Key Takeaways
Paras & Associates chose an Employee Ownership Trust (EOT) to preserve its social mission while enabling founder retirement.
Founder Melinda Paras wanted to protect both the company's employees and its commitment to improving healthcare access.
The company determined that an ESOP would be too complex and costly for a business of its size.
The EOT allows employees to receive annual profit-sharing distributions rather than waiting until retirement to realize ownership benefits.
Paras & Associates maintained its existing board-led management structure after the transition.
The transaction allowed the founders to receive fair value for the company while avoiding a sale to competitors.
EOT Advisors helped design, implement, and continue overseeing the Employee Ownership Trust structure.
Paras & Associates’ Employee Ownership Trust: Preserving Mission, Employees, and Social Impact
"We wanted to capture some of the value we had created in the company, but we also wanted to retain the social good that the company had facilitated."
That challenge sits at the heart of many business succession decisions.
For Melinda Paras, founder of Paras & Associates, retirement planning was not simply a financial exercise. The company had spent years building a technology platform that improved access to healthcare interpretation services for hospitals across the United States. Any ownership transition would need to protect not only the business itself, but also the mission that inspired its creation.
Rather than selling the company to a competitor or pursuing a traditional exit, Paras ultimately chose an Employee Ownership Trust (EOT), allowing employees to become the beneficiaries of the company's future success while preserving the organization's social purpose.
Building a Business Around Social Good
Paras & Associates was founded in 2006 as a technology company focused on improving access to healthcare interpretation services.
The company's platform enables hospitals and healthcare systems to connect patients with interpreters through a centralized video interpretation network. Hospitals can use their own interpreters more efficiently and even share interpreter resources across institutions.
When the company was founded, profit was not the primary objective.
"We were really trying to do social good and improve access to quality healthcare interpreting."
That mission shaped the company's culture and growth. Although Paras & Associates became a successful nationwide business generating approximately $6–7 million in annual gross profit, its purpose remained centered on expanding access to healthcare services for patients with language barriers.
The Succession Challenge
As Melinda Paras and the company's CFO approached retirement, they began evaluating ownership transition options.
Like many business owners, they initially considered selling the company to competitors in the industry.
However, the more they thought about that possibility, the less attractive it became.
"We thought probably there would be some interest in purchasing PAA. But we thought about what would happen if we did that."
Paras worried that a traditional acquisition would focus primarily on acquiring customers rather than preserving employees or mission.
"The competitors would be mainly seeking our client base, would probably let go of our employees, and really change the vision and the value of the company."
For a company founded around social impact, that outcome was difficult to accept.
Why an ESOP Wasn't the Right Fit
While exploring alternatives, Paras learned about Employee Stock Ownership Plans (ESOPs) through the National Center for Employee Ownership and attended one of its national conferences.
She credits the organization with providing valuable education and resources regarding employee ownership.
However, after learning more about ESOPs, she concluded they were not the best fit for Paras & Associates.
"Our company was just too small."
With approximately ten employees, the company faced challenges related to ESOP administration, regulatory requirements, and ongoing oversight obligations.
"There were just a lot of management processes that were required in an ESOP."
The complexity and expense associated with operating an ESOP ultimately led Paras to continue searching for alternatives.
Discovering the Employee Ownership Trust
Ironically, the solution appeared at the very conference where Paras had been researching ESOPs.
Although she left before the final presentation, her CFO stayed and attended a session by Chris Michael on Employee Ownership Trusts.
Following up on that presentation changed the course of the company's succession planning.
"We found that an Employee Ownership Trust was much more suitable for what kind of company we were."
The EOT structure allowed the company to remain employee-owned without the administrative complexity of an ESOP. It also provided flexibility in governance and profit-sharing design.
Most importantly, it preserved the mission and values that had guided the company since its founding.
Immediate Benefits for Employees
One aspect of the EOT particularly appealed to Paras.
Employees would begin benefiting immediately.
"In an ESOP, really the employees don't see the value of their shares until they retire."
Under the Employee Ownership Trust model, employees participate in annual profit-sharing distributions.
"In the EOT model, the employees profit share at the end of every fiscal year."
For Paras, this approach felt more tangible and rewarding. Employees could directly experience the benefits of ownership while actively contributing to the company's success.
The company elected to distribute profits proportionally based on salary levels, recognizing differing responsibilities while maintaining broad participation among employees.
Maintaining Leadership While Protecting the Mission
A common misconception about employee ownership is that it automatically transforms a company into a worker cooperative.
Paras & Associates took a different approach.
The company retained its existing board-led governance structure, which had been in place since its founding.
"The board of directors makes the main management decisions."
At the same time, the EOT includes a trustee whose role is to ensure that future leadership continues to operate in accordance with the purpose and principles of the trust.
This structure provides continuity while helping protect the employee ownership mission over the long term.
Paras also negotiated a provision allowing her approval rights over any future sale of the company, ensuring that the organization's future direction remains aligned with its original purpose.
How EOT Advisors Helped Structure the Transition
The transition from founder ownership to employee ownership required valuation work, transaction structuring, trust design, governance planning, and succession planning.
Working with EOT Advisors, Paras & Associates completed the transaction in approximately four to five months.
The structure allowed employees to become beneficiaries of ownership without contributing personal capital. Instead, the company would gradually repay the founders over a ten-year period using future profits.
Paras credits Chris Michael and EOT Advisors with helping the company understand and implement the Employee Ownership Trust model.
"Chris was not only our lawyer for the transaction, but he's also our trustee."
That ongoing relationship helped ensure that the employee ownership structure remained aligned with the company's mission and long-term goals.
Leaving the Company in Good Hands
For Melinda Paras, the most rewarding part of the transition was knowing that the company would remain in the hands of people who believed in its purpose.
"One of the things I really value about our company is the team that we've been able to put together."
Rather than seeing ownership concentrated in a small group of investors or transferred to an outside buyer, the EOT allows employees to participate directly in the company's future success.
"I can't feel better about leaving the company than having it be in their hands."
For companies whose value extends beyond financial performance alone, Paras & Associates demonstrates how an Employee Ownership Trust can preserve mission, reward employees, and provide founders with a meaningful succession solution.
About EOT Advisors
EOT Advisors is the first U.S. financial services firm dedicated to Employee Ownership Trusts. Working with business owners in all 50 states, the firm guides each sale from start to finish: advisory, valuation, tax planning, financing, legal coordination, and trust administration.
To learn whether an EOT is the right path for your company, schedule a free consultation or call (800) 289-9865.