ESOP Transaction

Employee Stock Ownership Plans (ESOPs) and the ESOP transaction process provide numerous corporate finance and tax advantages to businesses. Using the ESOP structure to finance business is not new. Under the Employee Retirement Income Security Act of 1974 (ERISA), ESOPs are referenced specifically as a technique of corporate finance.  It turns out that these employee…

If you are a small business owner who is exploring exit strategies and/or employee benefit offerings, you have likely come across Employee Stock Ownership Plans (ESOPs). ESOPs are an option for small business owners who want to transition out of the business over time and/or who want to share the business’ success with their employees…

There are two types of employee stock ownership plans (ESOPs) – leveraged ESOP and non-leveraged ESOP. Both are qualified retirement plans used by privately-held companies, but how they are funded and structured are slightly different. Leveraged plans are the more common arrangement, at least during initial formation, which is why we want to focus on…

ESOP transactions are the foundation of any employee stock ownership plan (ESOP). Although the specifics of a transaction vary from company to company, the fundamental steps or processes of an ESOP transaction are consistent across industries regardless of the ESOP plan design or company size. There are 6 essential steps in an ESOP transaction, which…