Watch this video to learn more about determining if an ESOP is feasible financially for a company.
It’s important to determine whether an ESOP is feasible for the corporation and whether it’s suitable for the other parties involved. On the corporation side of the analysis, cash flow, tax deductions, and sensitivity analysis need to be performed to identify a size of transaction or formative transaction that the corporation can prudently support while at the same time pursuing its business plan. On the selling shareholders’ side, the transaction has to be evaluated to determine whether or not a particular formative transaction will achieve the estate planning or personal financial planning goals of that selling shareholder. Ultimately, those objectives which might appear to be competing at times have to be reconciled to assure that it works for all parties involved.