VGM Ownership Transfer
Walsh: 'The Best Way to Ensure that the Company Would Stay Together'
Jim Walsh, one of three VGM Group stockholders along with CEO/founder Van G. Miller and Walsh's fellow minority stockholder John Deery Jr., said the decision to transition VGM ownership to its employees was "the best way to ensure that the company operations would stay together and stay located in our home area of Waterloo, Iowa."
In February, VGM announced it was taking steps to give its 400+ employees "associates," in VGM terminology eventual ownership of a company that includes such diverse HME operations as U.S. Rehab, VGM Insurance, VGM Financial Services, VGM Forbin and vgm creative. "We have planned the full transition to take five years with the company being 100-percent employee owned by the end of 2011," Walsh says, adding that the timetable "is subject to adjustment for business conditions and other variables."
Asked what he wants his VGM legacy to be, Walsh first chuckles: "Before you put us in the grave, let me explain that this basically is a 15-year transition. What happens is we gradually change the stock to employee ownership, which should be done within five years. But then it takes 10 years after that for the current shareholders to receive payment for them. So we're not going anywhere. What we're doing is putting the employees in as investors without them having to use any of their money."
As for that legacy, Walsh says, "I hope that what we've done is left them in a strong enough position that they can continue the mission that VGM's been on for 20 years now, which is to strengthen and build an independent home care provider network in the country. We don't want the government to run this business, and we don't want there to be just a few big businesses. We want hundreds and thousands of little hometown-based HMEs to be the survivors."
Walsh says a big concern was that eventually "the company would get broken up and sold off to pay estate taxes and liquidate estates." He points out that the transition plan "also has the added benefit of allowing those to benefit from the future growth and success of the company who have actually created that growth and success."
Employee reaction to the news? "Almost all appreciate the opportunity to have a stake in their place of employment and understand that if the company does well that they will also do well," Walsh says. "Some, of course, are skeptical given the number of companies that have floundered recently and left employees with long tenures in bad economic positions. VGM is in great financial shape at this time, and while no one can say what the future will bring, the present management is confident that employee ownership will only enhance the potential for success."
VGM members, Walsh says, are unlikely to notice any difference in day-to-day operations as the transition plays out. "But of course, over time," he adds, "we do expect that employee-owners will tend to give even better service."
This article originally appeared in the April 2006 issue of Mobility Management.