1
Gather Relevant Information
Similar to preparing a plan for strategic growth, key information must be obtained for review and analysis when considering an employee stock ownership plan for your company. A preliminary review of this information can help you clarify your financial and other business objectives. At minimum, this data should include:
-Succession plan priorities and the goals of the selling owner(s)
-Other available alternatives to an ESOP – such as a management buy-out, recapitalization, or selling to a strategic or financial buyer – and the pros and cons of each option relative to the selling owner(s) priorities
-Historical and projected financial results of the company
-Management structure, including depth of the team and the experience and expertise of the C-level executives responsible for key areas within the company
2
Determine if an ESOP is Right for You
When planning the future of a business, understanding all options is essential. An employee stock ownership plan is one solution, but the preliminary review may determine that an ESOP is not the best solution to help you achieve your goals. When an ESOP is not the right choice, SES ESOP Strategies is positioned to assist owners in finding the best non-ESOP structure to fit their unique situations.
Together with our affiliated law firm, Stevens & Lee, and our affiliated FINRA-licensed investment bank, Griffin Financial Group, we assist companies in clarifying their objectives and exploring a broad range of non-ESOP strategic alternatives, including a leveraged management buyout, an old-to-young recapitalization, selling to a strategic or financial buyer or numerous other possibilities.
3
Effective ESOP Planning
If an ESOP is ultimately the best strategic choice for you to accomplish your objectives, SES ESOP Strategies will assist you in exploring the appropriate size, structure and financing terms, among other areas, of your ESOP plan, to ensure the feasibility of a successful transaction. This analysis will model how the ESOP will impact the company, the selling owners and the employees and may include the following:
-A preliminary valuation of the company to establish the approximate amount an employee stock ownership plan may pay
-An analysis of stockholders’ equity to assess the effects of the ESOP plan on existing shareholders and the company’s financial performance
-A study of plan design to decide the optimal structure of the transaction and plan features that should be incorporated into the ESOP
-A liquidity study determining the demands that the company repurchase obligations would eventually make on the sponsor company
4
Implement The ESOP
Once the company and its owners determine the appropriate structure, the ESOP implementation stage begins. SES ESOP Strategies assists companies in choosing advisors, negotiating key terms and conditions, and documenting and implementing the ESOP transaction in compliance with IRS/DOL regulatory requirements. If applicable, SES and affiliate Griffin Financial Group can assist you in raising debt to fund the transaction.
5
Maintain Your ESOP
Following ESOP implementation, SES ESOP Strategies’ affiliated law firm, Stevens & Lee, can provide legal services to assist the company in maintaining the tax-qualified status of the employee stock ownership plan, and also can provide a wide range of business-oriented, value-added legal services. We have longstanding relationships with third-party administration teams, and can assist the company in selecting the team best-suited to provide annual plan record keeping and administration services.