Kovatch, now 62, had been president at Kovatch Castings Inc., a Uniontown manufacturer started by his father in 1976, for more than 40 years. The second-generation owner was ready to step back, but didn’t have children in the company “to carry on after me.” “I had looked into the possibility of third-party sale, but one of my board of advisers suggested I consider an (Employee Stock Ownership Plan),” he said. “The more I learned about it, the more ESOP became sort of the clearest strategy to meet my goals.”
There were other benefits. Kovatch can remain connected to the company — he has transitioned to CEO — for as long as he likes and ensure leadership retains some of its core legacy values, such as donating 10% of its pretax earnings to charities tackling poverty and hunger. In addition, establishing an ESOP was an ideal way to reward “our hard-working employees,” he said.
Although Kovatch declined to disclose the financial terms of the transaction, he called the purchase price “very fair.” “Maybe not quite as much as a sell to a third party, but I am very satisfied and was actually a little surprised that we were able to hit the numbers that we did,” he said.