You’ve cultivated your business, hired the right people and turned a profit. So what’s next? Successful business owners face a multitude of options when planning for the future. Selling to private equity strips business owners of involvement, legacy and control. Maintaining primary ownership with diminished involvement keeps owners’ liquid assets inaccessible and can actually harm legacy and operations.
An employee stock ownership plan, however, merges the benefits of selling with the benefits of ongoing involvement.
In scenarios where an ESOP is deemed a good fit, business owners retain equity and the level of participation they choose, enjoying increased liquidity and tax benefits while incentivizing their workforce as employee-owners.
ESOPs are complex creatures of the tax code and ERISA and require lawyers with significant ESOP expertise to help minimize potential exposure, as individuals can be subject to potential personal fiduciary liability.
ESOP Legal Services for Companies Transitioning to Employee Ownership
Through SES ESOP Strategies’ affiliated law firm, Stevens & Lee, our ESOP attorneys assist companies in the legal process of establishing and funding an ESOP, including preparing the transaction, financial and legal documents with an eye toward minimizing fiduciary risk. We also assist the selling shareholders in aligning their transaction objectives with their wealth preservation and estate planning needs. Through our affiliation with a large corporate law firm, we provide the resources to handle unanticipated issues that may arise in the ordinary course of business or in a transaction, unlike other law firms and service providers that deal solely with ESOPs.
SES ESOP Strategies recognizes the extraordinary benefits of properly structured ESOP projects. ESOPs are complex and require professionals with significant expertise. Our affiliated law firm, Stevens & Lee, has a team of employee benefits, tax and corporate lawyers actively engaged in significant ESOP transactions on a regular basis, and we assist clients in determining the feasibility and proper design of an ESOP, and then establish and implement the single or multi-stage ESOP transaction. If contentious issues arise with federal regulators (the IRS and the Department of Labor), we can help the ESOP navigate those.
Legal Services for Existing ESOPs
In addition to creating new ESOPs, SES ESOP Strategies provides ongoing ESOP guidance and counsel to established ESOPs of all sizes, and offers legal services to clients through its affiliated law firm, Stevens & Lee. Among the 250 largest law firms the U.S., Stevens & Lee provides a full range of transactional, tax and litigation services to established ESOPs.
Our ESOP attorneys work to ensure that our ESOP clients meet their ongoing compliance, governance and operational objectives and position themselves for strategic growth.
ESOP Compliance Audits
To achieve the benefits of an ESOP, it is important to maintain compliance with the complex ESOP rules and regulations, and to administer the ESOP in accordance with its terms. Our team can:
- Anticipate questions from the U.S. Department of Labor or Internal Revenue Service that arise from 5500 Annual Report filings, ensuring proper documentation and communication
- Advise clients on the most responsible and cost-effective corrective actions necessary to obtain a “no action” closing letter from the DOL or IRS and represent the client throughout the correction process
- Monitor changes to the law and provide ongoing updates as needed
Corporate Governance Guidance
Shareholder, director and officer roles are uniquely impacted in companies with existing ESOPs. Every ESOP fiduciary should focus on the goal of having a solid corporate governance structure in place. Our professionals:
- Work with clients to enhance value, predictability, trust, fairness, stability, and quality of corporate life as a company faces routine governance issues
- Provide advice regarding the complex ERISA fiduciary duties of ESOP trustees
Program Operation Services
Our services for existing ESOPs include reviewing and redrafting plan documents. We strive for successful and sustainable employee ownership outcomes. Our multidisciplinary team:
- Works with clients to design and implement plan terms tailored to meet company needs, objectives, and legal guidelines
- As an ESOP grows and changes, provides advice and design amendments necessary to sustain relevance, profitability, and compliance
In addition, we have taken proactive steps to address the IRS’ abandonment of the determination letter program for ongoing individually designed plans. In order to solve the resulting gap in protection, we received approval from the IRS to offer a pre-approved plan document to our clients. By providing this solution for our clients, they have the ongoing benefit of relying on the opinion letter we received from the IRS that the plan is qualified in form. In addition, we now have the ongoing burden of maintaining the plan’s qualification on an annual basis by adopting any necessary compliance amendments due to changes in law or regulation.
Mergers and Acquisitions: Buying or Selling a Firm with an ESOP and Growing by Acquisition
We have extensive experience assisting ESOP companies and their trustees in fulfilling their fiduciary duties by optimizing the sale or restructuring process. Additionally, our lawyers with our affiliated law firm, Stevens & Lee, regularly handle general corporate and merger and acquisition issues, allowing us to call on their expertise when needed. Our services include:
- Assisting ESOP-owned clients in growing by acquisition, which is becoming a tried and true method for ESOP companies to grow
- Assisting clients in optimizing built-in benefits to be positioned for sale or as preferred buyers
- Assisting clients in choosing advisors, negotiating terms and conditions, and documenting and implementing the transaction
ESOP Termination
Just as a company can terminate a profit-sharing plan, it can also terminate an ESOP. In those cases, we can:
- Structure and document the handling of unallocated shares
- Remediate document or operational issues
- Prepare and file a submission to the IRS
- Prepare and negotiate the transaction documents to facilitate the termination
A Complete Range of Legal Services for ESOPs
As a large platform of multidisciplinary professional services providers, we have the resources to handle a wide range of issues that may arise in the ordinary course of business or in a transaction. SES ESOP Strategies offers legal services to clients through its affiliated law firm, Stevens & Lee. Among the 250 largest law firms the U.S., Stevens & Lee provides a full range of transactional, tax, and litigation services to business clients, including ESOPs.
- Corporate Assistance
- Mergers and Acquisitions
- Labor and Employment
- Litigation
- State and Local Tax
- Real Estate
- Intellectual Property
- Wealth Planning, Trusts and Estates
- Environmental
Why Choose Our ESOP Attorneys
With over 30 years of ESOP experience, our professionals have the skills and expertise to assist owners in balancing their needs with those of the company and its employees to create successful and sustainable employee ownership outcomes. Our team of professionals has successfully guided thousands of ESOPs through their complete life cycles – from an idea to implementation to a business sale and final termination.
Consult an Experienced ESOP Attorney
Whether you have recently adopted an ESOP, have been an ESOP company for years, or are now looking to implement an ESOP transition strategy, SES ESOP Strategies takes a uniquely strategic and responsible approach that maximizes value for owners, their companies and their employees. With complex structures and numerous potential pitfalls, setting up an ESOP does not guarantee success. You need an experienced team of professionals to make an ESOP work for your company. As your trusted advisor, our team understands the pitfalls and benefits in establishing and maintaining a successful ESOP.
Reach Out to an SES ESOP Strategies Professional Today!