Screech Owl Business Consulting

Hilltop Manufacturing was founded in 1986 by Frank Delaney in Springfield, Ohio. What started as a modest machine shop with three employees and a single lathe grew over four decades into a precision manufacturing company serving the aerospace and automotive industries. By 2024, Hilltop employed 180 people, generated annual revenue of approximately $42 million, and operated out of a 120,000-square-foot facility that had become an anchor of the local economy.

Delaney, who had built the company from the ground up, was approaching his 72nd birthday. His children had pursued careers in medicine and law—none were interested in taking over the business. The question weighing on him was not whether to exit, but how.

By early 2024, Delaney had received multiple acquisition offers. A private equity firm offered a premium price. A competitor from out of state wanted to acquire Hilltop and consolidate operations elsewhere. A large multinational corporation expressed interest in absorbing the company into its supply chain.

All three offers would have made Delaney a wealthy man—faster and with less complexity than any alternative. But Delaney hesitated.

"I built this company with my own hands, but I didn't build it alone," Delaney later reflected. "I have people who have been with me for over 30 years. Some started sweeping floors and now run entire departments. They helped create every dollar of value in this business".

His concern was what would happen to his employees after he left. The private equity firm would likely maximize profitability through cost-cutting and layoffs before flipping the business. The competitor would probably move production out of state. The multinational would absorb Hilltop into a faceless corporate structure, erasing the culture Delaney had spent decades building.

"There was no way I was going to sell to the sharks," Delaney said. "I worried about what would happen to my workers—people who had given their careers to this place"

Delaney's financial advisor introduced him to the concept of an Employee Stock Ownership Plan (ESOP)—a structure that would allow him to sell the company to his employees over time.

The idea resonated immediately. An ESOP would let Delaney achieve liquidity while ensuring the company stayed in Springfield, preserved its culture, and rewarded the people who had built it. But there was a catch: ESOPs take time. As one expert put it, "You can't retire at 65 and say 'I want to do an ESOP by the end of the year'".

Delaney was 72. He didn't have a decade to spare.

With guidance from a boutique investment bank specializing in ESOP transactions, Delaney structured a phased buyout. The plan was as follows:

Phase 1 (2024): Delaney sold 49% of the company to an ESOP trust established on behalf of all eligible employees. The trust borrowed money from a regional bank to finance the purchase, with Hilltop's future profits servicing the debt. Employees did not contribute any money from their wages.

Phase 2 (2025-2029): Over the next five years, the ESOP would purchase the remaining 51% of the company in annual increments. Each year, Hilltop would contribute shares to the ESOP based on company profitability, and those shares would be allocated to individual employee accounts.

Vesting: Employees became fully vested in their accounts after six years of service. Those who worked at least 1,000 hours per year—roughly half-time—qualified for ownership shares.

Management: Delaney agreed to remain as CEO for three years to ensure a smooth transition, mentoring the management team he had groomed for leadership

Under the ESOP, Hilltop's 180 employees became beneficial owners of the company. Each year, shares were allocated to individual accounts based on a formula tied to compensation—the higher an employee's salary, the more shares they received.

For a longtime production worker earning $55,000 per year, the numbers were compelling. Based on Hilltop's growth projections and historical performance, a worker with 15 years of service could expect an ESOP account balance of approximately $150,000 to $200,000 by retirement. For context, the average ESOP account balance at similar manufacturing companies has exceeded $170,000.

"I've worked here for 28 years," said Maria Gonzalez, a quality control supervisor. "I never imagined I'd own a piece of this place. It changes how you think about your work. When the company does well, I do well. We're all in this together now."

Under the ESOP, Hilltop's 180 employees became beneficial owners of the company. Each year, shares were allocated to individual accounts based on a formula tied to compensation—the higher an employee's salary, the more shares they received.

For a longtime production worker earning $55,000 per year, the numbers were compelling. Based on Hilltop's growth projections and historical performance, a worker with 15 years of service could expect an ESOP account balance of approximately $150,000 to $200,000 by retirement. For context, the average ESOP account balance at similar manufacturing companies has exceeded $170,000.

"I've worked here for 28 years," said Maria Gonzalez, a quality control supervisor. "I never imagined I'd own a piece of this place. It changes how you think about your work. When the company does well, I do well. We're all in this together now."

Year One (2024-2025): The transition was not without challenges. Employees needed education about what ownership meant—and what it didn't. Some initially worried that "employee ownership" was code for wage cuts or increased responsibility without additional pay.

Hilltop addressed this through monthly all-hands meetings, quarterly ESOP education sessions, and an employee committee that represented all shifts and departments. The company brought in outside consultants to help employees understand their accounts, vesting schedules, and the long-term value of their shares.

Year Two (2025-2026): The culture shift became visible. Productivity increased by 8%. Employee turnover dropped to its lowest level in a decade. Suggestions for operational improvements—once rare—began flowing in from the shop floor.

CEO Frank Delaney noted the change: "Before the ESOP, people came to work for a paycheck. Now they come to work for their company. There's a difference you can feel."

Financial Performance: In its first full year as an employee-owned company, Hilltop grew revenue by 12% and profitability by 18%—outperforming industry averages.

By early 2026, Delaney had completed the sale of his remaining shares. His total payout over the multi-year transaction exceeded $15 million—slightly less than the private equity offer, but more than enough for a comfortable retirement.

More importantly, he achieved what he set out to do: the company remained in Springfield. All 180 jobs stayed local. The culture he built endured. And his employees—the people who had helped him build Hilltop into a success—now shared in the wealth they had helped create.

"At the end of the day, my legacy isn't the machines we built or the contracts we won," Delaney said. "My legacy is that this company is still here, still employing people from this community, and now those people own it. That matters more to me than a slightly bigger check from a private equity firm."

1. Founder Commitment. Delaney started planning his exit three years before the first transaction closed. ESOPs require time, patience, and a genuine desire to share ownership—not just a quick exit.

2. No Cost to Employees. Workers did not pay a cent for their shares. The ESOP trust borrowed money to buy the company, and Hilltop's profits repaid the debt. This preserved employee morale and avoided the resentment that might have come with wage deductions.

3. Professional Guidance. Delaney worked with specialized advisors who understood ESOP transactions, bank financing, and the legal complexities involved. "You need experts who have done this before," he said.

4. Cultural Preparation. The company invested heavily in employee education before and after the transition. Ownership without understanding is meaningless.

5. Patient Capital. The phased buyout—49% initially, the remainder over five years—allowed Delaney to gradually transfer ownership while maintaining stability and mentoring the next generation of leadership.

Hilltop's story illustrates a path available to thousands of business owners approaching retirement. According to the National Center for Employee Ownership, there are approximately 6,500 ESOP companies in the United States, employing over 14 million workers.

Yet many owners remain unaware of the option. "Most owners think their only options are private equity, a competitor, or family succession," said one ESOP advisor. "ESOPs provide a compelling alternative that offers liquidity while giving employees a meaningful stake in the company's success".

For owners like Frank Delaney, the choice was never just about money. It was about legacy, community, and the people who made the business what it was.

Hilltop Manufacturing's transition to employee ownership demonstrates that selling to employees is not only possible—it can be the best outcome for founders, workers, and communities alike. The company preserved jobs, maintained its culture, and created meaningful wealth for 180 families.

As Delaney put it on his last day as CEO: "I could have taken the money and run. Instead, I took the time and stayed. And what we built together will outlast me."

In an era when many businesses are swallowed by private equity or consolidated by competitors, Hilltop Manufacturing chose a different path—one that proved you can do well by your employees and still do well for yourself.