An ESOP trust, representing at least 10 employees, buys company stock.
The price is negotiated with an institutional trustee, based on an independent valuation.
Commercial and/or seller financing, paid-off with pre-tax corporate cashflow.
Full-time employees are allocated shares proportional to their annual compensation.
A portion of all shares is allocated annually; the shares vest within 3-6 years.
Vested stock is sold back to the company, at a current valuation, when employees depart.
ESOPs are ERISA-authorized, defined contribution plans that create incentives for all associated parties.
Paid fair market value for stock
Can maintain role & upside in company
May defer capital gains taxes on proceeds
Enhance cash flow with tax deductions
Can become income tax-free entities
Gain talent attraction & retention tool
Secure unique retirement benefit (stock)
Earn real stake in their company
Gain workplace stability & peace of mind
In short, an ESOP can benefit all stakeholders.
When Larry Kaplan founded CSG Partners in 2000, he made ESOP education a priority. That remains central to everything we do. So, if you have questions about employee stock ownership or selling to an ESOP, you've come to the right place. You'll find answers below and more on our Resources page.
Get news and insights from our employee stock ownership plan experts. Subscribe to our monthly newsletter today.