Rovers North sells to employees, creating a path to a better future for employee owners

When the owners and founders at Rovers North started considering their succession strategies over a decade ago, they weren’t enthused about the options until learning of the Employee Stock Ownership Plan, the most common broad-based employee ownership business model in the United States.

The company’s founders Mark and Andrea Letorney were not interested in selling to an outside buyer, fearing the likelihood they would close the Vermont facility and consolidate, putting their loyal employees out of work. "We always thought our people were our greatest asset,” said their son, Calef, now CEO of Rovers North.  So, rather than create a situation where their employees could end up losing their jobs, the Letorneys decided to make them all co-owners of the business, a process they began considering around the year 2010 before beginning in earnest in September 2023. They completed the ESOP transaction in June 2024.

“We’d been looking for an exit strategy for my parents.” Calef explained. “Our team has been getting a lot bigger as we grow, but still about half the staff have been with us over a dozen years. And a handful of folks have been with the company a very long time. To put it in context, I’m forty, and there are people here who changed my diapers. These team members are equally responsible for our success. So personally, it didn’t feel right for only the family to keep the business profits forever into the future. Rather than do the normal thing of giving or selling to a child, I’m excited that we sold the family business to an ESOP trust so my parents get compensated for selling the business they built and future profits fund employee retirement accounts. I don’t lose out either because I’m continuing as an employee-owner.”

Mark and Andrea Letorney started their Land Rover business in Westford, VT in the winter of 1979. What started as a mobile repair service evolved into a repair and parts shop until the late 1990s, when Rovers North sold their repair operations to what is today the 4x4 Center in South Burlington. Since then, the company has become the largest US company of its kind, focusing on sourcing and selling the entire range of Land Rover Genuine Parts as well as its own line of Land Rover parts sourced from various manufacturers. In addition to selling parts, the company publishes and circulates the largest magazine in North America for Land Rover enthusiasts. Rovers Magazine, which began as a newsletter in 1985, is now mailed to over 25,000 subscribers across the continent.

Calef has worked at Rovers North full time since 2007 and was Vice President of Rovers North for 12 years prior to becoming CEO in the ESOP transition. He says the new structure has already grown the company’s appetite for improvement. Employees feel inspired to bring their own innovative ideas to the table and there’s even more team effort to create profit.

“We were always really generous with profit sharing and bonuses,” Calef notes, “but from a psychological standpoint the benefits of the company are more obvious when it’s truly employee-owned rather than a voluntary and changing amount of profit-sharing contributions.”

As a form of retirement plan, the ESOP also provides employees the opportunity to grow their wealth over time for the day when they are ready to leave the company or retire. In a state facing the sixth largest gap between the cost of housing and average hourly wages, ESOP employee owners at Rovers North are now resting easier knowing their retirement is more secure without them needing to contribute or save any additional dollars from their paychecks.

Zack Griswold, Sales Manager at Rovers North, says the ESOP has already made a positive difference

“In the current economic climate with high inflation and low housing availability, the company moving into an ESOP has made us feel financially unrestricted. It’s a great step towards stability and a nice feeling knowing you have a stake in the company’s success.”

Employee owner Bridget Bailey says the increased security for the future makes for a better today:

I see the transition of the company to an ESOP to be a great benefit. Financial security in retirement is always a concern, but current circumstances in all aspects of the economy do not always allow the opportunity to contribute the maximum, or even the minimum, amount of investment. The ability to work as a team towards a goal that will benefit everyone’s financial future without any up-front monetary buy-in cost helps to lessen the burden of saving the money I am making now, so that it can be spent on immediate needs for me and my family.”

As an S-Corp, Rovers North will also benefit greatly from tax benefits for ESOPs, which Calef says will allow the company to more easily pay down the seller note without impacting or unnecessarily burdening the business’s day-to-day operations. Calef says the tax benefits certainly were not the primary reason for an ESOP transaction, but the saves helped make the deal more clearly feasible.