Bayonet Point Sells Out--To Its Employees

IT DIDN'T SEEM RIGHT. And somehow they just knew it wasn't right. So following their gut instincts, the owners of Port Richey, Fla.-based Bayonet Point Oxygen and Medical Supplies decided not to sell their company to a large corporation after all.

Going through the process of due diligence with a national company that was trying to buy us, we realized that we didn't want to do that, says Carol Acevedo, Bayonet's chief operating officer. Even though they said the employees would stay and things wouldn't change that much, there was always a fear of employees' getting laid off, that our branches would be closed down. The owners didn't feel comfortable because they didn't know if these employees were really going to be taken care of. That was their biggest thing.

According to Acevedo, the Bayonet owners, Mitchell Weiner, M.D., and his wife, Paula, explored other options, one of which emerged during discussions with a local physical therapy provider about its business. The PT provider has been 100 percent employee-owned for about 15 years, and after learning more about employee ownership, the Weiners decided they liked what they heard and would sell their company to their employees.

The owners thought this was the perfect win-win situation, says Acevedo. The name of the company won't change, and the employees don't have to worry about getting laid off or having to close down offices. It helped them feel better about doing this also because they were just torn apart about the thought of selling us to a national company and maybe having the name change. We've been around for almost 19 years, and that's important to us because we do a lot of community work. We pride ourselves on things like that, and we don't want to have our name taken away.

Sealing the Deal

IN ORDER TO SELL the company to the employees, Bayonet implemented an employee stock ownership plan, or ESOP, which is a trust governed by retirement security laws that holds stock on behalf of employees and pays out the stock's value when qualified employees leave the company. For such a major transaction, Acevedo says, Bayonet's owners retained the services of an accountant, a banker and an ESOP management advisory company that helped guide them through the deal, making sure they submitted the proper forms to the government and complied with federal laws.

In the end, the Weiners sold 60 percent of the company to the employees and kept 40 percent for themselves. In addition, according to Acevedo, Weiner personally guaranteed the loan taken out for the deal. Once the loan is paid down, the new employee-owners' goal is to purchase the remaining 40 percent from the Weiners.

The ideal thing about this is that there's no money and no risk really to the employees, says Acevedo. When everyone heard we were employee-owned, they thought we took money out of our paychecks to pay the loan. On the contrary, the loan gets paid down every month via our profits from the company, which is even more reason why we have to be very cost-efficient. The more cost-efficient we are, the quicker we pay the loan, the more shares we get back.

Taking Charge

COST-EFFICIENCY, IN FACT, has become the name of the game at Bayonet, says Acevedo. With a vested interest in Bayonet's success, the employee-owners have become more involved in the operations and look for ways the company can save money.

It's not a day that doesn't go by that someone's coming up with an idea or suggestion to save money or cut waste in an efficient way, says Acevedo. We have probably more suggestion boxes than any office I've ever seen. They're constantly bringing in suggestions and ideas, and I see that they've given more input now than they ever have before. Before, people couldn't have cared less. But now they really, truly care about where the money goes. So that's a really good thing that I've seen so far, and I know there's tons more to come.

Since Bayonet has truly become their company, the employee-owners feel that more is personally at stake for them and have therefore become less inclined to leave, Acevedo says.

I've got people here that now say they plan on retiring from this company, says Acevedo. And that was the whole idea. In our industry, in general, there's a lot of turnover. So one thing we've always been trying to do is groom people so that they can stay with us for life because we want people to be able to stay, have a good, secure future, not have to worry about their job and know that when they come in, they're going to have a place.

Proof in the Pudding

AT PRESS TIME, Acevedo was unable to provide numbers about how Bayonet has performed financially since becoming employee-owned. She did say, however, that she felt confident that both revenue and profit have grown. I can also speculate for the year of 2001 that we will definitely be increasing profits and sales without a doubt, she adds.

The other area in which employee ownership has had a positive impact has been in customer service.

I was in the showroom the other day, and a couple of oxygen patients were saying that they felt that our service had gotten even better since we had become employee-owned and operated, Acevedo recalls. She has also noticed changes in the customer satisfaction surveys done for the Joint Commission on the Accreditation of Healthcare Organizations. I am getting a lot more coming back now, she says, and they've got wonderful comments all over them. So obviously something's working out there.

Acevedo does warn her fellow providers that an ESOP might not be for everyone and that each company should consider its employees' attitudes toward ownership before making such a move.

It really depends on what kind of employees they've got there now, says Acevedo. If you don't have a good percentage of your employees that believe in employee ownership, the same waste is going to happen. It depends on the circumstances and the people involved because everything revolves around what type of employees you've got.

If you've got good employees, it could work great, she says. If you're not sure, I'd wait until you get the good employees.

SNAPSHOT

Company Name:
Bayonet Point Oxygen and Medical Supplies

City, State:
Port Richey, Fla.

Main Products/Services:
home medical equipment including seating and mobility products, rehab and respiratory services

No. of Branches: 3

No. of Employees: 34

Accreditation: JCAHO

Association: National Registry of Rehabilitation Technology Suppliers

Has good thinking in business operations paid off for your business? HomeCare magazine would like to hear about it. Contact Richard Park at 800/543-4116, ext. 292; fax: 310/317-0264; or e-mail: richard_park@intertec.com.