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Capstone Headwaters Advises Nicklas Supply on the Creation of ESOP to Preserve Family Legacy

November 2019

Pittsburgh, PA - Capstone Headwaters, a leading international investment banking firm, advised Nicklas Supply, a plumbing wholesaler, on the creation of an Employee-Owned Stock Ownership Plan (ESOP). Terms of the deal were not disclosed.

Nicklas Supply was founded by Elmer J. Nicklas Jr. in 1956. Elmer’s sons, Mark and John, were groomed to run the wholesale plumbing supply business. Together, they grew the business which today has five stores with nearly 70 employees serving a majority of Western PA.

Upon John’s retirement in 2013, Mark was still 10 years away from retiring. The question became, “What will happen to the family business in the next decade?” Mark was concerned not only for his three sons that had built their careers on carrying on the family business, but also for all his employees, which he considered an extension of his family. Mark would receive several offers to sell the company, but he knew that was not the route to go because it would jeopardize his parent’s legacy, along with the job security of his employees. But Mark had to also find a way to satisfy the shareholders of Nicklas Supply.

When Mark Nicklas expressed these concerns to his financial advisor, it was suggested that he go the path of an ESOP and he was referred to Dan Zugell, Senior Vice President for Business Transition Advisors – the ESOP division of Capstone Headwaters.

“From our initial conversation, Mark expressed his desire to honor and preserve his family legacy while doing right by his employees. The ESOP allowed the family to fulfill their desire to expand the definition of ‘family’ to include the employees whose efforts help make Nicklas Supply the successful and respected company it is today,” Zugell said.

“What I like about having an ESOP is that everyone now has skin in the game,” said Mark Nicklas. “The better the business does, the more their ESOP shares are worth.” 

Another advantage to ESOPs is that profits from the employee-owned portion of the company are tax-free. “The tax ramifications are huge for us and we can reinvest profits back into the business,” Mark said.

Lead Professional

Daniel Zugell

Senior Vice President