Banik Communications of Great Falls, Montana Goes Employee-Owned

February 7, 2008

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As small business owners across the country have learned, the toughest trial is maintaining a top-notch staff. In a recent national study, workers between the ages of 18-38 change their job on average of 10 times in their lifetime. With that steady trend on the forefront of any business owner’s mind, Carl and Ronda Banik of Banik Communications http://www.banik.com , an advertising and public relations firms based in Great Falls, have sought a silver-clad solution to the problem.

“Our employees are honest, kind and talented - they are the best there is,” said Ronda Banik, Executive Vice President of the company. “We wanted to find a way to not only reward them, but to keep the team together. The challenges in our industry are exponential, and we’ve got the people who can handle it—we want to keep them. This solution will benefit our clients as well as our talented employees who work so hard.”

Monday, January 28th, the Baniks signed a stock transfer that turns over 65 percent of the company to an employee-owned trust. They also gifted 10 percent of their stock to a five-person management team. The Banik employees, currently numbering 16, will have the opportunity to build their ownership in the 28-year old firm. The Baniks have held the reins at the agency since 1990.

While Carl and Ronda will continue to lead the company, the establishment of the ESOP (Employee Stock Ownership Plan) confirmed the five-person management team as Creative Directors Pat Doyle and Dan Perbil, Communications V.P. Randi Szabo, Financial Officer Patti Nyman and Media Director Heather Burcham.

“Candidly, this is a transition strategy, but we won’t be leaving in the near future,” said Ronda. “More, we’ve wanted to find a way to reward the long-term employees who have contributed to the agency’s tremendous success, and create a mechanism for keeping a great team together here in Montana. These are talented people that could work in any market they choose.”

The Banik’s ESOP has been set up with the help of Marshall & Stevens http://www.marshall-stevens.com/ and ESOP Capital Strategies, Inc. http://www.esopcapital.com/ , two California companies specializing in employee ownership strategies. The ESOP was also orchestrated with help from Banik’s local accountant, Allen Bloomgren with Bloomgren Rivera & Co. PLLC. http://www.cpaking.com/new/cpaking/ The most difficult part of the process was determining a carefully documented valuation for the company so that the price of stock shares could be established.

“This is an industry where we have a changing client landscape year to year,” said Ronda. “We’re selling high-end communication services that serve public as well as private sector accounts and the market needs are constantly changing.”

As arduous as the valuation process was, it validated the Banik’s investment. President Carl Banik, a Great Falls native whose experience of success as a business entrepreneur has been shared with clients for almost 20 years, commented, “The stock sale was a big moment that we’ve worked toward for a long time.” Bringing his usual humor to the occasion, he said, “I might finally be ready to forget my sports car that I had to sell so that we could buy the art department’s first computer.”

From one computer to state-of-the-art equipment, talent and knowledge around every corner of the office, the Banik agency has built a sterling reputation for advertising and public relation services in the financial, telecommunications, health care, construction and other industry sectors, as well as creating a niche in social marketing.

“While the tax advantages and employee benefits are a sound strategy for this business, it should also be noted that the Baniks have been very generous in formulating the plan,” said Ron Farmer, the Marshall and Stevens ESOP consultant who helped orchestrate the restructuring. “They have shown a great deal of consideration for their employees by selling stock to the ESOP at a discounted price as well as gifted stock to employees.”

ESOPs have been growing in strength since around 1974. The corporate structure is designed for tax advantages as well as employee benefits. One of the goals of creating an ESOP within Banik Communications is to share equity in the company with employees to attract, retain and reward a productive work force. The basis is that employees can build substantial retirement reserves that may run to hundreds of thousands of dollars depending on their longevity with the company.

Though Banik Communications is on the small side for employee-ownership, ESOPs can be established for companies both large and small, as long as certain requirements are met and maintained. In Great Falls, there are other notable companies that have similar ESOPs that offer great benefits to their employees.
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