Two Midlo homebuilders convert to employee-stock ownership

LifeStyle Home Builders team

The team at LifeStyle Home Builders, which recently switched to an employee ownership stock plan. (Photo courtesy LifeStyle)

Employees of two longtime area homebuilders are getting to own a stake in their respective companies.

LifeStyle Home Builders and Main Street Homes each announced this month they have transitioned to employee stock ownership plans, or ESOPs, in which employees share ownership interest in the company through shares of stock.

The moves mean the two builders, both based in Midlothian, are now owned by a trust instead of individual owners. Company profits are used to pay back the loan used for the transaction, and employees are then able to own company stock that, through the trust, works as a type of retirement plan.

Kevin McNulty Lori McNulty

Kevin and Lori McNulty

Kevin McNulty, who has owned LifeStyle with wife Lori since 2016, when founder Lloyd Poe sold them the now-35-year-old company, said he was introduced to ESOPs a couple years ago and considered the structure the right fit for the company, which has 21 employees.

“We saw it as a way to reinforce the culture that we have, which starts with the idea that we don’t feel like we really ever owned the company; we were just stewards of a resource that we have,” McNulty said. “This allows us to reflect that back to the team that builds value into the organization every day.”

Vernon McClure, who founded Main Street Homes in 1996 and has grown it to 90 employees today, said he likewise became aware of ESOPs only recently as the firm was strategizing an eventual succession plan amid acquisition offers from national builders moving into the Richmond market.

“We’ve certainly had people that contacted us in the past. When you’re a business owner and you get to 60 years old or more, you start thinking about how do you transition at some point,” said McClure, 64. “I don’t have family that wants to actively manage Main Street Homes, so there’s really not a way to pass that on to someone. That was part of it, and it gave us a friendly transition.

Vernon McClure mug 2024

Vernon McClure

“The big thing is that the employees will start getting shares right away, and that’ll be really meaningful – probably hundreds of thousands of dollars – in the next 10 years,” he said. “It’s a really big benefit for them. It helps us attract and retain team members. There are some tax advantages, which really help, because that tax savings will help to pay off the note.”

In McClure’s case, he said he financed 100% of the company to make the transaction easier. Company earnings will pay him back over the next eight to 10 years, which McClure said will give the firm time to continue to work through its business plan.

Main Street, which has homebuilding and real estate development divisions, brought in $230 million in revenue last year, McClure said. The company’s recent projects include Cosby Village near Moseley, the 81-home Shire Walk near Short Pump, and the forthcoming 800-home Swift Creek Station near Brandermill.

The ownership entity, a stock corporation, was changed from W.V. McClure Inc. to Main Street Homes of VA Inc. Chicago-based Prairie Capital advised McClure in the transition process.

ESOPs have been growing in popularity across the U.S. in recent years. According to the National Center for Employee Ownership, more than 6,500 ESOPs are in place across the country, covering nearly 15 million participants and holding over $1.8 trillion in assets.

Notable ESOPs include Publix Super Markets and communications firm Padilla, which has an office in Richmond. Locally, companies structured as ESOPs include commercial printer Worth Higgins, electrical equipment manufacturer Power Systems & Controls, and real estate firm Thalhimer, whose ESOP was central to a legal dispute several years ago amid the collapse of construction arm MGT Construction.

ShireWalk1

Main Street Homes’ townhomes at Shire Walk in Henrico. (BizSense file photo)

McClure acknowledged that ESOPs can have some downsides, but he said the benefits to the company in attracting and retaining employees, as well as mapping out a plan for Main Street’s future, outweighed any negatives.

“Probably the downside for an owner is if you’re financing it, then you’re still in the business, so if you just wanted to retire and live in the islands, that’s not going to happen,” said McClure, who said he is staying on as Main Street’s president. “I really enjoy what we’re doing and I want to keep doing it. I just want to have a plan in place, and I think it’s a really good plan.”

Both McClure and McNulty said they have no immediate plans to retire, but acknowledged that moving to an ESOP lays the groundwork for an eventual exit.

“Everybody’s got to retire at some point, but I’m 54 and feel like I still have a lot of runway and a lot still to do in this industry,” said McNulty, who remains LifeStyle’s CEO. “I’m not planning on retiring anytime soon. This is really a long-term transition and strategy to preserve the company for decades down the road.”

Having worked at LifeStyle since 2004, McNulty said he and Lori, who serves as a vice president in the firm, had no qualms about sharing the company’s profits with the rest of Lifestyle’s team. They worked with Washington-based Business Transition Advisors on the move to an ESOP.

McNulty said LifeStyle brought in over $38 million in revenue in 2024, with 56 homes sold at an average price above $600,000. Communities where the firm has been active include River Mill in Henrico and Harpers Mill and Hallsley in Chesterfield.

LifeStyle DesignStudio 1

LifeStyle’s design studio in Midlothian.

“It’s really never been about it serving us; it’s been about the team,” McNulty said of the company he’s led for a decade. As was the case for McClure with Main Street, McNulty said that keeping the company independent was also a consideration.

“One of the reasons we looked at this is because it allowed us to remain in control of the organization and for us to continue to run it according to our core values,” McNulty said, “where if we would have merged with somebody or sold to somebody at some point, we feel like that work that we’ve done building the actual culture of the company would have been lost. That was a big motivator.”

For McNulty and McClure, moving to an ESOP also fulfills a philosophical approach to what it means to lead a business and grow a company.

“For some owners, they like to say, ‘I built this company for 30 years and I want the name to continue.’ That wasn’t quite as much of a thing for me,” McClure said. “I’ve got quite a few people that have worked for me for five, 10, 15, even 20 years, and at this point in my life, just thinking about what my role is, my hope is that I’ll transition more to a leader and founder and coach.”

Added McNulty: “For us, it really comes down to: material things – we all need them; we need money to live and to survive, and we’re blessed in America to live a great life – but at some point there’s only so much that you need.

“If you can take your ability to produce profits and earnings and use that to bless other people and try to help them be blessed in a similar way to the way you’ve been blessed, that’s way more rewarding than putting another dollar to the bottom line of your net worth,” he said. “We just had gotten to a point where we feel like that is a higher calling and is something that’s more important to us.”

LifeStyle Home Builders team

The team at LifeStyle Home Builders, which recently switched to an employee ownership stock plan. (Photo courtesy LifeStyle)

Employees of two longtime area homebuilders are getting to own a stake in their respective companies.

LifeStyle Home Builders and Main Street Homes each announced this month they have transitioned to employee stock ownership plans, or ESOPs, in which employees share ownership interest in the company through shares of stock.

The moves mean the two builders, both based in Midlothian, are now owned by a trust instead of individual owners. Company profits are used to pay back the loan used for the transaction, and employees are then able to own company stock that, through the trust, works as a type of retirement plan.

Kevin McNulty Lori McNulty

Kevin and Lori McNulty

Kevin McNulty, who has owned LifeStyle with wife Lori since 2016, when founder Lloyd Poe sold them the now-35-year-old company, said he was introduced to ESOPs a couple years ago and considered the structure the right fit for the company, which has 21 employees.

“We saw it as a way to reinforce the culture that we have, which starts with the idea that we don’t feel like we really ever owned the company; we were just stewards of a resource that we have,” McNulty said. “This allows us to reflect that back to the team that builds value into the organization every day.”

Vernon McClure, who founded Main Street Homes in 1996 and has grown it to 90 employees today, said he likewise became aware of ESOPs only recently as the firm was strategizing an eventual succession plan amid acquisition offers from national builders moving into the Richmond market.

“We’ve certainly had people that contacted us in the past. When you’re a business owner and you get to 60 years old or more, you start thinking about how do you transition at some point,” said McClure, 64. “I don’t have family that wants to actively manage Main Street Homes, so there’s really not a way to pass that on to someone. That was part of it, and it gave us a friendly transition.

Vernon McClure mug 2024

Vernon McClure

“The big thing is that the employees will start getting shares right away, and that’ll be really meaningful – probably hundreds of thousands of dollars – in the next 10 years,” he said. “It’s a really big benefit for them. It helps us attract and retain team members. There are some tax advantages, which really help, because that tax savings will help to pay off the note.”

In McClure’s case, he said he financed 100% of the company to make the transaction easier. Company earnings will pay him back over the next eight to 10 years, which McClure said will give the firm time to continue to work through its business plan.

Main Street, which has homebuilding and real estate development divisions, brought in $230 million in revenue last year, McClure said. The company’s recent projects include Cosby Village near Moseley, the 81-home Shire Walk near Short Pump, and the forthcoming 800-home Swift Creek Station near Brandermill.

The ownership entity, a stock corporation, was changed from W.V. McClure Inc. to Main Street Homes of VA Inc. Chicago-based Prairie Capital advised McClure in the transition process.

ESOPs have been growing in popularity across the U.S. in recent years. According to the National Center for Employee Ownership, more than 6,500 ESOPs are in place across the country, covering nearly 15 million participants and holding over $1.8 trillion in assets.

Notable ESOPs include Publix Super Markets and communications firm Padilla, which has an office in Richmond. Locally, companies structured as ESOPs include commercial printer Worth Higgins, electrical equipment manufacturer Power Systems & Controls, and real estate firm Thalhimer, whose ESOP was central to a legal dispute several years ago amid the collapse of construction arm MGT Construction.

ShireWalk1

Main Street Homes’ townhomes at Shire Walk in Henrico. (BizSense file photo)

McClure acknowledged that ESOPs can have some downsides, but he said the benefits to the company in attracting and retaining employees, as well as mapping out a plan for Main Street’s future, outweighed any negatives.

“Probably the downside for an owner is if you’re financing it, then you’re still in the business, so if you just wanted to retire and live in the islands, that’s not going to happen,” said McClure, who said he is staying on as Main Street’s president. “I really enjoy what we’re doing and I want to keep doing it. I just want to have a plan in place, and I think it’s a really good plan.”

Both McClure and McNulty said they have no immediate plans to retire, but acknowledged that moving to an ESOP lays the groundwork for an eventual exit.

“Everybody’s got to retire at some point, but I’m 54 and feel like I still have a lot of runway and a lot still to do in this industry,” said McNulty, who remains LifeStyle’s CEO. “I’m not planning on retiring anytime soon. This is really a long-term transition and strategy to preserve the company for decades down the road.”

Having worked at LifeStyle since 2004, McNulty said he and Lori, who serves as a vice president in the firm, had no qualms about sharing the company’s profits with the rest of Lifestyle’s team. They worked with Washington-based Business Transition Advisors on the move to an ESOP.

McNulty said LifeStyle brought in over $38 million in revenue in 2024, with 56 homes sold at an average price above $600,000. Communities where the firm has been active include River Mill in Henrico and Harpers Mill and Hallsley in Chesterfield.

LifeStyle DesignStudio 1

LifeStyle’s design studio in Midlothian.

“It’s really never been about it serving us; it’s been about the team,” McNulty said of the company he’s led for a decade. As was the case for McClure with Main Street, McNulty said that keeping the company independent was also a consideration.

“One of the reasons we looked at this is because it allowed us to remain in control of the organization and for us to continue to run it according to our core values,” McNulty said, “where if we would have merged with somebody or sold to somebody at some point, we feel like that work that we’ve done building the actual culture of the company would have been lost. That was a big motivator.”

For McNulty and McClure, moving to an ESOP also fulfills a philosophical approach to what it means to lead a business and grow a company.

“For some owners, they like to say, ‘I built this company for 30 years and I want the name to continue.’ That wasn’t quite as much of a thing for me,” McClure said. “I’ve got quite a few people that have worked for me for five, 10, 15, even 20 years, and at this point in my life, just thinking about what my role is, my hope is that I’ll transition more to a leader and founder and coach.”

Added McNulty: “For us, it really comes down to: material things – we all need them; we need money to live and to survive, and we’re blessed in America to live a great life – but at some point there’s only so much that you need.

“If you can take your ability to produce profits and earnings and use that to bless other people and try to help them be blessed in a similar way to the way you’ve been blessed, that’s way more rewarding than putting another dollar to the bottom line of your net worth,” he said. “We just had gotten to a point where we feel like that is a higher calling and is something that’s more important to us.”

This story is for our paid subscribers only. Please become one of the thousands of BizSense Pro readers today!

Your subscription has expired. Renew now by choosing a subscription below!

For more informaiton, head over to your profile.

Profile


SUBSCRIBE NOW

 — 

 — 

 — 

TERMS OF SERVICE:

ALL MEMBERSHIPS RENEW AUTOMATICALLY. YOU WILL BE CHARGED FOR A 1 YEAR MEMBERSHIP RENEWAL AT THE RATE IN EFFECT AT THAT TIME UNLESS YOU CANCEL YOUR MEMBERSHIP BY LOGGING IN OR BY CONTACTING SUPPORT@BUSINESSDEN.COM.

ALL CHARGES FOR MONTHLY OR ANNUAL MEMBERSHIPS ARE NONREFUNDABLE.

EACH MEMBERSHIP WILL ONLY FUNCTION ON UP TO 3 MACHINES. ACCOUNTS ABUSING THAT LIMIT WILL BE DISCONTINUED.

FOR ASSISTANCE WITH YOUR MEMBERSHIP PLEASE EMAIL SUPPORT@BUSINESSDEN.COM




Return to Homepage

Subscribe
Notify of
guest

4 Comments
oldest
newest most voted
Inline Feedbacks
View all comments
Bruce Milam
Bruce Milam
13 days ago

Vernon and Kevin are both terrific guys who have built companies that care about their customers and employees. they’ve each served as President of HBAR as well which takes a lot of their time away from the office and their family. Their life’s servitude pillars have been solidly built and maintained. This has been a fun article to start my day.

Bic Mitchum
Bic Mitchum
13 days ago

This is a GREAT way to actually show the company cares for its employees and to not backhandedly force them to rely on something like Social Security upon retirement. I wish more company’s would go this route…

Bruce Milam
Bruce Milam
12 days ago
Reply to  Bic Mitchum

It’s a great way to pass through the assets of a carefully built family business when the next generation isn’t interested in pursuing that course. There’s really no other way to do it without losing the talent who helped build the company. I’m proud of these two guys for setting this mechanism in motion.

Sara McIntosh Stern
Sara McIntosh Stern
12 days ago

Congratulations! Love seeing a couple of long-time local home building companies finding a way to stay in business when the principal is ready to hand over the reins.
So much better than selling out to one of the national home building companies that have little to no investment in a community and therefore their customers.