Employee Stock Ownership Plans (ESOPs)
Succession planning in closely held businesses is always tricky. A popular tool that has been used by many of our clients is setting up an ESOP to assist in the transition of your company’s ownership to the employees of the company. Essentially, the ESOP serves as a tax-advantaged financing source. It allows the owner(s) to sell the company while maintaining management control. There can be significant tax benefits to the selling ownership group in transitioning to an ESOP. However, proper planning is critical in order to retain those benefits. The buying ownership groups (the employees) also have critical planning needs.
Wolf & Company has helped many clients in establishing and maintaining ESOPs. This assistance includes obtaining financing for the acquisition and dealing with the eventual repurchase obligations that the company will have in buying back stock from departing employees. We work with both the selling group and the buying group to make sure that all of the issues are properly identified and dealt with in order to ensure that the transaction is successful for both parties.
Our professionals have experience with:
- Performing ESOP feasibility analyses
- Design and implementation of the ESOP
- Valuation support in establishing the initial ESOP purchase price and performing annual updated valuations of ESOP stock
- Annual recordkeeping and reporting, including audits of both leveraged and non-leveraged ESOPs and benefit plans
- Employee communications
- Repurchase liability studies
For more information on our services for family businesses, contact Russell L. Romanelli, Partner, Tax Services.