Chapter 11

Practical Considerations and Employee Stock Ownership Plan Resources

Professionals who are interested in working with clients on possible employee stock ownership plan (ESOP) installations or who wish to learn about this field will gain an understanding from a number of time-honored best practices. ESOPs are not always a logical or even desirable option for certain closely held companies. It is most efficient to quickly qualify the likelihood of a potentially successful ESOP installation. By recognizing a manageable set of variables, ESOP candidates may be quickly screened for suitability. Absent these best practices, the candidate may still be a suitable prospect, but the professional adviser is on notice that the installation will likely be a challenging assignment.

Finally, a number of ESOP-related resources are identified later in this chapter. Only resources that are likely to be readily available are listed. Older ESOP resources may be hopelessly outdated because there have been significant and sweeping changes in ESOP legislation in the past few years.

Qualifying ESOP Candidates

ESOPs are generally a far more viable alternative for the business owner to consider, but there is often a significant amount of misunderstanding about the mechanics of an ESOP. Misunderstandings about the technical aspects of an ESOP installation are the most common reason for business owners to reject the concept, in our experience. The following observations are offered to assist professionals ...

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