40 years of DAI

In 2005, DAI began working to create a more cohesive brand
identity. The new brand, unveiled at the May 2006 staff
conference, was striking in its simplicity and its departure from
convention. At its heart was a new logo, soon dubbed the “DAI
Flag,” which consisted of three bars of color, with the brown
representing strong foundations, the green signifying results,
and the blue evoking aspirations—both those of the company
and those “that our clients and beneficiaries hold for their own
future.” The award-winning new scheme was immediately
successful, as employees quickly embraced the step toward
forging a one-company mentality.
One of the things DAI celebrates most visibly is employee
tenure, with public acknowledgment for all employees passing
key milestones. Pictured from left to right are Carol Kulski, Tami
Fries, and Tony Johnson, who have celebrated their 25-, 20-, and
25-year anniversaries with the company, respectively.
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commissioned Houlihan Lokey, an investment banking firm
with a strong ESOP practice, to evaluate the options for ownership
and compare the ESOP to other investment vehicles.
Over the course of several meetings in 2005, the Board
debated the Houlihan Lokey report, which recommended a
recapitalization of DAI based on the use of new bank debt to
buy back all shares owned by individuals. This would leave
the ESOP as DAI’s sole owner, after which DAI would convert
to a Subchapter S corporation. Going forward would require
taking on significant long-term debt ($15 million to be repaid
over five years) as well as the willingness of all 70 individuals
to sell their shares. The Board took pains to ensure that DAI
was prepared on both counts. Although at least one external
director expressed concern that management seemed to be
putting employee ownership ahead of other strategic considerations,
Jim Boomgard insisted that “independence is a
critical part of our DNA,” and the transaction was approved. It
closed in December, and to the surprise of the attorney who
handled the paperwork, all 70 individual shareholders willingly
tendered their stock, receiving an excellent return on the
funds they had invested in prior years.
To access the necessary funds, DAI negotiated a new credit
agreement, this time with a syndicate of five banks, combining
the $15 million term loan with a $60 million revolving
credit line that could be used to finance accounts receivable
as the company continued to grow. The result was a
much closer alignment between its capital structure and its
employees’ interest in enhancing their own financial wellbeing
through steady, long-term appreciation in the value of
the firm. As Boomgard put it, “We make a lot of decisions
over the course of any year that wouldn’t satisfy an outside
financial investor, or a public company focused on meeting its
quarterly earnings forecasts, but are the right things to do for
our employee owners.”