As retirement neared, Butler and Till chose to protect their company culture with an ESOP
by Sarah Stranahan
When Butler/Till’s original founders Sue Butler and Tracy Till began to look at retirement, they were concerned about protecting their company culture. They had thought they would look for a compatible buyer but instead chose to transfer ownership to employees through an ESOP. As part of our employee ownership and sustainability series, we spoke recently with Sue Butler about Butler/Till, her passionate embrace of employee ownership, and how mission-led employee-owned companies are more likely to protect people and the planet.
The Origin Story
In the early 1990s, Sue Butler and Tracy Till were two working moms in the advertising business in Rochester, New York. Till worked at Young and Rubicam and Butler ran her own small firm, buying media placements on TV, radio, and print outlets for advertisers. “In those days,” Butler recalls,” the creative side ruled the advertising business. It was all about the concept, the message, and the jingle. Maybe, if there was time at the end of the meeting, there might be some discussion about where to run the ad.”
In 1998 Till left her job with Young and Rubicam and she and Butler started Butler/Till, a marketing and advertising firm. “There were only three of us and we ran the company out of my living room,” recalls Butler. “In 1998 the Internet was fairly new, and there was no social media. As the media landscape changed, we worked hard to stay on the leading edge.”
By design, the company culture was different than other advertising agencies. Instead of a high-pressure competitive environment, “we wanted to create a place where you could be a mom and still be successful.” Butler/Till stressed teamwork, collaboration, and “being there for each other. Our philosophy was, if we lift each other up we are all going to rise together faster.”
Butler and Till’s company stayed ahead of the curve through a long wave of media diversification and disruption, from an advertising market dominated by three TV networks to today’s thousands of channels. By 2009 Butler/Till had grown to gross media billings of over $70 million and more than 60 employees, and the company’s founders had started thinking about their retirement plans.
“We assumed we would make a strategic sale to another buyer,” said Butler, ”but we didn’t want to see loyal employees laid off in a merger, and we wanted to protect the collaborative culture and values we had created.” Butler and Till had never heard of an ESOP. “It wasn’t even on our radar screen,” says Butler.
Employee Ownership: A Succession Plan to Protect the Company Culture
Then one day, purely by chance, Butler/Till’s CFO happened to be at a business lunch that included a presentation about ESOPs. She was excited about the opportunity for the founders to reward their employees, protect jobs, maintain the values and culture of Butler/Till, and receive tax-free capital gains on the sale.
“Our accountant had never heard of ESOPs either, and was pretty skeptical about the idea,” said Butler. But they worked through the deal structure and in 2011 Butler and Till sold 51 percent of the company to the ESOP. By 2014 Butler/Till was 100 percent employee owned. The company borrowed money to finance the ESOP and Butler said, “we paid off a seven-year loan in three years.”
The ultimate results were higher productivity, less turnover, and an ownership culture. Butler/Till practices open-book management and also hosts a series of educational sessions on financial literacy so employee-owners can understand how their work impacts company value. Other initiatives include monthly gatherings of employee-owners and leadership to openly share thoughts, suggestions, questions, and concerns; and Culture Crew, a group of employee-owners from all levels of the organization who participate in the interview/selection process for new hires/future employee-owners.
Brand Cool Merger: Embracing Sustainability
In 2015, Butler/Till acquired Brand Cool, a Rochester-based marketing agency focused on the energy sector. It was a strategic acquisition, combining Brand Cool’s energy expertise with Butler/Till’s sophisticated media analysis. “The strength of Brand Cool in the energy/sustainability space was very appealing, as was the similar culture and values of the firm,” explained Sue.
Butler/Till followed Brand Cool to become a certified B Corp, embracing the B Corp triple aim of protecting profit, people and the planet, and the employees at Brand Cool joined Butler/Till’s ESOP.
Brand Cool helps governments, utilities and corporations engage consumers in energy efficiency and sustainability initiatives. A certified B Corp and a woman-owned business with strong environmental values, Brand Cool, like Butler/Till, had invested in creating a collaborative, caring corporate culture. And the merger has been a great success: the combined agencies now have more than $185 million in billings, and Brand Cool recently opened a branch office in San Francisco to bring its renewable energy expertise to the West Coast.
The two companies also shared some of their innovative corporate designs: Butler/Till followed Brand Cool to become a certified B Corp, embracing the B Corp triple aim of protecting profit, people and the planet, and the employees at Brand Cool joined Butler/Till’s ESOP. Though Butler/Till hadn’t been looking specifically to grow its environmental portfolio, it found a natural fit with the values-based focus of Brand Cool, as well as with its caring culture.
Advocating for Employee Ownership
After successfully managing the ESOP and a leadership transition, both Butler and Till are happily retired and still serve on Butler/Till’s Board of Directors. But Butler was not ready to retire her messaging skills, so she got involved in a big campaign — this time for employee ownership.
Sue describes herself on her LinkedIn page as a “passionate advocate for employee ownership,” and has joined the board of the ESOP Association, the flagship advocacy and education organization for employee owners. She consults with business owners considering exit strategies who want to explore the many benefits of employee ownership.
Most recently, she participated in an OWN Rochester meeting to share the Butler/Till story of successful transition of a privately owned business to an ESOP. And in 2017 Butler/Till became a founding member of Certified Employee Owned, a rigorous certification program for companies that are at least 30 percent employee owned. According to Thomas Dudley, a co-founder of Certified EO, “By creating a common brand for EO, we’re combining the reach of our members to raise the profile of employee ownership.”
There isn’t a better partner than Butler/Till to spread the message of employee ownership. As Kimberly Jones, the current president of Butler/Till, put it, “We believe that employee ownership is perhaps the best-kept secret of our economy. It strengthens communities, fosters a financially savvy workforce, increases resiliency during recessions, and offers big benefits during economic booms. It’s a sound choice economically, with several tax and financial incentives to its name. It also empowers employees to think and act like owners, which results in an engaged workforce, happy customers, and sustainable financial success that in turn benefits the community.”
Sarah Stranahan is senior editorial associate at The Democracy Collaborative and a leading member of its Fifty by Fifty employee ownership team.
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