Time to Sell Your Business? An ESOP May Be the Answer

Strategy Driven

Selling one’s company to an ESOP, an employee stock ownership plan, does just that. Selling to an ESOP preserves company culture and increases productivity, which generally ensures strong future performance. How does an ESOP work? In an ESOP transaction, owners essentially sell stock, whether some or all, to employees. Often these transactions are underwritten by banks, which prefer to lend to ESOPs due to the record-low default rates.

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2020 Exit Planning Checklist

Strategy Driven

Sale to Third-Party | Sale to Insiders | Transfer to Family Members | Sale to ESOP | Absentee Owner. Who will Manage the Exit Planning Project? With decades of experience in financial services, for-profit and non-profit leadership and management, along with the founding of ELP in 2010, Pat has extensive knowledge and understanding of the many challenges faced by business owners. All business owners will stop being business owners at some point.

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Why the U.S. Needs More Worker-Owned Companies

Harvard Business

nonprofit organizations like the Heartland Capital Strategy Institute are bringing together institutional investors, private asset managers, and worker representatives to harness some of the $13 trillion of assets in workers’ pension funds to invest in worker-friendly businesses that offer good investment returns. The biggest difference is that workers have an important say in who manages them and how profits align with values. Klaus Meinhardt/Getty Images.

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Profit Sharing Boosts Employee Productivity and Satisfaction

Harvard Business

Since the mid-2000s, broad-based shared capitalist programs — in other words, programs where firms offer profit sharing and employee ownership to nonmanagers as well as managers — have spread to cover more employees than traditional forms of individual performance-based pay in Europe and the United States. For instance, individuals who become part of all-employee share ownership plans (ESOPs) are given tax breaks to own their company’s stock.

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Treat Employees Like Business Owners

Harvard Business Review

Many large corporations manage to find big bundles of shares (and huge amounts of cash) for executive compensation, even though there’s little relationship between senior-management pay and financial results. And companies — except for the very smallest — can implement an employee stock ownership plan (ESOP), often funded through borrowing. It takes a careful mix of mission, management, and culture.

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