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Aegis Fiduciary Services, LLC offers trustee services to privately-held companies that sponsor employee stock ownership plans (“ESOPs”). In an ESOP transaction, some or all of the owners of a company individually decide to sell some or all of their stock to the company’s employees through a to-be-formed ESOP. An ESOP is required by the Employee Retirement Income Security Act of 1974 (ERISA) to have a trustee that manages or controls plan assets. Aegis is one such trustee. 

What is an Esop?

Created by the Employee Retirement Income Security Act of 1974 (ERISA), an employee stock ownership plan (“ESOP”) is a qualified, defined contribution plan created by the employer-company that is designed to invest primarily in the stock of the employer-company. In an ESOP, some or all of the owners of the company individually decide to sell some or all of their stock to the company’s employees (the participants) through a to-be formed ESOP. The company appoints a trustee to represent the interests of the participants. The company also creates a trust known as an employee stock ownership trust (the “ESOT”) into which the company makes tax-deductible cash contributions.

The ESOT uses those contributions to purchase the stock of the owners. The ESOT can also borrow money from the company and/or the selling shareholders to finance the ESOT’s purchase of the stock of the selling shareholders. The ESOT repays those loans using the annual contributions it receives from the company. The ESOT’s use of borrowed funds to purchase stock is referred to as a leveraged transaction.

In a leveraged transaction, the stock the ESOT purchased gets allocated to participants based on a specific formula. As the stock in the company appreciates, the value of the participants’ ESOP accounts increase, creating a valuable retirement benefit. For a private company that sponsors an ESOP, each year the stock of the company must be valued by an independent valuation firm. As the participants cease working for the company, they are entitled to a distribution of the stock in their accounts. The company repurchases the stock from departing employees at the stock’s fair market value.

Industries Served

  • Apparel & Textiles
  • Building Products
  • Consumer Products
  • Construction
  • Engineering
  • Financial
  • Government Contractor
  • Healthcare
  • Hospitality
  • Retail
  • Service Companies
  • Transportation
  • Wholesale Distribution

Derived from Greek mythology, "Aegis" is the shield used by the Greek god Zeus. In modern times, Aegis represents the protection, backing and support of a group or organization.

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