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ESOPs by Scott D Miller

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Chapter 6

Advanced Employee Stock Ownership Plan Applications

This chapter is intended to provide a brief overview of the range of employee stock ownership plan (ESOP) applications in closely held companies. This range of illustrations is not intended to be all-inclusive; rather, it is a sampling of the flexibility ESOPs may provide in meeting various requirements. ESOPs may become very complex, with myriad issues and complexities as the transactions grow in both size and sophistication. It is beyond the scope of this book to describe such applications in any appreciable detail. Rather, by providing an overview of such applications, the intent is to leave the impression that ESOPs are often a viable option for consideration in transition planning.

This book is oriented to the discussion of ESOPs in closely held companies. ESOPs or other types of equity participation plans have been installed in many publicly held corporations, as well. The dynamics of ESOPs in public companies are often much different than ESOPs in closely held firms. With public companies, the securities markets will determine the value of the stock. The public markets are often notorious for their short-term orientation and volatility. Correspondingly, ESOP-related issues in publicly held companies often have different dynamics. ESOPs in publicly held companies are not considered in this chapter.

Mergers and Acquisitions—Buying a Target Company With Pretax Dollars

This particular illustration is easiest to understand ...

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