Resources

Whether an ESOP can or should participate in earn outs or escrows from transactions depends upon the structure of the transaction and what's prudent. Watch our video to learn more.   Earn Outs & Escrows Many transactions include escrow provisions that hold back certain sums of ...
[Read more] about When an ESOP Company Is Sold, Can the ESOP Participate in Earn Outs or Escrows?

There are a number of reasons why an ESOP may be frozen or terminated. In our video, learn about freezing or terminating an ESOP.   Ending an ESOP Since terminating an ESOP and completely winding up an ESOP trust necessitates buying out all of the shares of the ESOP to create the ...
[Read more] about What Is the Difference Between Freezing an ESOP And Terminating It?

An issuance ESOP uses financing to acquire newly issued shares from the employer sponsor. The shares are allocated to the participants’ accounts as the loan is repaid. Learn more in our video.   Issuance ESOP An issuance ESOP is actually a form of ESOP transaction where the ...
[Read more] about What Is an Issuance ESOP?

A non-leveraged ESOP does not involve borrowed funds to acquire the sponsoring employer’s stock. It is funded by contributions of cash or stock directly from the employer sponsor. Learn more in the video.   Non-leveraged ESOP Non-leveraged ESOP simply refers to an ESOP that does not ...
[Read more] about What Is a Non-leveraged ESOP?

Historically, ESOPs were custom written documents produced by lawyers, which had to be submitted to the Internal Revenue Service for approval. These documents could be costly to amend and maintain. With the arrival this summer of IRS pre-approved “checklist driven” ESOP documents (similar to 401(k) ...
[Read more] about Finally! Pre-approved ESOP Plan Documents to Make Your Life Easier

An ESOP may provide a more flexible solution for company owners compared to a traditional company sale. Watch the video to learn more about a leveraged buyout ESOP.   Leveraged Buyout ESOP A leveraged buyout ESOP is a transaction that can take a variety of forms. Simply stated, an ...
[Read more] about What Is a Leveraged Buyout ESOP?

There are multiple classes of stock that an ESOP can own. In our video, we discuss the different classes of stock.   Classes of Stock The Internal Revenue Code defines employer securities for privately held companies as including common stock if the common stock has the highest ...
[Read more] about What Classes of Stock Can an ESOP Own?

Once the ESOP owns all of the company stock, it faces the challenge of how to get stock into the hands of new employees. Watch our video to learn more.   Approaches to Free Up Shares The simplest and most straightforward approach is for the corporation to simply issue and contribute ...
[Read more] about What Can an ESOP Company Do Once the ESOP Owns All the Stock?

ESOPs and ESOP transactions are highly complex. They involve several areas of the Internal Revenue Code including corporate taxation, qualified plan, design and administration, and mechanical tests. It is important to understand how ESOP transactions can potentially trigger excise taxes under the ...
[Read more] about What Are the Tax Risks of an ESOP Malfunction?