SCHEDULE 13D/A: National Research Corporation: Major Shareholder Restructures Estate Holdings, Consolidating Significant Stake Under Common Property Trust

An amended Schedule 13D filing reveals a significant restructuring of beneficial ownership in National Research Corporation, consolidating a substantial stake under the Common Property Trust as part of Michael D. Hays's family estate planning.

Summary

• This Amendment No. 2 to Schedule 13D updates the beneficial ownership of Common Stock in National Research Corporation, involving Common Property Trust (CPT), Common Property Trust LLC (CPT LLC), Amandla LLC, Patrick E. Beans (PB), Michael D. Hays (MH), and Thomas Richardson (TR).
• The Amandla MK Trust (AMK Trust) assets were 'decanted' to the Common Property Trust (CPT) effective December 31, 2024, leading to the termination of the AMK Trust.
• CPT is now the 100% owner of both CPT LLC and Amandla LLC, consolidating beneficial ownership of 8,609,601 shares, representing 37.5% of the outstanding Common Stock.
• Patrick E. Beans replaced Thomas Richardson as the manager of CPT LLC as of December 31, 2023, and now holds significant shared voting and dispositive power over 10,553,161 shares, totaling 46.1% beneficial ownership including his direct holdings.
• Michael D. Hays, the founder and CEO, beneficially owns 1,415,535 shares (6.2%), primarily through direct holdings, exercisable stock options, and reacquisition rights over shares in irrevocable trusts, though he disclaims beneficial ownership of shares held by his spouse and certain trusts/LLCs where he has replacement powers.
• Two promissory notes, originally totaling $62,548,000 (dated January 24, 2018) and $2,479,870 (dated October 27, 2021), were assigned from the AMK Trust to CPT as the new borrower, with the first note having an outstanding principal balance of $3,634,643.00 as of December 31, 2024.
• The primary purpose of these transactions is to further the estate planning objectives of Michael D. Hays's family.

Sentiment

Score: 6

Explanation: The document is largely procedural, detailing a complex but planned restructuring of beneficial ownership for estate planning purposes. It clarifies significant ownership stakes and related financial obligations, which is neutral to slightly positive as it provides transparency on a major shareholder's long-term strategy.

Positives

• The restructuring clarifies and consolidates significant beneficial ownership under the Common Property Trust, potentially streamlining future management of these assets.
• The transactions are part of a long-term estate planning strategy for the founder and CEO, indicating a structured approach to wealth management.

Negatives

• The complex web of trusts and LLCs, despite the consolidation, may still present a challenge for external parties to fully comprehend the ultimate beneficial ownership and control structure.

Risks

• Michael D. Hays disclaims beneficial ownership of a significant portion of shares over which he has indirect influence (e.g., through replacement powers over trustees/managers), which could create ambiguity regarding ultimate control or influence for some investors.
• The complexity of the trust structures and inter-entity transactions, while for estate planning, could be perceived as opaque by some stakeholders.

Future Outlook

The Reporting Persons intend to continue monitoring the Issuer's operations, prospects, and market conditions. They reserve the right to further purchase, hold, trade, or dispose of Common Stock as deemed advisable for their investment goals and to fund beneficiary distributions. They may also engage in discussions with the Issuer's management or directors, other stockholders, and industry professionals, potentially leading to proposals for changes in the Issuer's operations, governance, or capitalization.

Management Comments

• The purpose of the transactions described was to further the estate planning objectives of the family of Michael D. Hays, the Issuer's Chief Executive Officer and founder.
• Michael D. Hays disclaims beneficial ownership of shares held by his spouse, CPT, CPT LLC, the AMK Trust (prior to Decanting), Amandla II (prior to dissolution), or Amandla LLC, despite having powers to remove and replace managers/advisers in certain entities.

Industry Context

This filing primarily details internal ownership restructuring and estate planning activities of a significant shareholder group, rather than reflecting broader industry trends or competitive dynamics. It provides insight into the long-term strategic financial planning of the company's founder and CEO.

Comparison to Industry Standards

• The document does not provide specific financial or operational results that can be directly compared to global industry benchmarks or specific comparable companies/projects. It focuses on the internal beneficial ownership structure and related financial arrangements within the context of estate planning.

Management Changes

Corporate Governance

Legal Proceedings

• None of the Reporting Persons has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
• None of the Reporting Persons has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction that resulted in a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws.

Related Party Transactions

• Indirect gift of 281,806 shares and acquisition of 1,602,399 shares by AMK Trust from Michael D. Hays for a $62,548,000 promissory note.
• Acquisition of Amandla, LLC interests by Amandla II from Michael D. Hays for a $107,052,000 promissory note.
• Transfer of 923,955 shares from Amandla II to Amandla LLC for no consideration.
• Promissory Note dated October 27, 2021, from AMK Trust to Michael D. Hays for $2,479,870, representing a purchase price adjustment and accrued interest.
• Assignment of promissory notes from AMK Trust to Common Property Trust, both entities established by Michael D. Hays.
• Michael D. Hays's reacquisition right over 1,298,721 shares held by irrevocable trusts created for family members.
• Michael D. Hays's power to remove and replace the Special Holdings Direction Adviser of CPT and the manager of CPT LLC, and the trustee of the 1999 Trust.

Stakeholder Impact

• Shareholders: The filing clarifies the complex beneficial ownership structure of a significant block of shares, providing transparency on the control and influence held by the founder's family and associated entities. This could impact perceptions of corporate control and stability.
• Creditors: The assignment of promissory notes to the Common Property Trust clarifies the new borrower for these obligations.

Next Steps

• Reporting Persons may further purchase, hold, trade, dispose, pledge, or otherwise deal in the Common Stock.
• Reporting Persons will routinely monitor the Issuer's operations, prospects, business development, management, competitive and strategic matters, capital structure, and prevailing market conditions.
• Reporting Persons may discuss matters with the management or directors of the Issuer, other stockholders, industry analysts, and investment professionals.
• Reporting Persons may propose changes in the Issuer's operations, governance, or capitalization.

Key Dates

Keywords

SEC filing, Schedule 13D, beneficial ownership, estate planning, trust restructuring, promissory note, corporate governance, National Research Corporation, Michael D. Hays, Patrick E. Beans