Is Now The Right Time To Consider An ESOP?

Employee Stock Ownership Plans (ESOP)

FOCUS adopted an ESOP, an employee stock ownership plan, form of corporate structure late last year. We decided to implement an ESOP as it afforded our partners an opportunity to redeem their capital accounts but kept our existing organization intact without any changes to our culture, organization, benefit plans or management team. In effect, the ESOP allowed us to maintain our business model and procedures exactly the same as prior to the transaction. In so doing, FOCUS joined nearly 7,000 other companies who have made the decision to establish an ESOP.

ESOP From an Adopter’s View

It is very likely that you have been approached by advisors over the years suggesting you consider selling your business to an ESOP, an employee stock ownership plan. Interestingly enough, FOCUS recently adopted an ESOP in December 2018 to execute our own long-term transition plans, and we thought our perspective on this ownership structure (as both an advisor and recent adoptee) might be helpful to you.

The FOCUS Experience 

Over the past few years, FOCUS found itself considering ways to both help long term shareholders monetize their investment as well as provide for a stable transition to a broader set of owners.During this process, FOCUS had been approached by various suitors, including private equity groups. A sale to either a strategic buyer or a private equity buyer has unique benefits, but a key priority for FOCUS was to preserve the culture and business model it had created over its 40-year history.

During its substantial history, FOCUS has experienced very little staff turnover. The firm has a collaborative, collegial, customer service driven culture which has served it well in the marketplace. Seeking to balance the goal of maintaining this culture with the objective of achieving a competitive exit price, the shareholders began exploring an ESOP as an alternative to a third-party sale. In doing so, it drew on its own experience in working with ESOPs through the years as well as seeking outside advice.

1 2 3
View single page >> |

Disclosure: None.

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.