Employee Stock Ownership Plans

Owners and entrepreneurs who invest the majority of their wealth back into the businesses they’ve built often face weighty tax burdens, uncertainty about sufficient retirement funding, and indecision surrounding succession arrangements. The solution to these pressing issues can be found in a single source: the Employee Stock Ownership Plan.

A proven approach that reduces taxes and optimizes performance, wealth, and succession planning.

The Employee Stock Ownership Plan (ESOP) offers valuable benefits to a privately-held business’ shareholders, management and personnel. More than qualified retirement plans, ESOPs serve as powerful exit planning vehicles for many owners, producing liquidity and advancing business succession strategies. For most, the greatest benefit is the ability to increase the company’s value and transfer ownership, often without relinquishing control, and generate substantial wealth in the process.

Specialized Insight to Support Vital Benefits

With deep experience in designing ESOPs to achieve the specific outcomes business owners seek, our Employee Benefits professionals assist with every aspect of the transaction from feasibility, employee benefit and executive compensation analyses to plan modeling and design, succession solutions, accounting, monitoring, recordkeeping, and reporting. Of particular value is our tax expertise as the regulations surrounding compliance and filing are complex and the mitigation opportunities significant.

In order to determine whether an ESOP is appropriate and structure a customized plan, our specialists offer the following services:

  • Current Status Assessment: Review existing ownership structure and shareholder objectives, management, capital, leverage, corporate objectives, existing benefit plans and census information.
  • Financial Projection Modeling: Range of business valuations, alternate ESOP transaction scenarios.
  • Plan Development: Develop structure; design benefit and management equity/compensation programs; incorporate senior debt financing and liquidity alternatives.
  • Transition Support: Analyze mix of cash consideration; design seller financing structure; develop employee communications; perform repurchase liability assessment as employees terminate employment; assist with individual and corporate tax issues.
  • Post-Transition Support: Review financials, valuation reports, projected equity valuation, third-party recordkeeping reports; assess potential post-transaction value provided to ESOP and other interested parties, including M&A opportunities. Provide plan design advice, ESOP repurchase obligation studies, ESOP distribution and distribution policy updates.

Throughout the process, we collaborate with our clients’ legal counsel, financial and other advisors. Should management later decide to sell the company to a third party, our professionals are available to provide M&A transaction and business termination advisory services.