Employee Stock Ownership Plan Uses

Companies should consider Employee Stock Ownership Plans (“ESOPs”) because they can create liquidity for the owners, permitting owners to retain “de facto”  control, and allows employee ownership resulting in productivity and retentive benefits to the business. Below are some common uses for ESOP’s: 

•  Offers incentive to keep existing management simultaneously allowing owners to leave the business; 
• Permitting shareholders to diversify holdings through a sale to an ESOP;
• Offering a way to efficiently redeem unwanted shareholders;
• Giving management buy-outs a structure;
• Offering buyer’s with closely held stock an opportunity to buy an estate

See Steven Schaffer and Chris Rylands The ESOP as a Solution, Bryan Cave Aug. 2, 2013.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.