Example of Capital Allocation Strategy

Why it’s important Managing employee expectations early and in the later years is critical to the benefits of the ESOP. Educating participants is the “why” is not easy as most employees don’t have a finance background. All these concepts come back to “What does it mean to be an owner?” Also there is a difference in value and valuation.

Framework to respond

• Use your professionals to assist in this process

• Correlate the value creation to a concept we all understand, ie. Home and mortgages

• Explaining the concept of debt pay down versus the multiple; enterprise value versus equity value.

• Risk vs. Reward