Davey Tree Flipbooks

53 52 Growth Rings At All; A Case Study of e Davey Tree Company" published by the Ohio Employee Ownership Center (OEOC) at Kent State University in 2005. "As time was running down to the point where the sale was going to be put together, we were quite concerned," Joy said in 2005. "I called John Miller, who was then the general manager in Canada and said, 'I know the fellows in Canada think the people in the States will buy most of the stock, but we need everybody to buy some.' He offered to get with the eight managers and put something together." Murray Linton, who was district manager of the Toronto residential tree care office at the time of the acquisition, said a handful of Canadian employees decided to buy stock, in part, for self-preservation – something their American comrades could relate to. "I know some people did mortgage themselves pretty tightly or go into some pretty heavy financial commitments to buy stock to make the whole thing happen," Linton said in a June 2000 interview. "And it was more to hold our jobs, hold Davey Tree. Because if it was gone, it was gone." As a result, the participating Canadian managers provided enough to ensure the employees could buy the 60,000 shares needed to make the agreement work, according to the OEOC report. Yet, the deal was far from done. On Aug. 7, 1978, a division manager of the company made a proposal to the Davey family to buy his division. A week later, one of Davey Tree's competitors made an offer to buy the company. e employee committee responded by adjusting its proposal to increase the cash redemption and installment redemption share prices. e committee made its final offer on Aug. 16, 1978. It was approved in substance by a committee of Davey's board of directors that same day. One month later, on Sept. 12, 1978, the full board of directors sanctioned their committee's acceptance and approved the purchase of the company by the employees. On Nov. 6, 1978, Society National Bank of Cleveland and U.S. Trust Company committed to provide up to $11.3 million for the employees' purchase of the company, for the refinancing of outstanding debt, and for capital expenditure and working capital needs. On Nov. 16, 1978, concurrent redemption and offering plans were filed with the U.S. Securities and Exchange Commission (SEC). e SEC granted final approval of the prospectus describing the plans on Feb. 4, 1979, and the prospectuses were mailed to approximately 300 shareholders and 1,150 employees on Feb. 7, 1979. On March 15, 1979, the redemption and offering plans were consummated and ownership control of the company officially changed hands. A total of 114 employees participated in the purchase and original stock subscription, and more than 400 employees participated in the ESOP. Prior to the employee acquisition, the Davey family owned 246,455 shares, or 70 percent of the total shares outstanding. After the transaction, the employees, together with the ESOP, owned 215,656 shares, or 68 percent, of the total shares outstanding. Two important elements made the employee acquisition possible. e first was Brub Davey's dedication to the employees, as shown by his willingness to leave his shares in the company so the employees could afford the acquisition. e second was the inclusion of the Pine Knoll Nurseries, Inc., property in Suffern, New York. Per the financing deal, Society Bank had a lien on the Pine Knoll property so that, when it sold, the bank would retain the proceeds and apply them to the employee- acquisition loan. In 1980 the company sold the Pine Knoll property for $2 million – the equivalent of more than $6 million in 2017 dollars – to help pay down the debt from the acquisition. Truly, two key components comprised the acquisition itself. First was the dedi- cation of 114 employees who subscribed to buy 64,552 shares. is original stock subscription commitment amounted to about 30 percent of the shares the employees and the company had to obtain in order to afford to buy the company from the Davey family. Second is the role the Employee Stock Ownership Plan (ESOP) and the Employee Stock Ownership Trust (ESOT) played in the employee acquisition. e ESOT, as a separate legal entity, included the ESOP. e trust borrowed approximately $2.7 million to buy about 150,000 shares from other Davey family members – excluding Brub Davey's shares – and it was the Davey Tree Company itself that guaranteed the loan. e shares bought by the trust were administered by the ESOP and represented about 70 percent of the shares needed for the acquisition. "is was the biggest piece of the pie," said Dave Adante, retired chief financial officer, executive vice president, and secretary, who joined Davey in 1979. "at's where the majority of shares were acquired and where most of the debt was incurred." Each year, the company made a payment of principal and interest – which it could deduct from corporate taxes – on the loan the trust had obtained. "It was a Chapter 3 Davey representatives gather to sign the documents officially placing ownership of Davey Tree into the hands of the employees. Here the attendees share a light moment before the official signing on March 15, 1979. On March 15, 1979, ownership of e Davey Tree Expert Company officially passed into the hands of the employees. Pictured at the official signing are, seated the members of the employee ownership committee from left, Jim Pohl, senior vice president, finance and administration, Jack Joy, president, and Doug Cowan, corporate controller. Standing from left are Patrick V. Auletta, vice president, Society National Bank, and Joseph Humphrey, vice president, U.S. Trust.

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