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Real Estate & Construction  June 4, 2010

Alliance employee/owners commit to long term

What happens when a business goes from sole ownership to employee ownership? Perhaps more importantly, why would an owner want the headache of other people in the company telling him how to run the company? If the company is Alliance Construction Solutions, headquartered in Loveland with satellite offices in Cheyenne and Denver, then it works.

Alliance is a general contractor and construction management firm whose services include development, construction, design/build, design/assist and estimating. Among its current projects are three buildings at Cheyenne Medical Center, an MRI facility in Rock Springs, Renaissance Uptown Lofts in Denver, and a waste treatment plant in Roxborough.

The company has been through several incarnations since Ed Baldwin founded Baldwin Construction in Fort Collins in 1982. Ten years later Clayton Schwerin came on board. After he completed a buyout in 1994, the company was renamed Alliance Construction Solutions and moved to Loveland.

Five years later, Bill Joyner, fresh off a 17-year stint as a superintendent with Hensel Phelps Construction Co., bought a 10 percent interest in the company. And then Schwerin stepped down as president at the end of 2009.

On Jan. 1, Joyner had the title of president/CEO. One of the first things he did was open company ownership to all 32 Alliance employees. About half took him up on the offer, at a minimum buy-in of $5,000, and bought as much as 30 percent and as little as 0.5 percent, while Joyner retains 45 percent. Ownership in the privately held company is still restricted to employees but is now by invitation only.

Why split the pie into so many pieces?

Joyner says it just makes sense as a business and for the employee-owners. When employees make an investment – financial and long-term – in a company, they work their hardest to make the business a success.

Economic sense

It also makes sense in the current economic climate. While it’s important that employees have opportunities to grow in their jobs, what’s even more important is knowing that you have a job. Employee-owners, he said, know they have their own destinies in their hands, that it’s up to each of them to ensure the company succeeds. And so they work harder and they work smarter.

Scott Neuenschwander, who earned both his undergraduate and MBA at Colorado State University, is a superintendent with Alliance and one of the younger new owners.

“Being with Alliance for six years, I have a lot of trust in the leadership of the company,” he said. “And seeing how far this company has come in six years, and the people we have in this organization, it was a good opportunity to make an investment for now and into the future. I look at myself as being a long-term employee. What better way then to invest in the company?”

But becoming a savvy business owner takes time, and Joyner is spending that time grooming the new owners. Meetings every other month cover everything from how to read financials to determining how much risk the company should take on. Involving employee/owners in decision-making helps build leadership.

“I turn 50 this year,” Joyner said. “I won’t be with the company forever. My personal goal is that when I’m in my mid to late 50s, I’m out of the business.”

And, he added, when that time comes, transition to new management will be seamless.

“I think the bigger picture is this: We can provide all of our employees with a decent living, not necessarily to make any of us rich, but great if it does,” Joyner said. “But that’s not our purpose. We have to make a profit to stay in business. ‘Profit’ is not a dirty word.”

To protect the company, Alliance has a buy-out provision that allows the company to purchase a departing owner’s percentage at current value. If the value is more than $250,000 the company has five years to make the purchase; if it’s over $100,000, the company has two years.

Only major change

In the six months that Joyner has been president/CEO of Alliance, the ownership structure is the only major change he’s made. “We haven’t changed the direction of the company, the day-to-day building of buildings and construction services,” he said.

What has changed is how the jobs are acquired and the amount of backlog. Design-build projects that involve a team approach with multiple contractors and an architect have been put on the back burner and replaced with hard-bid work.

The stalled construction scene has reduced the company’s backlog of projects to $65 million from a previous high of $120 million, according to Joyner.

“We’re starting to see architects designing more than they were six months ago, but it takes another year to get to us before we see it pick up and translate into actual construction jobs. We usually lag the economy by 12 to 18 months,” he added.

To make up for the slack in the private market, Alliance has gone after municipal projects. But that is not without its risks, Joyner said. “My biggest concern is, over the next 18 months, will public projects continue or will the pressures on tax dollars start shutting down federal and state-funded projects?”

In the meantime, Alliance is creating a niche for itself in the affordable housing sector. Joyner said the transition from hospitality projects to transitional housing was a natural. “We had a big resume in hospitality projects, and that same knowledge and style of construction, which is not being built today, fits with transitional housing. It’s the same, unitized construction.”

An added benefit is that employees like that they’re helping people by building these projects. “It provides a sense of pride to do something that helps society as a whole. As president of this organization, it’s been fun to see,” Joyner said.

And it’s always good to keep the owners happy.

What happens when a business goes from sole ownership to employee ownership? Perhaps more importantly, why would an owner want the headache of other people in the company telling him how to run the company? If the company is Alliance Construction Solutions, headquartered in Loveland with satellite offices in Cheyenne and Denver, then it works.

Alliance is a general contractor and construction management firm whose services include development, construction, design/build, design/assist and estimating. Among its current projects are three buildings at Cheyenne Medical Center, an MRI facility in Rock Springs, Renaissance Uptown Lofts in Denver, and a waste treatment plant…

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