Your Succession Plan Starts Here™

What is an ESOP?

An ESOP is a type of qualified benefit that allows a business owner to sell their business to their own employees in the form of stocks. A team of advisors set up a trust for the employees, which borrows money and buys the entirety or part of the business, giving each qualifying employee a share according to an agreed-on formula, which is gradually paid off with a defined payroll contribution.

ESOPs are tightly regulated and have stringent fiduciary rules and compliance reporting requirements; in addition, since employees stand to become company owners and take an active role in decision making, it is critical to have a comprehensive employee communications strategy, and help everyone understand their new status, the inner workings of an ESOP, and the ways to secure the company’s – and the fund’s – long-term health and prosperity.