I outlined the key considerations, important steps and issues of concern when buying a company that is employee-owned, or at least partially employee-owned, by an Employee Stock Ownership Plan (ESOP), including:
- The nature of an ESOP: In an ESOP, employees have retirement accounts invested primarily in their employer’s stock, rather than having accounts invested in an array of securities and mutual funds. The trustee of the ESOP – who represents ESOP participants as the beneficial owners of the company stock – is entitled to participate in the sale or transaction like other shareholders would. Most importantly, anytime an ESOP is involved in the acquisition or sale of company stock, the transaction must be for “adequate consideration,” and the trustee’s decision to buy or sell must be in the financial best interest of the ESOP participants.
Continue Reading Key Considerations When Buying a Company with an ESOP