Employee Stock Ownership Plans

Sponsored by the employer, an employee stock ownership plan (ESOP) presents employees with the opportunity to purchase company stock and realize certain tax benefits. Regulated under ERISA, ESOPs may function as a corporate finance strategy or liquidity tool. Because they tend to incentivize performance, ESOPs align the interests of employees and company shareholders.

Consider these benefits of sponsoring an ESOP:

  • Improves morale and productivity
  • Increases ability to recruit/retain staff
  • Owner retains control of company
  • Stock can be sold in a tax-free sale
  • Sponsor earns higher after-tax proceeds vs. sale to an outside buyer
  • Sponsor can repay debt with tax deductible, tax-free dollars

As a business owner, you can use an ESOP to exit your business by selling to management or employees. To realize the value of an ESOP, you need to prove a history of profitability, workforce stability, a succession plan and team in place, and you must have access to adequate corporate credit.

Join us for an exploratory conversation to learn if an ESOP is right for you.