‘Letting the Wolf into Your House’

Josh Patrick is a tad skeptical of private equity firms that say they want to create Employee Stock Ownership Plans.

Good Morning!

Here are today’s highlights:    

• Is this a good job-interview question: “If you were a superhero, what powers would you have and why?”

• Gene Marks offers some guidance for business owners looking to hire immigrants.

• The job market has certainly cooled, but salaries just ticked up again.

• A Harvard professor argues that employees are more likely to stay engaged if they feel they have a say in important decisions.

SUCCESSION

Josh Patrick took issue with an item in Tuesday’s Morning Report about PE firm KKR trying to change the ESOP regulations to encourage big companies to sell shares to employees: “I believe there is no place for private equity and ESOPs in the same place. Private equity can’t own ESOPs because a trust owns the portion of the stock that’s put into an ESOP. From where I sit, this looks like a play to build value, have a PEG swoop in and buy the company for fair market value, and then flip the for market value. Otherwise, why would PEGs, meaning KKR, have an interest in ESOPs?”

• “If an ESOP is done primarily for financial reasons, it rarely lasts. This is also why the number hovers around 5,000 to 6,000 ESOPs in the country. I could go on about this, but I’ll just end by saying that having private equity involved in the ESOP world feels like letting the wolf into your house.” 

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