Three young workers wearing safety vests and hard hats stand together in a warehouse
Three young workers wearing safety vests and hard hats stand together in a warehouse

Group Sales, Inc. and investing in the future of the team

Creating an ESOP with First Financial

Overview

Wholesale toy distributor Group Sales, Inc. has enjoyed more than 30 years of success. When owners began asking what the next chapter for the company would look like, they consulted their team at First Financial Bank. They received valuable guidance and insight about various business succession options, and with access to the lending solutions offered by First Financial, they chose to sell to an Employee Stock Ownership Plan (ESOP). The transition has been a great success for their close-knit company.

The Problem

During his nine years in the Marine Corps, Jason Ernst worked closely with Group Sales, Inc.—the number one partner for the Marine Corps Toys for Tots Foundation. In fact, Group Sales describes itself as a for-profit company that helps to supply and service the non-profit community. Jason was so impressed by the work he saw, when he left active duty he joined Group Sales in a managerial role. Three years after that, he was given the opportunity to buy into ownership and gladly accepted.

As an owner, Ernst quickly began asking himself what the next step would be for the company. As succession conversations became more earnest in 2020, the group of owners kept exploring opportunities to sell the company. Several attractive deals came to the table, but each time Group Sales chose to walk away.

Too often, people assume you’ll sell and move on. Bringing in an outside party meant no guarantee for the employees, and we care about them. We wanted to make sure the transaction wasn’t only for the owners—it was about the team. – Jason Ernst, President

Solutions with First Financial

Group Sales had been a First Financial Bank client since 2012. Over the decade-long relationship, Ernst found the banking team to be trustworthy and personable.

The relationship began as a business banking relationship, including checking, savings, lines of credit, and term loans. As a seasonal company, Group Sales has encountered banks who First Financial Team’s understanding of seasonal industries and their willingness to look at both twelve months of data and trailing 12-month data has been key to the relationship’s success.

When their Relationship Manager, Kevin Brown, heard about their succession planning challenges, he offered to bring in some colleagues. First, he introduced Karina Horton, Director of Business Succession with Yellow Cardinal M & A Services, a First Financial company. Over the course of several informational sessions, she looked over discussed pros and cons of various scenarios and encouraged them to expand their view beyond strictly mergers and acquisitions. That was when they began considering an ESOP.

We trust them, we have been successful, and in turn they have trusted us. They have been there through it all and have been outstanding to get us where we are today. – Jason Ernst, President

“With an ESOP, the owners are still on the Board of Directors, we’re still making decisions. We make the employees part of that team, part of the decisions,” explains Ernst. “It was taking care of the troops, the team—it was a no-brainer at that point.”

Even better, First Financial Bank has a team of dedicated ESOP professionals with a combined three decades in specialty and ESOP financing. When Group Sales decided to pursue an ESOP sale, First Financial made introductions to an experienced transaction team. Thanks to Group Sales’ years of preparation, the deal went through on time and on budget. Now, after a full year as an ESOP, Ernst is confident this was the right decision.

“Your two main goals are mission accomplishment and troop welfare," he explains. "The mission is the business, and the business has to run. But sometimes the troop is the mission. If I can take care of the team and they can continue to work and take care of the company, and we can take care of the customers, that’s mission accomplishment. You’ve got to take care of your people.”