ESOP Services

SES ESOP Strategies assists companies in creating and maintaining successful, sustainable employee ownership results throughout the entire ESOP lifecycle.

Invest in your employees and your business with an employee stock ownership plan (ESOP). Contact SES ESOP Strategies’ team of legal, finance, investment banking, and consulting professionals to assist you in establishing your company’s ESOP or sustaining your Company’s existing ESOP.

Our ESOP Services

Our lawyers and professionals have provided ESOP feasibility, design, implementation, financing and legal services to hundreds of clients throughout the country for three decades. A premier team of ESOP attorneys, consultants, and advisors, we pride ourselves on client satisfaction and we will work hard for you, no matter your company’s location. In addition to helping companies looking to establish an ESOP as part of a business exit strategy, we also provide services to existing ESOP companies.

ESOP Feasibility

As a first step when considering an ESOP, key information is gathered from the Company. A preliminary review of this information helps clarify your financial and other objectives. This information will help determine if an ESOP is right for you. If an ESOP is the best choice for accomplishing the objectives, we examine the size, structure, and financing terms, among other areas, to ensure the feasibility of a successful transaction. This feasibility study will model how the ESOP will impact the company, the selling owners, and the employees.

ESOP Design

Once the company and its owners determine the appropriate ESOP structure, the design and implementation stage begins. A team of professionals is engaged to provide advisory services and complete the sale of stock to the ESOP in compliance with IRS and Department of Labor’s regulatory requirements to help establish an ESOP.

ESOP Financing

Along with assessing the impact of the ESOP on its selling shareholders, the sponsoring company, the employees, and the ESOP itself, the company’s debt borrowing capacity and future cash flows must be taken into account. If applicable, we can help raise the debt necessary to fund the ESOP transaction. SES ESOP Strategies and its affiliated investment bank and law firm assist companies in the due diligence process to ensure a successful path forward. We also guide clients through choosing advisors, negotiating terms and conditions, and documenting and implementing the transaction.

ESOP Legal Services

Through its affiliated law firm, Stevens & Lee, SES ESOP Strategies assists business owners 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 ESOP transaction objectives with their wealth preservation and estate planning needs.

The Many Advantages of an ESOP

An ESOP is a retirement plan designed to provide employees with an ownership interest in the company by investing primarily in the stock of the employer. ESOPs also provide benefits to the business owner(s) and the Company. ESOPs are unlike other retirement plans, which typically diversify their holdings by investing in a variety of assets. The ESOP is funded with tax-deductible contributions by the employer, which can be in the form of company stock, or in cash which is used to purchase company stock. An ESOP operates through a trust under the direction of a trustee or other named fiduciary.

ESOPs must be specifically designated as an ESOP in the plan document and must comply with special ESOP requirements of the Internal Revenue Service (IRS).

Advantages of an ESOP for Companies

An ESOP is a technique of corporate finance as well as an employee benefit plan. An ESOP can be used to finance ownership transition in succession planning, raise new equity capital, refinance outstanding debt or acquire productive assets. ESOPs can also be used to increase cash flow by making plan contributions in stock instead of cash. ESOP contributions are fully tax-deductible, allowing employers to fund both the principal and the interest payments on an ESOP’s debt service with pre-tax dollars.

Dividends on ESOP stock are tax deductible if they are applied to repay the principal of the loan made to acquire the company stock on which the dividends were paid. Reducing loan principal with pre-tax contributions and dividends generates significant tax savings, which in turn increases the ESOP company’s cash flow. This favorable tax treatment means that ESOPs are effective vehicles for financing ownership transition. In addition, an S Corporation that is wholly owned by an ESOP effectively escapes income tax on the company’s profits since the ESOP trust is tax-exempt.

There is strong statistical evidence that ESOP participation improves employee morale and productivity, and reduces turnover. Surveys conducted by The ESOP Association show that most Association members report improved employee morale and productivity from their ESOPs.

Advantages of an ESOP for Employees

Each year company contributions to the ESOP, in cash or stock, are allocated to the accounts of participating employees in the trust established as part of the ESOP. The accumulated balance in a participant’s account is distributed to the participant after his or her retirement or other termination of employment with the company. So long as a participant’s account remains in the ESOP trust, the value of the account– including the appreciation in stock value – is not taxable to the employee.

Advantages of an ESOP for Stockholders

One of the most popular uses for an ESOP is to provide a ready market for some or all of the shares owned by shareholders in a closely held company. With an ESOP in place, a majority or controlling shareholder has an exit strategy when he or she is ready to retire. Likewise, an ESOP is often an attractive buyer for a minority shareholder in a closely held company. With an ESOP, a majority shareholder has the option of selling only a portion of his or her stock to increase personal liquidity while maintaining control of the company.

Are You Considering an ESOP For Your Business?

Turn to SES ESOP Strategies and its affiliated law firm, Stevens & Lee, the leading providers of legal and consulting services for ESOPs and related compensation strategies. Advising companies and their executive teams in employee-centered ownership options since 1987, our professionals leverage their many years of experience to help business owners implement and maximize the numerous financial and other benefits of this unique and flexible ownership tool. Ready to learn more? Contact SES ESOP Strategies today!