ESOP Implementation Process

With decades 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. Through its affiliated law firm, Stevens & Lee, SES ESOP Strategies assists 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.

How to Implement an ESOP

With a team of multidisciplinary professionals actively engaged in significant ESOP transactions on a regular basis, we can assist clients in determining the feasibility and proper design of an ESOP, and then establish and implement the single or multi-stage ESOP transaction. 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.

Gather 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. Don’t lose control because of a lack of planning. At a 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 the depth of the team and the experience and expertise of the C-level executives responsible for key areas within the company

See ESOP success stories from our clients.

Determine if an ESOP is Right for You

What does employee-owned mean to 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.

Create a Plan for Your ESOP

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

Begin Implementing Your 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 can assist you in raising debt to fund the transaction.

This video, featuring SES ESOP Strategies President and CEO Ed Renenger, offers a detailed description of the ESOP implementation process.

Ongoing ESOP Upkeep and Maintenance

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.

How Our Team of ESOP Professionals Can Help With the Implementation Process 

ESOPs are complex creatures of the tax code and ERISA and require professionals with significant ESOP expertise to help minimize potential exposure, as individuals can be subject to potential personal fiduciary liability. To achieve the benefits of an ESOP, it is important to communicate properly with your employees, to maintain compliance with the complex ESOP rules and regulations, and to administer the ESOP in accordance with its terms. Our team is focused exclusively on ESOPs, and we are uniquely positioned, as we also rely on a network of employee benefits, tax and corporate lawyers from our affiliated law firm when specific complexities arise. Additionally, we have a team of litigators who focus exclusively on handling all forms of ERISA litigation.

If you are seeking an experienced source to handle all aspects of your ESOP, the SES ESOP Strategies team is the right team for your business.

Get Started With Implementing Your ESOP

If you are interested in seeing if an ESOP is the best fit for your business, take the first step and reach out to us to learn more. We look forward to guiding you along your path to employee ownership.

Contact Us Today!