportunity for themselves.

Chris Fredericks: 08:07 That's a great point. I had never quite made that connection, but that is very true.

Bret Keisling: 08:12 So you mentioned the canvas and again, with the website, you have so many cool products. We could the whole time just... I went to your print media site, their banner flags, indoor, I mean just amazing stuff, but why don't you describe the products, what you folks do?

Chris Fredericks: 08:28 Yeah, we sell a lot of different types of fabrics for a lot of different end uses. Really thousands, honestly, of SKUs, you know, in terms of styles and colors. We're probably one of the most diverse fabric suppliers in the country, if not the world! So we sell a lot of industrial heavier duty fabrics for things like luggage and outdoor gear. That's a big chunk of our product line, but we also sell a lot of athletic apparel fabrics. So this would be performance polyesters and things that would be similar to Nike or Under Armour fabrics. And then we sell a lot of other things too, like the signage fabrics that you're referring to. So a lot of printable textiles for home decor, signage, and then another, a whole other group for things like truck tarps and more really industrial fabrics. So we have a very wide gamut in terms of the product line that we sell.

Bret Keisling: 09:31 You know, again, just going to the website, it was like, oh, really cool awnings and umbrellas and just, you know, and you have the advantage of so many bright colors and that sort of thing that it really seems like a lot of fun stuff. So Your two founders started together in '74 when you came on board and I'm sorry, did you say '04?

Chris Fredericks: 09:49 That would have been '05.

Bret Keisling: 09:52 '05. About how many employees were there and how many are there now? Take us a little bit through the growth in terms of the people.

Chris Fredericks: 09:58 Yeah, so probably when I started, we were around 45 or 50 focused on Top Value Fabrics. Dick had another business on the side and as a -- to take one step backwards, Dick had bought out his partner back in 2000. So in 2005, Dick Hanzel was the only owner at the time. So yeah, we were around 45 or so employees when I started.

Bret Keisling: 10:24 Excellent. And where are you now?

Chris Fredericks: 10:27 We're probably about mid-70s, 74, 75-ish.

Bret Keisling: 10:32 Okay. And in terms of the last year has been a little bit crazy if you don't mind me asking, how are you holding up in the pandemic? Have you noticed any changes? Anything along those lines?

Chris Fredericks: 10:41 As with a lot of companies, it's been a wild ride. We've definitely outperformed what we feared might be the case. We've been really happy that a lot of our customer groups and a lot of our customers have held up really well. Many of our customers are selling you know, into industries that have actually benefited even from the situation, which obviously no one wants that to be the case in such a difficult time. But you know, some of our customers sell fabrics that get people are at home, making masks out of. Many of our customers as a matter of survival, you know, tried to and did successfully pivot to making PPE, you know, for medical and frontline workers. So, you know, and on the flip side, we also have other customers that have been in some industries that have been hit the hardest. So, you know, you mentioned the banner and kind of signage type fabrics. You know, the trade show industry is one of our key customer constituencies. And as you can imagine, and as I'm sure a lot of people know, there's not very many trade shows happening right now. So that's been a challenge to see some of those customers having to deal with that.

Bret Keisling: 11:54 You mentioned your customers; just very broadly and like you, I'm a proponent of if employee owned companies could do business together, that would be great. I understand that some of your customers are specialty, but once you give a sense of who your customers are?

Chris Fredericks: 12:11 Yeah. So, because the nature of our service is that we're stocking and supplying a lot of fabrics that smaller companies would have a hard time finding and sourcing on their own. So for instance, on the flip side, you know, Under Armour, Nike, they don't need someone in between to find fabrics for them. So our customers tend to be mom and pop or small manufacturers, niche manufacturers spread throughout the country that have a really interesting or unique niche in what they're doing. So maybe they're a really high quality bag producer or, you know, a very niche apparel producer. A good example that I like to refer to as a customer in California that make -- their entire business is making paintball uniforms for adult paintball leagues. So, and they have a whole business built on that. So pretty much every single customer we have is a unique story in and of itself.

Bret Keisling: 13:05 I love that. And I think we shared offline. I did an awful lot of site visits when I was a trustee, I think 120 of them. And there are so many companies doing so many cool things. I would point out that Certified EO now has a directory. I think they've got -- I almost said 5,000 companies listed, that's probably high, but a lot of employee owned companies in there. And it would be really cool if all of us started doing business where we could with other employee owned companies.

Chris Fredericks: 13:37 Yeah. We've got we, I know of at least a few customers that are ESOP companies, as well as some on our supply side as well. So we are aware of some in our industry, for sure.

Bret Keisling: 13:48 So somewhere along the line, Chris, you got the idea for Empowered Ventures to be an acquisition and holding company. Why don't you give us a thumbnail about that endeavor and also just how it evolved, what made you think of it?

Chris Fredericks: 14:05 Yeah. And if it's okay, I want to maybe share a little bit more about kind of what has happened for TVF leading up to that. So since we became employee owned, I came into a situation where I was really, really fortunate to have a team of people and experts that already, where the business was very successful without me. So I didn't need to come in and fix anything and, and our team has continued to do just a terrific job and they've really taken to employee ownership. So, you know, we're really passionate. Our team is passionate about it and loves being employee owned company. And I think that has showed itself in our performance.

Chris Fredericks: 14:44 And so for the last 10 years, you know, we've succeeded and built up a nice, you know, capital base to kind of keep growing from. And at some point it became apparent to me and some of the rest of our leadership too, that we're probably going to need to figure out what we're going to do with our resources. You know, how are we going to invest if we continue to build up, you know, some, some resources. And of course we started looking in our industry for acquisition opportunities or further growth opportunities, and we continue to invest in organic growth and, you know, but we're still, you know, need to figure out what else to do. So, yeah...

Bret Keisling: 15:24 Chris, sorry, but just to drive the point home operations were well-funded. I mean, the company was well, doing well, doing so well that this was excess, this wasn't cutting out -- what existing lines are we going to reduce to do this -- this is on top.

Chris Fredericks: 15:41 Not at all. Yeah. And we obviously benefit from the S Corp tax situation and we were relatively early in our need to plan for RPO [an employee stock ownership plan's repurchase obligation]. So yeah, it's a very good situation, very fortunate situation we've found ourselves in.

Chris Fredericks: 15:56 So thinking about what we're going to do, I, the idea came, you know, what, if we look at companies outside of our industry, so, cause I know that with obviously so many baby boomers still needing to eventually sell their company and find a transition plan, that's still a challenge out there, a market opportunity, even, that needs more good solutions. So the idea for me was, you know, how appealing could it be for an already employee owned company to come in be interested in maybe buying someone's company. I thought that that is worth exploring. So, and with a little bit of research, I found, you know, some ESOP holdcos [holding companies] that are already doing that. So I presented it, ended up presenting it to our board as an idea. And then we basically over the last couple of years decided this is a great path for us. And that is something we could be really excited to do

Bret Keisling: 16:53 Was the due diligence between you and the board akin to 2010 when you were looking at an ESOP generally, in other words, over the course of years, this wasn't, hey, this is a great idea, let's jump in.

Chris Fredericks: 17:06 No, in fact, I mean I, for myself, I started making notes and thinking about it in 2015. So it's not something we just rushed right into. I ended up presenting it in a formal way to the board in 2019. But by that point we had had a lot of conversations and I had put a lot of thought and research into it and I felt like it was an outstanding opportunity for not just us, but for our, what we're passionate about now, which is employee ownership. You know, I think doing acquisitions is one great way to add to the employee ownership totals in this country. And if we could make one small dent in that, I think we'd really happy about that.

Bret Keisling: 17:51 You are singing my song. That is absolutely wonderful.

Bret Keisling: 17:55 So how do you look at comp-- do you have any metrics? And this again is long ball, this isn't like somebody can call you tomorrow and there's a deal in a couple of weeks, but do you have any metrics of the type of countries [companies] you're looking for, or geography or anything like that?

Chris Fredericks: 18:11 Yeah, for us, we're focused for now on the Midwest, Indiana and surrounding states. We're starting on the lower end of size, so $1 to $5 million in owner earnings or EBITDA, and, you know, we want to understand the business. We're not, I'm not, super sophisticated. So, B2B companies that have an understandable business model, but you know, a really interesting niche and reason for their existence. That's what would excite me. So that, that's kind of a general profile, I think, of what we're looking for.

Bret Keisling: 18:44 One of the, and there are several holding companies, one of whom was a client of mine when I was a trustee, a client of our firm, the other I've talked about quite a bit on the podcast, Daniel Goldstein of Folience. And Daniel, I know for example, they, one of the properties is a newspaper company. The other, I believe is an ambulance service, I don't think it's a manufacturer, but so you would look at industries that maybe you could acquire and wanted to go this path anyway, are you wide open to the types of businesses? Are there any parameters at all?

Chris Fredericks: 19:22 Pretty open, we would want to stay within the overall B2B kind of model. I'm not personally super comfortable with retail or, you know, direct to consumer. And then yeah, distribution, niche manufacturing, business services, I think as general categories, that's what we're interested in. But then, you know, in terms of actual industries, it's, it's fairly open, you know, with the exception of maybe not wanting to go into really healthcare heavy kind of a focus. Or just try and make again, making sure it's boring business models that we can understand and appreciate but that have -- I like to think of it as companies that you're surprised to hear that they exist, but then once you realize they exist, it makes total sense. [Laughter.] That's exactly what people say about TVF in Indiana. It's like, oh, I never thought there was a textile supplier in Indiana, but you know, there's a national textile supplier in Indiana. So...

Bret Keisling: 20:19 Chris, as a trustee, I did transactions where an ESOP acquired an employee owned company. I did transactions where employee owned ESOPs acquired non-employee owned companies and brought them into the fold. And as I recall, I even did one where a company formed an ESOP, the acquisition company, right prior to a transaction, and then merged them together, although that five or six years ago. Do you have a preference or any model for whether you're acquiring an employee owned company or non?

Chris Fredericks: 20:56 No, we're pretty open and flexible. I think it really depends on the situation. The situation we really had in mind, as we've gone down this path, is a company that is privately owned, ideally by a founder, probably wants to retire in three to five years. That was kind of the situation we had in mind. Having said that, I think there's a lot of employee owned companies out there that, you know, might be facing an RPO crunch or, you know, might, but love being employee owned. So I think, you know, maybe that's not a good path, but something I've definitely thought about and would be very open to in the right, in the right scenarios.

Bret Keisling: 21:37 I love when you talk about the baby boomers, because, you know, one of the statistics we all know is that only 20% of companies sell and most of those sell on the third or fourth try. So I love the fact that you're looking at non-employee owned companies. And I also like the fact that, and again, I was a boutique ESOP trustee, but you're able to do a transaction with half of the professional advisors, and there's nothing against the professional advisors, but these can be expensive anyway. And if the selling company doesn't have to pay, you know, for the whole set of advisors, it's an easier path to employee ownership it would seem to me.

Chris Fredericks: 22:25 Yeah, it can be. And it definitely is in the right situation. The way I'm thinking about this is there are founders and owners out there who if they've become aware of ESOPs as a good option for them, and they are excited about it, and they have advisors that are supportive, which there are lots of advisors out there who are phenomenal and supportive. So there are plenty of companies that doing an ESOP transaction on their own is absolutely the right move for them. And I, that excites me and I'm happy to even play an informal role and advisor to have that happen when people call me and want to talk about ESOPs, I'd definitely include that as one of the viable paths to becoming an employee owned company. I think my thesis, or my theory here is that there are companies and there are owners out there who for whatever reason become aware of employee ownership and have, are maybe turned off by the process or by something about the process. And maybe they can't even articulate it. And for them, if we can present a different approach that is less complicated in their minds or easier to accomplish, then maybe we can bring more companies into the employee ownership world that just would not have become otherwise.

Chris Fredericks: 23:53 It's definitely not my intention to replace the option of a company selling directly to an ESOP and creating a new ESOP. I think those should continue to happen as they always have been.

Bret Keisling: 24:05 And it would seem to me, Chris, that there are companies, and I think you said this, but that may not even be a good target for you for whatever reason, but would be a perfectly great ESOP on their own. So you're not looking to take anything it's just a different, additional path.

Chris Fredericks: 24:21 Absolutely.

Bret Keisling: 24:21 I imagine at a certain level of deal, your trustee and professional advisors would need to be involved. Certainly with my trustee hat on, I'd be like all of them, but there probably are limits and that sort of thing. Do you know, or have you gone far enough down the path? For example, if we were just doing a traditional transaction and I was the trustee, we can't pay more than fair market value. Is that an actual standard with the holding company or is that a standard that you would adhere to whether, you know, there was some way around it or not?

Chris Fredericks: 24:59 Yeah, no, it's a real standard and it's something that's important to us and that we absolutely want to adhere to. We're very fortunate to have a trustee and valuation advisors and other advisors who are really collaborative and supportive of this path that we're going down. So they will be aware of any and every opportunity that we get serious about and they'll weigh in on it as they see fit to ensure that they do their part of protecting the ESOP and the value that the current participants already have. So, yeah, it's a very collaborative approach. And of course that, you know, adds a step in the process, but it is an important step and not one that we view as problematic for what we're doing.

Bret Keisling: 25:49 Well, and I just, by training and experience default to the legal and regulatory oversight kind of frame of mind, but you're not doing this to diminish value for the TVF employee owners now. So in terms of transactions, you, no doubt are mindful that they have to be good, not just for the selling shareholder, but for TVF.

Chris Fredericks: 26:15 Yeah. That's a great point. And, you know, with doing this, we would be adding more EBITDA, more earnings to the overall company, to the overall holdco, and that will benefit everybody by, obviously, by increasing share price and future projections. And as the acquired companies succeed, existing employees and participants will directly benefit from that on their statements. So obviously there's a financial benefit there.

Chris Fredericks: 26:44 There are other benefits too, though, in terms of being part of a, ultimately a diversified holdco. So having companies in many different industries is our intention. Especially when we look down the road at like a long term vision. I want this to be truly diversified because I believe that will be a good way to protect the value that we are creating. And I think that that could be, that's something that I think there's valid views from many different angles on, but I think that's one of the common criticisms at times that come at ESOPs from maybe less understanding or appreciative, you know, parties out there is the lack of diversification. I view this as one way to at least provide, you know, an answer to that and see that as a benefit for our employees too.

Bret Keisling: 27:39 I like that. I hadn't really thought in the context of the lack of diversification as being a criticism outside of ESOP world, just hadn't given that much thought. I know internally, and if you don't mind, we'll chat about this for a minute or two internally and by that, I mean, in the EO sandbox, there would be strong views. And now I left my trustee firm in June of 2019. So I don't know, my former partners really talented. He might've evolved, but when I was a trustee, I know that this came up every so often in different contexts. And he felt very strongly that a company should stick to operations. That anything related to fabric, anything related to your core, he would look at as okay, whereas I'm not open-ended for example, if you said, hey, we're going to buy a shopping center in Las Vegas, I'd look at your data, but I'd want to know, you know, what you're thinking, but I think that there's more room, as you said, for that growth and diversity. Have you run into those opinions?

Chris Fredericks: 28:52 Yeah, yeah, for sure. And I think there's, there's validity to some of the concerns, I guess? The way I would think about that is each -- it's important that that companies that get into M&A to begin with, you know, even in their own industry, that they're excited about it. And they're excited about that as a new component of the business. You know, I've seen, I have seen some ESOP companies and not a criticism, but it's, they're not really serious about M&A, they say, you know, we're open to acquiring companies, but, you know, they don't necessarily put real resources towards it and invest in it. And it's, they're more interested in focusing on what they're doing and succeeding in what they're doing. And there's actually, I don't think there's anything wrong with that. But I do think there is an opportunity for some ESOP companies that love and or like the idea of doing M&A and finding other companies to buy and include in their operation, be that in their industry or, you know, diversifying and looking outside their industry. For us, it's exciting to me because that original kind of 2010 transaction was the most interesting professional moment for me, like in terms of most rewarding. And I'm also a finance background and, you know, it's interesting to me. You know, doing acquisitions is very interesting to me. So developing that as a capability of our firm is something I think we're capable of and excited to invest in. So if it's for you, and if that, if it sounds like something that the leadership of a company wants to embrace, I think it's a phenomenal way to grow an ESOP, you know, and keep, keep taking it to new levels.

Bret Keisling: 30:47 I got to tell you, I want to splice out what you just said and do like a special little three minutes. I did, I think, over a hundred transactions in my seven years. And I can't tell you how many CFOs and CEOs at the end of the transaction, or worse yet two or three weeks before closing, "When do I get my life back? When can I go back to the job?" When it's so intensive. And for you to describe it now, ten years later saying it was the most professionally rewarding! I kind of want to hold that hope, but you know, anybody who's mid transaction, it gets better!

Chris Fredericks: 31:25 Yeah. Once you sign that paperwork and you look back and think, wow, we really did something here. Like this is a big deal to -- for the employees. It was the process of going to the employees and telling them like, this is what just happened. And their reactions to that definitely made it all worth it.

Bret Keisling: 31:44 I'll circle back to the employees in just a moment, but to finish the thought, if you don't mind, with my trustee hat on some of the things that came to mind, when you talk about the acquisition company is everything's relative to TVF and I don't know your number, so I'll just throw it out. But for example, if you're running at 10% margins and you find another company that's at 14% margins, to me, that's a positive sign, you know, that you can pull folks in. And the one thing with the niche manufacturers or distributors there may be client crossover that is incidental or that you'll discover. So I like the fact, and keeping the metrics that, that, that your top concern is not doing harm to your current employee owners, with the caveat that if you do an acquisition, presumably price might come down for the short term.

Bret Keisling: 32:42 You know, in other words, I'm a company invests in a $6 million piece of equipment that has a perfect ROI, whatever perfect would be. Yeah. The numbers are going to take a hit, share value, might take a hit, but we're playing long ball here. So it seems to me being mindful of everything -- and I like the fact for now that you're saying, Hey, with Indiana and the four or five states around us, that geographically, if something started to get a little crazy, you would be able to be there close enough. You know, you're not buying a business in Guam.

Chris Fredericks: 33:17 Yeah, absolutely.

Bret Keisling: 33:19 Chris, anything about Empowered Ventures you'd like to share? Anything that I didn't ask?

Chris Fredericks: 33:23 No. I mean, we've been at this seriously now for about a year, so we're still early and I've got a partner helping me who is working full-time on it finding opportunities and we've got some really good ones in the works. So we're just really optimistic and excited about the path, but, you know, I'm continuing to be just as excited about TVF as a business as well. So I'm lucky to have two great things going on right now.

Bret Keisling: 33:51 And presumably TVF is, not to minimize your contributions as CEO, but TVF presumably is a pretty well-oiled machine right now. You have a great management team.

Chris Fredericks: 34:02 Yes. And that's kind of back to a point I mentioned earlier. We've got some long-standing VPs that just are tremendous experts in the industry. I've got a really strong CFO right-hand person. And we've got numerous other really strong leaders and managers who've come up over the years. So yeah, I'm super fortunate with the team that we have. And that's definitely enabling me to start to shift and think about Empowered Ventures as a new opportunity for all of us.

Bret Keisling: 34:35 And this goes back a little bit, but we were talking about the professional advisors. And an awful lot of professionals are with larger multi-disciplinary firms. So I guess it goes back to sourcing out the companies that you could potentially buy. And boy, if I were a large accounting firm or a large law firm in the ESOP space,-I'd be reaching out to my non-ESOP partners and colleagues and saying, hey, who could we bring into the ESOP fold? And the professional advisers will recognize what I'm saying; they'll get origination credit if the transaction happens, even if you know, they're not part of the transaction. So there's a lot of good benefit for folks keeping their eyes up, eyes open, and be willing to work with you.

Chris Fredericks: 35:22 Yeah, absolutely.

Bret Keisling: 35:24 So, Chris, if it's okay, let's wind down with just a little bit more about TVF and the employees. You mentioned the kickoff meeting at one point being very exciting when you explained it to the employees. I imagine there were an awful lot of blank faces, as there often are, what is this? And they're taking advantage of us somehow, you know can often come about. You folks in Indiana might be a little more gentler than some, but also in subsequent, do you have annual meetings? And if there've been checks issued for retirees that have really caught some attention. Tell me about the cultural vibe of employee ownership.

Chris Fredericks: 36:00 I think we've had an experience that mirrors what I've heard from a lot of other ESOPs and in a very good way. You know that, like you said, that first meeting, maybe some question marks, some -- a little bit of like confusion, because it's just so new and not something most people know about. And you know, the first year or two, the share price doesn't blow anybody's minds or anything because it's just, you're growing from zero...

Bret Keisling: 36:27 ...and they're not vested.

Chris Fredericks: 36:28 Exactly. But we, you know, we really, I think we had really good advisors, not just in terms of legal and structure and all that, but like advisors who have been through all this and seeing how to communicate early on and set the right foundation. So we were careful to make sure we educate a lot about how an ESOP really works, what it means.

Chris Fredericks: 36:52 It's not a lottery ticket, but it really is a big deal for the long term. And so we set a pretty good foundation at the beginning, our team that really got excited within a couple years because we also embraced change, you know, in terms of just making the business better for them and reflecting ownership as a mindset. So our team fully embraced it and now we've had a few retirements and some good-sized checks and yeah, we have the annual statement party, like a lot of companies do. And there's a lot of excitement about trying to guess the share price. So yeah, I'm personally this, I just find it very rewarding that our team, which is, you know, a lot of great people, are benefiting from what we're doing. So it's pretty, it's pretty awesome.

Bret Keisling: 37:38 By way of winding down, let's talk big picture and it's circles on some points that you made. First of all, Empowered Ventures. I know from your website, you belong to the big three, you belong to The ESOP Association, NCEO and ESCA. It's most of us who are involved support all of them. And that's excellent. There is so much focus and attention and has been since I got into ESOPs in '08 about reaching the selling shareholders. And it seems, and I don't mean to be negative, but we seem to be saying the same things and to the same people and baby boomers are retiring in droves and the things that we all know, but we're not necessarily getting traction. Do you have thoughts? Are we just not saying it enough? Are we not saying it to the right people? Or are we somehow not conveying the right message?

Chris Fredericks: 38:34 You know, it's obviously a very hard question. I think a lot of people do a terrific job and make good progress. And I think the numbers -- just look at the numbers, something like 250-ish companies, private companies are actually transacting each year and becoming ESOPs. So, you know, there's success to build on there, but there is that overall trend that doesn't seem super positive and it's like, we're not having our breakthrough moment. And I think there was a report from Jared Bernstein recently that was really directly about all of this question and what needs to be done. And I think a lot of what it said was fair. You know, like for instance, one of the conclusions that I was actually glad to see was we don't need more tax incentives. Like, of course that would be nice, but like they're there, it's plenty. We really do need to, I guess my only thought is we really need to get more creative because what we're doing, isn't creating that breakthrough moment or, you know, breaking through.

Chris Fredericks: 39:33 We need, I think what we need, honestly, is stories in the media. Not in, you know, our own media, not in our own world, but outside of our world, we need to get our stories into the newspapers and online, of course. But I think we need people to understand, there needs to be a pull effect here, where employees of other companies are saying, gosh, I wish I worked for an employee owned company because I've heard about stories about how great it can be. It needs to be a pull, not a push, I think, ultimately. Now, that's easier said than done, but that's my suggestion.

Bret Keisling: 40:11 That's a great idea. It certainly seems like we are positioned not just with Jared Bernstein, who I think is the Council of Economic Advisers [Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden], but there are two others who are active in employee ownership, and I apologize, I don't have their names in front of me, but one is from Rhode Island, the other from California. And I've done a number of podcasts in the last year, particularly with all the debates, every political leader talks about the issues that employee ownership addresses. You know, it makes our communities more viable. There's less gender wealth inequality, same thing among whites and people of color. You don't move out. You don't sell to a big competitor, you know, as Empowered Ventures points out, you know, the plan is to keep your roots and grow them. And you are right that it seems really robust and at the year, end of 2020, all of the professional advisors that I've worked with, if they were talented, they were busy as heck, you know, the pipeline has come out, but our numbers are down 15% since 1996.

Bret Keisling: 41:16 So here we are really busy. And that's why I was curious about your thoughts because we know it's great. There are some misperceptions, you won't get top dollar, but you get fair market value if you're the selling shareholder and that's more money than you think, you know, for someone listening, but it's, I guess we just keep plugging away in different ways. I do it by the podcast. You're doing it through Empowered Ventures and your support of all the organizations and we just keep trying to get it. But I love the idea of getting more stories out in local media, perhaps like Folience you should look at acquiring a local media company and help us out there! [Laughter.]

Chris Fredericks: 41:57 I love that. That's a good idea.

Bret Keisling: 41:59 Chris, thank you very much. Is there anything regarding TVF or Empowered that I didn't give you an opportunity to say?

Chris Fredericks: 42:06 The only thing I would want to re-emphasize if I didn't do it enough, is I've just my colleagues at TVF are just -- do a phenomenal job. And I'm really fortunate to be able to talk with you today and share what we've been able to do. And it's, they've just done -- I just love working with them, they do a great, great work. So appreciate this opportunity to talk about our story.

Bret Keisling: 42:27 Well, Chris, I'm very grateful. And as you know, pre-pandemic, I spent most of my time traveling between Pennsylvania and Denver, Colorado, and 70 right through Indianapolis, I am in your backyard. So every October, I like to make visits and deliver pie for Employee Ownership Month. And if I'm traveling next October, and I hope we all are, you're on my list. I hope you'll let me bring some pie to your employee owners.

Chris Fredericks: 42:52 Very exciting. We would love that.

Bret Keisling: 42:53 Excellent. Chris, thank you very much.

Chris Fredericks: 42:55 Thank you.


Bret Keisling: 42:59 I appreciate Chris Fredericks coming on the podcast and I hope you enjoyed listening to the conversation as much as I enjoyed having it with him.

Bret Keisling: 43:06 As I mentioned at the top of the episode, NCEO's virtual annual conference will be held April 20th to 21st, 2021. There's also a pre-conference on April 16th. I'm registered for the conference and I hope you will too.

Bret Keisling: 43:22 When you register use the exclusive discount code, EOPODCAST25, and you'll save $25 on your registration. Several weeks ago on Mini-cast Episode 120, Ivette Torres of NCEO told us all about the conference. I hope you'll check out that episode and all of our archived episodes at

Bret Keisling: 43:47 Thank you so much for joining me today. Our country, and all of us are going through a lot together right now and that's how we'll get through it, together, which is in the best spirit of employee ownership. This is Bret. Keisling; be well.

Bitsy McCann: 44:07 We'd love to hear from you! To contact us, find us on Facebook at KEISOP, LLC and on Twitter @ESOPPodcast. To reach Bret, with one "T", email, on LinkedIn at Bret Keisling, and most actively on Twitter at @EO_Bret. Again, that's one "T". This podcast has been produced by The KEISOP Group, technical assistance provided by Third Circle, Inc. and BitsyPlus Design. Original music composed by Max Keisling, archival podcast material edited and produced by Brian Keisling, and I'm Bitsy McCann.

Standard Disclaimer: The views expressed herein are my own and don't represent those of my own firms or the organizations to which I belong. Nothing in the podcast should be construed as guidance or advice of any kind in any field and the fact that I mentioned an organizational website or an advocate or a company on a podcast does not reflect an endorsement, but if you've heard your name or your group's name mentioned on this podcast, I'd love to have you come on and talk about it yourself.

A note on the transcript: This transcript was produced by Temi, an automated transcription service. While it has been reviewed by The ESOP Podcast, we can not guarantee the accuracy of the transcription. Please refer to the original audio when citing sources.


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