Forhemit is the Continuation of Operations (COOP) stewardship firm engaged from Day 1 through 12–24 months post-close. Forhemit owns all four operational tracks — people, place, technology, and financial systems — and is the party responsible for delivering the COOP document the trustee must accept before a closing date can be set. Gate 4 is Forhemit’s defining transaction deliverable. Forhemit’s engagement begins with a $25,000 non-refundable retainer covering COOP pre-assessment, deal structuring coordination, and advisor assembly from Day 1 through closing.
120
Days to close
5
Phases
9
Team seats
4
Hard gates
Ignition 1–14
Build 15–45
Validate 46–75
Close prep 76–105
Closing 106–120
Forhemit deliverables by phase — all covered under the $25,000 retainer through closing
Phase 1 — COOP intake complete (all 4 tracks)
People, place, technology, and financial systems inventoried. Raw material for every downstream COOP deliverable.
Day 14
Phase 2 — Full COOP plan drafted
Continuity plans written for all 4 tracks. Gaps remediated before the trustee sees the document. Post-close manager search begins.
Day 45
Phase 3 — COOP delivered to trustee; Q&A led
Full package submitted. Forhemit leads trustee review on operational readiness, key-man mitigation, and post-close governance.
Day 70
Phase 4 — Trustee COOP sign-off obtained — Gate 4
Forhemit’s primary transaction deliverable. No sign-off = no closing date. Forhemit is accountable for this gate.
Day 90
Phase 5 — Written Day 121 readiness confirmation delivered to trustee
Final deliverable under the $25,000 retainer. Every system, credential, and process confirmed ready to run without the owner. Closing date is then set.
Day 112–118
Post-close stewardship (12–24 months) — separate engagement
Operations monitoring, annual valuation coordination, debt service and refinance trigger tracking, employee ownership culture development.
Day 121+
The 4 hard gates — process stops if any don’t clear
Gate 1 — FMV adequacy letter (Day 45)
Trustee’s appraiser confirms purchase price is fair to the ESOP under ERISA. No letter = no LOI. Full stop.
Gate 2 — SBA commitment letter (Day 60)
Lender issues formal commitment defining the capital stack. Nothing is drafted before this arrives.
Gate 3 — QofE EBITDA within 15% of LOI (Day 75)
Outside that band: stop, renegotiate the structure, then draft. Do not draft on a broken number.
Forhemit delivers and drives this gate. Trustee confirms business is operationally viable post-close. No sign-off = no closing date scheduled.
01
Ignition — team assembly & structure
Days 1–14 · Forhemit engaged Day 1 — $25,000 retainer initiates COOP intake
Forhemit
Retained Day 1 alongside legal counsel — not after the deal is structured. The $25,000 non-refundable retainer activates immediately, covering COOP intake, deal structuring coordination, and advisor assembly through closing. COOP intake across all four tracks must be complete by Day 14. Early findings directly inform the FMV appraisal, lender package, and trustee’s initial risk assessment.
Legal & advisory — seat these before anything else moves
Retain independent ESOP trustee
Legal buyer — holds shares as fiduciary for all eligible employees. Conflict check mandatory before engagement. Must have general business experience at the target deal size. Capital Trustees, ERISA Advisory Group, and Argent Trust are active providers.
Day 7 — hard deadline
Engage ESOP/ERISA counsel
Plan documents, DOL compliance, §1042 election mechanics, seller note subordination under ERISA. Not general M&A counsel — requires ESOP-specific experience. Krieg DeVault, Dickinson Wright, and Verrill Dana are established ESOP practices.
Day 7 — hard deadline
Confirm SBA lender — ESOP-specific vetting call
Ask for specific prior deals: ESOP trust as buyer, trustee as closing party, seller note subordination treatment. “We’ve done both SBA and ESOPs” is not confirmation — ask for a reference transaction and the trustee’s name.
Day 10 — hard deadline
Engage seller’s CPA / tax advisor
S-to-C conversion built-in gains analysis, §1042 QRP investment planning, seller net proceeds modeling. Independent of Forhemit — this is the seller’s own advisor.
Day 10
Entity structure — decide before plan documents are drafted
S-corp vs. C-corp decision
§1042 capital gains deferral requires a C-corp. If currently an S-corp, the built-in gains tax over the 5-year recognition period must be calculated before committing to conversion. Seller’s CPA owns this analysis.
Days 1–7 — do not defer
100% vs. partial ESOP decision
Full exit or retained minority stake? This shapes the capital stack, §1042 eligibility, and the trustee’s FMV adequacy analysis. Every downstream document is built on this decision.
Day 10
Forhemit — COOP intake across all 4 tracks
People — org chart, key-man mapping, employment agreements
Every person whose departure breaks a critical function. Revenue concentration by individual. Employment agreement status for each key role. Any customer relationship not transferable to another employee flagged immediately.
Forhemit · Days 7–14
Place — leases, facilities, equipment ownership
Transfer and assignment provisions in every lease. Owned vs. leased facilities and equipment. Landlord or lender consent requirements flagged now — the most common late-discovered deal killers. Can delay closing 30+ days if surfaced late.
Every admin credential mapped to a named non-owner employee. Software licenses tied personally to the owner identified. Auto-renewing contracts inventoried. Every system that must run on Day 121 documented and assigned to a specific person.
Forhemit · Days 7–14
Financial systems — banking, payroll, contracts, authority
Bank relationships and authorized signers. Payroll processor and workflow. Key customer contracts with change-of-control provisions. Vendor lines of credit with personal guarantee clauses. Who can write a check on Day 121 without the owner?
Forhemit · Days 10–14
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Gate check — end of Day 14Trustee seated. ERISA counsel engaged. SBA lender confirmed. Seller’s CPA engaged. Entity structure decided. Forhemit COOP intake complete across all 4 tracks. All six must be closed before Phase 2 starts on schedule.
02
Build — financials, valuation & COOP plan
Days 15–45 · Everything runs in parallel — Forhemit builds while the financial team validates
Forhemit
Converts the intake inventory into a working COOP plan across all four tracks. Operational gaps found during intake are remediated here — before the trustee sees the document. Post-close governance structure identified and the manager search begins. Target: COOP draft complete internally by Day 40, ready for trustee submission by Day 60.
Financial baseline — the number everything is built on
Quality of Earnings engagement
3 years of tax returns, P&Ls, and balance sheets. Revenue by customer. Owner compensation normalization. The adjusted EBITDA is what the trustee’s appraiser builds the purchase price on — must be clean before the appraisal begins.
Start day 15
Normalized EBITDA and customer concentration analysis
Owner add-backs, one-time costs, above-market compensation. Any customer over 20% of revenue will be scrutinized by both lender and trustee regardless. Surface it now — not in underwriting.
Days 15–35
Complete financial package assembled
Tax returns, financials, AR aging, customer concentration schedule, equipment list, real estate summary. One clean package shared to both the lender and the trustee’s appraiser — build it once.
Days 25–40
ERISA FMV appraisal — trustee orders it; seller pays for it
Trustee orders independent FMV appraisal
The trustee — not the seller, not Forhemit — selects and directs the appraiser. ERISA independence requirement protecting employees. Appraiser must be accredited (ASA or ABV). FMV sets the maximum the ESOP can legally pay.
Order by day 18
FMV result and price negotiation
If the appraisal comes in below the seller’s target, the seller note bridges the gap. Cash-at-close cannot exceed the appraised value. This is a negotiation, not a failure — structure the seller note accordingly.
Days 35–42
Forhemit — COOP plan built across all 4 tracks
People continuity plan written
Role-by-role redundancy documented. Named backups for every critical function. Employment agreements with tail provisions drafted for key managers. ESOP vesting schedule designed as the primary retention tool.
Forhemit · Days 15–35
Systems continuity plan written
Every software login transferred to a named non-owner employee. Vendor relationships migrated from personal accounts. Auto-renewing contracts inventoried. IT support vendor contracted independently. Day 121 systems readiness confirmed on paper.
Forhemit · Days 15–35
Financial continuity plan written
Bank signature authority post-close protocol established. Payroll continuity confirmed for the transition period. Customer contracts with change-of-control provisions identified. Vendor lines with personal guarantees flagged for renegotiation.
Forhemit · Days 20–40
Governance plan — post-close CEO/GM search begins
Who runs the business on Day 121? Forhemit drives the identification. The trustee needs a specific named, contracted person — not a role description — before Gate 4 sign-off is issued.
Forhemit · Days 25–45
Lender package begins
SBA 7(a) lender package assembly begins
Financial package, normalized EBITDA, collateral inventory, business plan narrative, ESOP plan design summary. Full capital stack: SBA senior debt + seller note (subordinated, mandatory refinance trigger at Month 14–18).
Start day 20
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Gate 1 — Day 45FMV adequacy letter received from the trustee’s appraiser. Purchase price confirmed fair to the ESOP under ERISA. Without this letter there is no LOI. Forhemit COOP draft complete internally and ready for trustee submission in Phase 3.
03
Validate — LOI, lender commitment & COOP review
Days 46–75 · Lock the deal — Forhemit delivers COOP to trustee and leads the review
Forhemit
The completed COOP package is delivered to the trustee by Day 70. Forhemit leads the Q&A on operational readiness, key-man mitigation, and post-close governance. The post-close manager must be named and under contract before submission — the trustee will ask for a specific person, not a plan to find one.
LOI and lender commitment
Letter of intent executed
Price, structure, capital stack, seller note terms, exclusivity period, and trustee consent requirement. ERISA counsel must review before signing. The LOI sets the architecture — every document downstream is built on it.
Days 46–52
SBA commitment letter
Complete lender package submitted by Day 50. Commitment by Day 60. If the lender cannot commit by Day 65 — replace the lender or extend the timeline. No legal drafting begins without this document.
Day 60 — Gate 2
Quality of Earnings final validation
QofE report delivered and validated
Adjusted EBITDA within 15% of LOI assumption — or stop and renegotiate before drafting. Drafting on a broken number creates liability for every party and almost always collapses the deal late in the process.
Day 75 — Gate 3
Customer and contract risk review
Key customer contracts reviewed for change-of-control clauses. Any contract that could dissolve or materially change at closing must be surfaced now — not discovered during lender underwriting.
Days 50–70
ESOP plan design
ESOP plan document drafted
Vesting schedule, eligibility, allocation formula, distribution policy, share repurchase obligation methodology. These decisions affect employee retention and the business’s long-term cash obligations to departing employees. ERISA counsel owns this — get it right now.
Days 50–72
TPA engaged
Third Party Administrator handles annual plan administration, participant recordkeeping, allocation calculations, and Form 5500 DOL filings. Must be engaged before the plan becomes effective at closing. Pentegra, Newport Group, and ESOP Partners are established nationwide providers.
Days 55–70
Forhemit — COOP delivered to trustee
Full COOP package submitted to trustee
All 4 tracks documented: people (named backups, employment agreements executed), place (lease transfer confirmations obtained), technology (admin access transferred and tested), financial (bank authority protocol, payroll continuity, customer contract status). Post-close manager named and contracted before submission.
Forhemit · Days 60–70
Trustee Q&A on operational readiness
Forhemit leads responses to trustee questions on key-man concentration, operational dependencies, and post-close management capability. Specific documented answers — not aspirational language. The trustee’s fiduciary obligation requires satisfaction on each specific point.
Forhemit · Days 65–75
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Gates 2 & 3 — Days 60 and 75Gate 2: SBA commitment letter in hand. Gate 3: QofE EBITDA within 15% of LOI assumption. Both must clear before legal drafting begins. Forhemit COOP submitted and trustee review actively underway.
04
Close prep — legal drafting, Gate 4 & employee notice
Days 76–105 · Forhemit owns Gate 4 — no sign-off, no closing date
Forhemit
Gate 4 is Forhemit’s primary transaction responsibility under the $25,000 retainer. Trustee COOP sign-off by Day 90 is what allows a closing date to be scheduled. Forhemit also coordinates the employee announcement, delivers the final Day 121 operational readiness confirmation to the trustee, and begins transitioning into the post-close stewardship engagement.
Legal document drafting
Purchase and Sale Agreement (PSA)
ERISA counsel drafts. The ESOP trust is the buyer — the PSA structure differs materially from a standard M&A purchase agreement. Seller representations and warranties are typically more limited given the trustee’s independent fiduciary role.
Days 76–90
Seller note and subordination agreement
Interest rate, maturity, mandatory refinance trigger at Month 14–18, subordination to SBA debt. Triparty document — seller, ESOP trustee, and SBA lender all sign. SBA lender must approve seller note terms before the PSA is finalized.
Standard loan agreement plus ESOP-specific riders. SBA Form 1050 required at closing. The trustee signs as buyer — lender’s counsel must be comfortable with the trustee in that legal role.
Days 85–102
Forhemit — Gate 4, Day 121 readiness & employee communication
Trustee COOP sign-off — Gate 4 (Forhemit owned)
Forhemit delivers Gate 4. The trustee formally accepts the COOP, satisfying their fiduciary obligation to confirm the business is operationally viable post-close. This sign-off is what allows the closing date to be set. Forhemit is accountable for obtaining it.
Forhemit · Day 90 — Gate 4
Employee announcement and ESOP education
Forhemit coordinates the announcement process. The message comes from the owner — not Forhemit. Summary Plan Description distributed. TPA available for participant questions. This moment begins the ownership culture Forhemit develops during the stewardship period.
Forhemit · Days 90–105
Day 121 operational readiness confirmed — all 4 tracks
Final walkthrough: every system login transferred and tested, bank authority updated, payroll confirmed, notifications sent, post-close manager fully briefed. Forhemit delivers written readiness confirmation to the trustee. Final deliverable under the $25,000 retainer.
Forhemit · Days 100–105
Licensing and contract notifications
State and local licensing review
Business licenses, permits, and registrations requiring notification or re-issuance upon change of ownership. Varies by industry and state. Anything with an advance notice requirement filed now.
Days 80–100
Key contract change-of-control notifications
Customer and vendor notifications per contract terms. Landlord consent on the facility lease — flagged by Forhemit in Phase 1, executed now with sufficient lead time to avoid closing delays.
Days 85–105
05
Closing — execution & Forhemit stewardship begins
Days 106–120 · $25,000 retainer closes — stewardship engagement activates Day 121
Forhemit
Forhemit’s transaction role — covered under the $25,000 non-refundable retainer — ends at closing with the delivery of the written Day 121 readiness confirmation. The post-close stewardship engagement activates Day 121 under a separate agreement and runs 12–24 months: operations monitoring, annual ESOP valuation coordination, debt service and refinance trigger tracking, and employee ownership culture development.
Pre-closing — days 106–115
Final document review by all parties
PSA, seller note, loan documents, employment agreements, ESOP plan. The trustee’s counsel is the final reviewer — their sign-off is the green light. No surprises at the closing table.
Days 106–112
Wire instructions confirmed by phone — not email
Every wire destination confirmed via live phone call to the actual account holder. Wire fraud targeting closings is active. Email confirmation alone is insufficient. This step is non-negotiable.
Days 110–114
Forhemit delivers written Day 121 readiness confirmation
Written confirmation to the trustee that every system, credential, vendor relationship, bank authority, and payroll process is ready to run without the owner on Day 121. This is the final deliverable under the $25,000 retainer. Closing date is then set.
Forhemit · Days 112–118
Closing day — Day 120
Documents executed — business is 100% employee-owned
PSA signed by seller and trustee. Loan documents executed. Employment agreements signed. ESOP plan formally adopted. The trustee takes title to shares on behalf of the ESOP trust. Every eligible employee is now an owner.
Funds disbursed
SBA loan proceeds wired. Seller receives cash at close. Broker commission paid. Forhemit structuring fee paid from proceeds. Seller note established per the agreed schedule.
Forhemit post-close stewardship — Day 121 onward (separate engagement)
Operations monitoring and COOP plan maintenance
Ongoing review of all 4 tracks as the business evolves. Key person changes, system migrations, new contracts — each triggers a COOP update. The plan is a living document, not an archive.
Forhemit · Months 1–24
Annual ESOP valuation coordination
Required every year by ERISA. Forhemit coordinates between trustee, appraiser, and TPA to ensure operational data is clean and current going into each appraisal cycle.
Forhemit · Annual
Seller note refinance trigger monitoring
Performance metrics tracked against the mandatory refinance trigger at Month 14–18. Forhemit coordinates the refinance process when the trigger is met — seller note paid down from conventional refinance proceeds.
Forhemit · Month 14–18
Employee ownership culture development
Annual employee meetings on ESOP account values. Open-book management introduction. Leadership development for employee-owners. The ESOP structure creates ownership — Forhemit’s stewardship work turns it into an ownership culture.
Forhemit · Ongoing
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Post-close milestonesDay 150: First SBA payment made. TPA sends participant account notifications. Month 6: Annual ESOP valuation ordered. Month 14–18: Forhemit coordinates refinance trigger evaluation and seller note paydown. Month 24: Full stewardship review — COOP updated, culture assessment, debt service health check.
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The 9 team seats
Who you need, when you need them, and what breaks if they’re late
Engaged Day 1 — the operational and legal foundation
COOP stewardship
Forhemit
Day 1. Owns all 4 COOP tracks (people, place, technology, financials) from intake through the 12–24 month post-close stewardship period. Drives Gate 4. Coordinates employee announcement. Manages annual valuation, debt service tracking, and refinance trigger. The operational through-line of the entire transaction and transition.
Legal — ERISA
ESOP / ERISA counsel
Day 1. Plan documents, DOL compliance, §1042 mechanics, seller note subordination under ERISA. Not general M&A counsel — requires ESOP-specific experience. Krieg DeVault, Dickinson Wright, and Verrill Dana are established ESOP practices.
Seat by day 7
Fiduciary
Independent ESOP trustee
Day 7. Conflict check mandatory before engagement. Must have general business experience at the target deal size. Capital Trustees, ERISA Advisory Group, and Argent Trust are active providers.
Tax
Seller’s CPA / tax advisor
Day 7–10. S-to-C conversion BIG tax analysis, §1042 QRP investment planning, seller net proceeds modeling. Independent of Forhemit — this is the seller’s own advisor.
Confirm by day 10 — appraisal ordered by day 18
Capital
SBA lender — ESOP confirmed
Day 10. Specific deal references required: ESOP trust as buyer, trustee as closing party, seller note subordination treatment. “We’ve done both SBA and ESOPs” is not confirmation — ask for a reference transaction and the trustee’s name.
Valuation
ERISA FMV appraiser
Day 18 — trustee orders this seat. Accredited (ASA or ABV). Selected and directed by the trustee, not the seller or Forhemit. Sets the maximum the ESOP can legally pay.
Engage by day 15 and day 55
Financial
Quality of Earnings firm
Day 15. Must understand the industry’s revenue recognition and contract norms. Customer concentration analysis is critical — any customer over 20% of revenue will be scrutinized closely by both lender and trustee.
Administration
ESOP TPA
Day 55. Annual plan administration, participant recordkeeping, allocation calculations, Form 5500 filings. Pentegra, Newport Group, and ESOP Partners are established nationwide providers.
Identified by day 45 — contracted by day 75
Operations
Post-close CEO / general manager
Named by day 45, contracted by day 75. Forhemit drives the identification. The trustee requires a specific named person with a signed employment agreement before Gate 4 sign-off is issued. No name = no Gate 4 = no closing date.