Leveraged ESOPs: Key Considerations for Trusted Advisors

Since ERISA's passage in 1974, employee stock ownership plans (ESOPs) have offered a formal, qualified structure for employee ownership of a company's equity. Increasingly, these defined contribution plans have been leveraged as M&A alternatives, enabling shareholders of closely held companies to realize partial or complete liquidity events at fair market valuations. Beyond tax benefits for all stakeholders and wealth-building opportunities for workers, ESOPs can help build more cohesive, independent businesses. 

This program, presented by Stanley Bulua, shareholder at Polsinelli, and Stephen Berman, founding member and managing director at CSG Partners, explains the overall legal structure of a leveraged ESOP transaction and discusses the valuation and financing aspects of such transactions.

Learning Objectives:

1. Discuss how leveraged ESOPs can be used as business transition and/or shareholder diversification strategies
2. Review applicable statutory, regulatory, and fiduciary requirements, as well as relevant case law.
3. Examine the special tax rules and estate planning opportunities associated with ESOP transactions 
4. Appreciate commonly available transaction financing options
5. Identify instances in which an ESOP sale can serve as a viable alternative to a strategic sale or private equity transaction