7/16/25 - 2103: Selling Without Selling Out

Jim: You've tuned into iWork4Him, the Voice of Collaboration for the Faith and Work Movement.

Martha: We are your hosts, Jim and Martha Brangenberg, and our mission is to inspire every workplace believer to recognize their workplace as their ministry place where they work with God every day. What can that look like in your workplace? Let's find out right now.

Jim: Newsflash: most kingdom-minded business owners destroy their culture when they leave or retire. I've seen it over and over. They sell to the highest bidder, or so they think, and when they do, it's usually to a private equity firm. These firms come in, clean house, make the bottom line look awesome, and destroy culture because all they want to do is gain 40% yearly return and sell it four times the price they paid. Five years down the road it doesn't matter that the private equity firm promised to preserve your kingdom culture, it rarely happens.

I've witnessed countless former owners who made a lot of money on the sale, but mourn the loss of all that they poured into their former company, and the loss of a culture that celebrated God and honored people. Love God, love people? Yeah, I recognize that.

We're called in Romans 12:2 to change the way we think. And today, Brandt Brereton will do just that. He's going to bring a solution to the table that solves this problem and honors God with people and still lets the owner retire and make a great profit. Win. Brandt Brereton, welcome to iWork4Him.

Brandt Brereton: Thank you, Jim. And Martha.

Jim: Did I get the last name right, Brandt? I forgot to ask before we started recording. Is that okay? Did I do okay?

Brandt Brereton: You did really well.

Jim: All right, Brandt, we do this with every guest when it's the first time they're on the show. Tell us your Jesus story. When did Jesus change your life?

Brandt Brereton: Yeah, so twofold the answer, I would say. I accepted Christ at age 10 in a Southern Baptist church that we grew up in. But despite that, I would say God benched me. He loved me enough to bench me from investment banking at age 49. And through a series of circumstances, literally gave me no choice but to join this international ministry, evangelical ministry called City Team. So think Inner City Rescue Mission in six different major cities with this seemingly orthogonal other ministry of church planting among various people groups, Muslim people groups in Sub-Saharan Africa.

For example, I got to spend three weeks in Sierra Leone, totally eye-opening experience. So for two and a half years, God benched me for repairs, grounded for repairs, is how I put it, and got me really clear on, I was wrapped around the axel on money, like a lot of us in finance are, and he got me really clear in that two years of grounded for repairs time on money, stewardship, just things that I never would've taken the time to do the deep dive on, and frankly wasn't hearing a lot from pulpits on.

And so that experience, I would say, really informs my conviction to solve this problem and, we can talk about it more, but when you look at the richness of ministry that is happening inside Business as Ministry, so I use this term, BAM acronym, Business as Ministry, I'm sure you guys are all familiar with, really informs like the conviction that I know that this is what I'm supposed to do with the rest of my life. And meeting like-minded men and forming this investment fund to really get serious and intentional about solving the problem.

Martha: That's super. It's interesting that you say, and I think we hear a lot of people say this, that whatever it is that we're internally wrestling with, we may not be hearing it other places. So God is, God has churned you, he benched you, as you said, and had you on the ground for repairs, and the fact that you acknowledge that and that you actually utilized that and allowed him to grow you is huge. And I don't want that to be lost on our listeners because sometimes we can feel like nobody else is wrestling with this issue I'm wrestling with, but God has a plan.

And so this plan, ultimately we're gonna talk about the book that God has written through you called Perpetuate. Jim is holding it up for the YouTube watchers. This problem that you're talking about is perpetuating kingdom culture from the founder to whatever that next is, it's rarely done well, or maybe even done at all. Why is this such an issue for people today?

Brandt Brereton: Yeah, you're right. Here's how I would put it. Imagine a spectrum. In the spectrum are lower middle market business owners that demographically, most of us are baby boomers, have to sell for liquidity. And on the left side of that spectrum are people that just say, I need to get as much cash as I can possibly get, shift the business risk to the third party as much as possible, as fast as possible.

Jim: Hang on, I wanna explain a couple things because you're using financial words and not everybody understands it. Basically the business owner needs to sell it 'cause he's got all of his cash and investments tied up in his business. So he needs cash in order to live in retirement. And the lie in there is that he thinks he needs to get all of it out because he is worried he's not gonna have enough money to get to the end and he or she forgets that God is his provider.

And so they think I've gotta have all this money so that I could do the - I can go on vacation for 30 years. Again, retirement's not biblical. Go to iRetire4Him.com. We have a long conversation about that. We also have a book and a podcast about that. So two lies that are feeding into all this. I wanna make sure that people understand. People think, I gotta have enough money because I've gotta be able to go on vacation for 30 years and pay all my bills. Because I deserve it.

Martha: Because I've worked hard all these years.

Jim: It's right. It's the lie that the American dream is biblical. Okay.

Brandt Brereton: So that's what the world tells us. That's what Wall Street tells us. It's not in the Bible. And I couldn't agree more. And by the way, what makes that so hard to do is the level of taxation, which I'll get into because this strategy, well-worn strategy, addresses the tax issues.

But the spectrum, right? So there's those people that they're not, they don't care about perpetuating the culture of the business. They're just trying to solve for money. On the other very extreme end of the spectrum are deeply committed owners of purpose-driven companies, and they're going to perpetuate the independence and the kingdom impact of the business no matter how much cash on the barrel head.

But if you move one quadrant to the left on that spectrum, and you're in the middle of that curve where most people are being seduced by private equity groups, most of which are secular, trying to get more cash at close than they could get historically from the ESOP transaction, there's a lot, thousands of BAM owners and stewards that if you told them that they could get the same amount of cash at close that they're gonna get by selling to a secular, private equity group, but they get to retain control of the board and perpetuate the kingdom impact and culture of the business because of that retained control...

Jim: Okay. Again, I'm gonna stop you. Just, I wanna make sure I explain stuff because you've got a lot of stuff in your head that makes sense to you. And a lot of people listening today go I don't, tell me, wait a minute. Say this again. The issue is that a lot of owners, as they're trying to get out, they find that the easiest place to sell is not to find another owner that perpetuate and just jump in, or it's not somebody that will rise up within the ranks that's got the cash.

So they go to private equity. Private equity says, Hey, I'll give you X and that X happens to be a very attractive number, and so they sell out. But yet they've had a mindset of faith and work of business as mission. Their culture in their company is a Canaan culture where God is honored and people are loved. That's what they have, and they want that perpetuated.

And so they tell the private equity guys that, like this is what makes my company so awesome. And the private equity guys are looking at the profit and loss and the balance sheet and going, yeah, but I see an extra 200% or 300% in here that I could find if I could just get you out of the way. And so they go in and they buy this, they tell this guy whatever he needs to hear.

Martha: I was gonna say, they're probably saying yeah.

Jim: They say, yeah, sure. Uhhuh. Uhhuh, yep. Yeah, Uhhuh. And then all of a sudden they do it, and then we've heard stories in under six months all the good people are gone, the culture's destroyed. It's cut, sliced and diced and chopped and minced, and nothing is left but a shell of the original company, but it's worth a lot more money because it's more profitable. And what you're saying, Brandt, and really the summary of the Perpetuate, is that an Employee Stock Ownership Plan that can save the kingdom culture.

And when we get back to this conversation in a second, I want to really dig into that and how you got to be so passionate about it.

Martha: He got to be so passionate, and Jim, obviously this resonates with you as well because we have seen the brokenness that comes from this kind of takeover.

Jim: And anybody that's listening to this show for any amount of time understands that we have interviewed thousands of people. We have been on location at hundreds and hundreds of kingdom companies, and we have seen the decimation, the nuclear effect, of these private equity purchases. I mean, it is, it's just, it's heartbreaking. Heartbreaking.

All right. God gives each of us different passions. He's given Brandt a passion to save kingdom culture and one of our passions that Martha and I find ourselves living out is a responsibility to let others know the things that we've learned, like talking about employee stock ownership. Right now there are several things we want our listeners to know that are critical for the Kingdom on how we spend our dollars on things that support our values.

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Brandt, how did you get so passionate about this subject of perpetuating kingdom culture through Employee Stock Ownership Plans?

Brandt Brereton: Yeah, I will. Let me, before I do that though, I'm gonna bounce back to that, I won't spend a bunch of time, but just that last point. So you mentioned, what you just described are secular private equity groups telling people what they want to hear in order to execute against their formula.

Jim: No, I did not. No, I did not. I did not. I am talking about Christian private equity firms that have done exactly the same thing.

Martha: Oh, ah.

Brandt Brereton: So what I would say, my observation is that Christian private equity groups and Christian family offices have generally done, generally, not always, but generally done a good job at allowing that ministry culture and those investments to continue as long as they're holding the investment. But once it's time to sell that company, because of the world that they live in and the fun life, it doesn't matter who they sell it to. And so the problem is just getting kicked down the road.

And so that's what... we all know this: good is the enemy of great. And when you can, through this structure, which is designed to perpetuate independence indefinitely, when you can do that, that's what solves the problem. And the good news is that you can solve this problem without any sacrifice. You can drive the same investment returns. You just need to spend 10 hours understanding some algebra. It really is that simple. But your question is, how did I get passionate about this?

It was the grounded for repairs season of my life to be sure. But then meeting Mike Sharrow and Greg Life, the CEOs respectively of C12 and Convene, and being exposed to these companies that are unbelievable, right? Like just take C12, 2800 companies in that network, 21,000 salvations on average per year in the work workplace, 115,000 people being discipled and probably most notably, $530 million a year coming out of the profits of those businesses into ministry. They're all baby boomers. They're getting picked off by secular, private equity groups or taking the good instead of the great solution.

And so there are people, Jim and Martha, that you and I will meet in heaven literally because of where they worked. They will never darken the door of a church, but because of where they worked and the Christian stewardship and leadership of that business and what's availed to those employees in the workforce, it's bringing thousands of people to the Lord. And we cannot sit back and just let the world, or let financiers, take advantage of it and not perpetuate the most important part of that business.

The most important part of the business isn't the money that's being generated. We, American business people use money, use people to get profits, to get business done. We use people to get profits done and what Jesus wants us to do is use business to get people done.

Jim: Boy. Say it again.

Martha: Oh, that's good. A little slower.

Brandt Brereton: We use, we collectively, American capitalists, I would say, use people to get business done. And as with everything in the kingdom that's turned on its head, what Jesus wants us to do is use business to get people done.

Jim: And I'd say it's not turning it on its head, it's turning it on its feet, 'cause we're turning it right side up.

Alright. I wanna talk about some of the examples, but I wanna go into this ESOP conversation a little bit more because people, that's the solution. And when I read your book, I'm like, okay I get this. And I loved it. It made sense to me because Martha and I have experienced this. Agonizingly have experienced this. Why are ESOPs so rarely talked about? Where did all these misperceptions come from?

Brandt Brereton: That's a great question. Tons of misconceptions. I would say that it's twofold.

One is when these laws came out in the seventies, remember the seventies, right? We were in hyperinflation, stagflation, the stock market was in the tank, and this was a really good solution for sellers of businesses back then, and so all of the CPAs that were practicing in the seventies and maybe up until 1980, really understood these, and there were no misconceptions. They were very popular.

President Reagan came in, changed the country for the better, in my opinion, deregulation, reduction in taxes. The stock market took off and has like a rocket since then, frankly. And there's this explosion of 11,000 private equity groups that got formed over all these years looking at this demographic, baby boomer seller wave, that's cresting over, 20, 30 years.

We're literally right in the middle of it right now. And the younger gen, my son is a CPA, he can barely keep up with the continuing professional education requirements. And so there's so many private equity groups hounding sellers that these CPAs and even attorneys for that matter, are just so busy answering the phone, billable hours, helping these people get these transactions done that nobody had, none of the CPAs of our generation haven't had any reason to go back and dust off those old laws and rules, and so it's just like nobody has studied it.

Some, there's a few, there's a handful throughout the country, and they're huge proponents of ESOP. So I think that's the macro answer to the question. Maybe the micro answer to the question is, and by the way, I was a hundred percent guilty of doing this as an investment banker before I did the deep dive on ESOP, so I am guilty, which is why I know that this is what happens, is I did it.

Martha: Right.

Brandt Brereton: When you don't know enough about something and you get asked about it, it's embarrassing to not be able to explain what you know. So you deflect. You make the water's muddy and you focus people on what you know, or what you want to copy. And so that's a big part of it.

Jim: So we're not gonna be able to cover all of this conversation. Obviously, I encourage you to get a copy of Perpetuate and we'll have a link to that in the show notes.

Brandt, I wanna make sure that we at least address some of really what we're talking about. We're saying, Hey, instead of selling to a private equity group, form an ESOP. So let's explain this ESOP thing because will a business owner have to sacrifice the same selling price that he would've gotten?

Let's just say that the business is worth a million dollar sale to a private equity firm. Small potatoes in today's world, but a million dollars, 'cause a million dollars barely buys a house in California today, a starter home. Not that California's a great place to move anyway, but anyway.

Martha: Off topic here, Jim. (laughter)

Jim: Off topic. Sorry. Sorry. But so let's just say a private equity group's gonna offer Bob a million dollars for his business. Can Bob get the same million dollars from an ESOP?

Brandt Brereton: Yeah, so the ESOP can match third party bids. So you're never gonna sacrifice the valuation of the business when you sell to the ESOP. What you historically sacrificed before our fund was how much cash you were gonna get. So you could sell the business for that million dollars, but instead of getting a half a million in cash and the rest over time from an outsider, you would get a hundred thousand upfront and you would carry back a seller note for 90%.

Now with our fund, so the bank lends to the ESOP, we come below the bank, subordinate to the bank, we also lend to the ESOP. So the buyer of that stock is not some fund that's trying to get control, dictate pace of exit, et cetera, and stress everybody out and make cuts. It's this trust. And the trust buys the shares from the sellers, and the trust also holds this value of stock that the employees get to slowly vest into becoming beneficiaries of the dollar value, just like a family trust.

So the employees don't have to come up with any money. They're not actually buying and holding the stock. They have no say in any kind of changes to the business. They're just like our kids and our grandkids are in our family trusts. They are beneficiaries of the dollar value that's in that trust, and they get money from the trust based on how we write the trust. Exact same concept.

Martha: So I think it's important for listeners... the owners, the founders of the companies really need to be the ones that are aware of this opportunity to do an ESOP. Because it's not like some of the employees, in most cases, they're not gonna get together and go, Hey, we should have an ESOP so we can take over and keep the company the way it is and all of that. So this conversation really needs to get to the founders and owners of these companies, is that correct?

Brandt Brereton: Correct. They need to understand that now because of capital that is lent to the ESOP, our fund and others are popping up, which is fantastic, that you can sell to the ESOP now and retain control, get a bunch of tax advantages, and get the same amount of cash.

Now it's equal. You're not making a financial sacrifice by doing the right thing and selling to the ESOP, you're gonna get the same amount of cash, same valuation, same amount of cash at close, and you get to perpetuate the kingdom impact of that business into the future.

Jim: And that is so important.

Martha: It is. So Jim and I feel really strongly about protecting our values and not compromising the things that we believe in. And earlier in the show, Jim talked about several of our show sponsors that don't compromise their values either. And another way to stay strong and resist the urge to compromise is to surround yourself with other Christians in business that can help you to keep you accountable.

The US Christian Chamber of Commerce is an organization that serves that purpose. The US Christian Chamber connects you to a national network of faith-driven businesses committed to excellence and ethics. So join the movement today. Go to US christian chamber.com and also SWC 2026. I'll put that in the show notes. That is the expo that we will be attending next year, where you can rub shoulders, sit next to each other, and experience commerce in a new kingdom way.

Jim: And not just attending, Martha. You and I will get to be emceeing that event. It'll be a lot of fun.

Alright, so Brandt, in this scenario where Bob, our business owner, doesn't sell to private equity but forms an ESOP, an Employee Stock Ownership Plan, who runs the company then? 'cause Bob wants to retire.

Brandt Brereton: Yeah, great question. So nothing changes in the ESOP structure except the shareholders. So he gets to retain control of his board of directors, right? Which is the most important aspect of this. The board does the hiring and firing of management. And so literally nothing changes except for the shareholders. And so if Bob wants to retire, then by the way, we oftentimes help. We're not gonna force ourselves on anybody, but if they ask for our help, we will collectively come in and help solve for those succession issues.

Jim: Okay. A lot of business owners don't have a board of directors 'cause they've been running the business on their own. It's been their own deal for 40 years. So you're saying they need to form a board of directors that's gonna help perpetuate their kingdom thing before they can actually do this? Because most business owners are like, I got this, I don't need no stinking board.

Brandt Brereton: Yeah. They actually, they do have boards. They just don't know it. But yes, you have to, there's some formalization where you have to operate the business with a, in a board of director governance sort of fashion.

And so yeah, that is part of what you have to do is formalize the corporate governance, which you need to do in order to affect all of these things. But the point is, how do secular private equity groups solve succession when they buy a company? They look and see, is their successor in the business? Generally not. And then they go do a executive search plan. So we collectively can all do that, the very same thing. That's not rocket science to solve for.

Jim: If you're listening to the show today and you know of a business owner who's thinking about selling and they're thinking about private equity, or they're just thinking about selling, you don't know what they're thinking.

Martha: They don't know what they're thinking.

Jim: Brandt, we wanna be able to get in front of the bus because private equity people, I know it's not categorically, but often we'll tell the business owner whatever they need to hear so they can get the deal done. And they'll promise to perpetuate the culture, whatever they gotta do.

And I'm not sending a judgment out here because I know that there's always exceptions to the rule. How do we stop somebody? If somebody's already thinking about selling and they've already talked to a private equity person, maybe they've already even signed a letter of intent, can we get in front of this bus if it's already rolling downhill?

Brandt Brereton: Yeah, if they haven't sold, signed a letter of intent yet, then the answer is clearly yes. If they have signed a letter of intent, the answer is maybe. Generally speaking, the ESOP, which is an internal retirement plan, it's an internal captive buyer of the business, that's not a third party change of control buyer for the business, which is usually how those letters of intent are written.

So what I have seen is almost always the company, even if they're under LOI can be exploring this alternative and not be breaching the terms of the letter of intent. So they just need, they need an hour and a side by side, which is always what we do. Here's the deal that you have in your hand or here's what you're gonna have in your hand, 'cause I've sold thousands of companies to know what's gonna happen, and here's what the alternative would look like with the ESOP. And quantitatively, here are the differences. Here's the amount of after tax cash at close differences, and then qualitatively, here are the differences in terms of your ability to continue to perpetuate culture.

Jim: And if I remember your book correctly, I mean there's a significant tax advantage to an ESOP as opposed to just a private equity sale, correct? You gotta be short on this because we're running outta time.

Brandt Brereton: Yes.

Martha: I feel like this is one of those shows where you have to say, nothing is intended to be as legal advice, but we need to have you consult with Perpetuate Capital.com to find out more information. 'cause we certainly don't want anybody go, I heard on that podcast I could do this. 'Cause we don't know your situations, but there's hope and that's what we want people to hear.

Jim: We have to look at this, this is a stewardship thing. I know, Brandt, you just, I know we could talk about this for seven hours. This is a stewardship thing. The parable of the talents. This is all about the parable of talents. You've been given a business by God. You've been given talents to run that business by God. He has allowed your business to grow, to multiply, to be worth a significant amount of money, so much potential in that business that private equity people are drooling over the chance to get it so they can multiply their money 3, 4, 5 times over a period of five years.

That's the kind of potential you've got. So as a steward, you've gotta ask the question, not in the American dream sense of the way. What does the Bible tell me to do with this? The Lord is saying money is, listen, I'm gonna pave the roads in heaven with gold. The stuff that you think is so important, let's talk about what's really important and that's the souls of the people that have been working for you all of this time and the future people that are gonna work for you.

Yeah, that's why an ESOP is so important. But the question people are asking, especially if there's people thinking about this Brandt, is where's the money coming from? Because the employees, if they had the money, they'd offer the owner the money to buy the business out so that he wouldn't sell out the private equity. 'Cause if any employee knows anything, they know that's a bad deal. Private equity, somebody's gonna lose their job. So where's the money coming from if an ESOP is formed? Where does the ESOP get the money to pay off the owner?

Brandt Brereton: Yeah, the bank lends money to the ESOP and our fund lends money to the ESOP. And so where does the money in our fund come from? It comes from, first of all, our families, where we've invested big percentages of our net worth into the fund. C12 members, Convene members, guys who have sold their business and have a pile of cash and want to pay it forward with others. And individual investors that are looking for income and an inflation hedge through upside. It's basically private equity investors that have been enlightened with this knowledge in this expertise to contort that private equity investment to be a loan to the ESOP.

So the ESOP can do the work. We don't have to have control of things and own things and affect change. What we have to do is provide capital, same return profile, provide capital to excellent run companies that are doing a great job, that don't need to be fixed. We just need to solve for liquidity and control retention, and this is the most elegant solution and structure to do it with.

Jim: That was a lot, you just said a lot, but basically, you're saying in Bob's sale example of a million dollars, the banks are gonna come in, they're not gonna loan more than 80% on that. They're gonna want you to have a 20% equity stake. Are you guys that other 20% equity stake to help get this ESOP started?

Brandt Brereton: In Bob's deal, a hundred percent sale price, he's gonna get 80, he's gonna get 75 to 80% cash at close, and the rest is gonna be contingent.

Jim: Okay.

Brandt Brereton: In our scenario, they're gonna get the same 75 to 80% cash at close, and it's gonna come from a bank, just like the private equity guys do. And it's gonna come from our fund, just like the private equity guys do.

And he's gonna carry back a small seller note, which effectively is equity in the structure 'cause he needs to keep skinning the game on this thing to make sure that everything transitions correctly to the next generation over the next five, five or six years. But because Perpetuates investment fund is filling the hole that has existed and was being taken advantage of by private equity groups, now that we exist and we can plug that hole, equalize cash flowing to the seller at close, but do it in this structure that preserves the integrity of their control and eliminates all taxation on the earnings engine that is the business. It's just a better way to go.

Martha: I think the key of what I'm hearing in all of this for the listener is that you've got some people behind you for your fund, Perpetuate Capital fund, that wants this business to perpetuate the kingdom culture that has been created through God's design in whatever industry you're in, whatever amount of employees you have. And so they're gonna, it's a support system in a sense of saying, we want this part to succeed.

We want all of it to succeed. We want the business to continue, but with this amazing kingdom culture. And so I think that's the bottom line of what we want our listeners to hear is that there is other alternatives out there that may not be getting attention where it's needed. And we're so excited that you've put, and I will tell the listeners this is not a 500 page manual - thank goodness 'cause it can be very overwhelming, daunting - this is a book that you can pick up, Perpetuate: Selling Your Business Without Selling Out, that in a day, you could have a better understanding of what God has possible for your business, and then to take the next steps and to reach out on your website, Perpetuate Capital.com, and really pray about how God wants you to take your business into the next generation in a way that will keep it... perpetuating.

Jim: Honoring God and loving people. Brandt Brereton, I know we can talk about this forever and I'm probably just as passionate about this as you are, just don't have the capital. But I'm grateful that you brought this to our attention. I'm grateful that you wrote the book. I'm grateful that Perpetuate Capital is helping solve some of the unnecessary nonsense that's been going on in Christian Kingdom companies over the last several decades. Brandt Brereton, thanks for being on iWork4Him today.

Brandt Brereton: Yes. Thank you. Bless you guys.

Jim: You've been listening to iWork4Him with your hosts, Jim and Martha Brangenberg. We're Christ followers. Our workplace, it's our mission field, but ultimately iWork4Him.