Bryan Browning and Timothy Stewart
ESOP fables: Reviewing the myths and facts about Employee Stock Ownership Plans
Employee Stock Ownership Plans (ESOPs) can be an attractive way for an owner to sell a company and for employees to gain an ownership stake. ESOPs are qualified retirement plans that buy, hold and sell company stock for the benefit of employees. One of the main reasons ESOPs are often dismissed by business owners (and their advisors) as a legitimate succession planning option is due to the many unfounded misconceptions about them. In reality, many businesses are a perfect fit for ESOPs, but the business owners will never know because they think selling to a private equity or other third-party buyer are their only legitimate alternatives. Discussed below are some of the most common myths associated with ESOPs (sometimes referred to as “ESOP fables”):
