Leading a New ESOP-Run Remodeling Company

An employee stock ownership plan (ESOP) is a strong option for transitioning out of a remodeling company, but what's it like for the team? LEFF Design Build became an ESOP Two years ago, and in this podcast episode, president Candice Rania shares the new ESOP experience from the employee perspective.

Rania highlights what Founder Dave Leff did right in the transition, what major changes have occurred since transitioning from sole ownership, and the realities of running a new structure.

"Internal processes and procedures have been reinvented, but our biggest impact was also the ability to reinvent our core values, so really define our culture as an ESOP," says Rania. "Being an ESOP has been an incredible recruitment tool in a surprising way where we really value internally a culture of collaboration and people who are attracted to being on an ESOP want a team dynamic."

Listen to the full interview here

Timestamps:

00:16 Meet Candice Rania: President of LEFF Design Build
00:38 Candice's Journey into the Industry
01:52 Transitioning to an ESOP: The LEFF Experience
06:12 Cultural and Operational Changes Post-ESOP
12:55 Understanding ESOP Structure and Benefits
18:12 Advice for New ESOP Leaders

Transcript:

Caroline Broderick: Welcome back to Women at WIRC, brought to you by Pro Remodeler, Pro Builder, and Custom Builder. On this podcast, we talk to standout women in home building and remodeling to share their business insights and highlight the strong, but small, share of just 11% of the industry.

This episode features Candice Rania, president of LEFF Design Build. LEFF is two years into their transition into an ESOP (Employee Stock Ownership Plan) from a sole-owner company.

Candice shares the changes to company culture, why an ESOP worked for LEFF, the logistics behind it, and where the company is headed. If you’ve ever been curious about ESOPs as a way to transition out of a company, this is a great listen. I also love Candice's story about joining the industry.

She’s been in the industry since she was 16 years old. At 16, her high school provided two pathway options that combined math with an elective, and one of those options was an engineering pathway. Through this, students could learn directly from a retired architect, who helped create internships for some of these students.

Candice found mentors in these experienced architects and eventually decided to study interior design. After that, she went to work for a home builder but then heard about the design-build model at LEFF. To her, she thought, in her words, That is it. That is the recipe—getting everyone involved. That is the way to do construction. She advocated to meet the founder, put a portfolio in front of him, but Dave Leff, unfortunately, said they weren’t hiring.

Two years later, though, they were in need of a new designer, and now Candice is running the company. It really goes to show what can result from an opportunity presented at a young age, and it also shows how determined Candice is. Keep listening to hear more about her experience running an ESOP.

CR:
My name is Candice, and I’m the president of LEFF Design Build here in gorgeous Sonoma County, California.

CB:
LEFF Design Build opened in the ‘70s, is that correct?

CR:
Yeah, 1978. So we’re almost at our—oh shoot, quick math—46th year in business. But I think Dave (the founder) started out as a general contractor, and up until the ‘90s, he was really frustrated with the design-bid-build model. You’d see these great plans, but then competitive bids would come in, and it would usually be twice or three times what the client expected.

Dave wanted a more streamlined process, so he began to really take on the idea of design-build—bringing everything together under one roof. The company has always been forward-thinking, and becoming an ESOP in 2020, when Dave retired and sold the company to the employees, was part of that forward momentum. I want to talk to you a bit about how things have changed now, two years after the transition.

CB:
We talked about how the culture and the company are different now. Can you speak a little bit about when you first discussed the idea of an ESOP and how that process played out until it came to fruition in 2020?

CR:
Sure, it’s been quite the process. About five years before he sold the company, Dave was really transparent with all of us employees. He was getting ready to retire and wanted to ensure the company could operate without his day-to-day involvement. He was inspired by Michael Gerber’s book The E-Myth, which talks about creating a company that can sustain itself beyond the owner. Dave built out a leadership team and made sure the company was truly independent of him before moving forward with the ESOP transition.

First, he tried to sell the company privately. For whatever reason, that didn’t work out. I wasn’t in the room for those discussions, but I’m relieved because selling to someone outside the company who didn’t understand the culture would’ve been a challenging transition for the employees. Then, Dave was introduced to the idea of an ESOP through one of our clients, Iris Harrell, who owned Harrell Design Build. They’ve done nothing but grow and improve since becoming an ESOP.

CB:
That’s incredible. You mentioned the company is different now—what is it like?

CR:
The market has changed a lot in Sonoma County, so we’ve had to be more agile and innovative. We’ve streamlined our internal processes, going from eight different software platforms to four, which has been huge for efficiency. We've also rebranded to LEFF Design Build, leaning into architecture and design as key selling points, alongside construction.

But one of the most significant changes has been defining our core values. We brought together the heads of every department to discuss what being an ESOP means for our culture and where we want to go as a company. Our core values now are Be Bold, Stay Curious, and Move Together. We even have an MVP program where employees nominate their colleagues for embodying these values. It’s been an incredible shift.

CB:
Now that you’re a few years into the ESOP, what have been the greatest benefits and differences compared to before?

CR:
Transparency, for sure. Dave was always good about open-book management, but now we have quarterly shareholder meetings where the financials are fully transparent. In those meetings, I make it clear that I work for them—they don’t work for me. Everyone is responsible for the company’s success, and it really fosters a sense of ownership and responsibility, especially when the market is lean like it is now.

Listen to the full podcast episode above.