The Sale of Stock in a Closely-Held Business to an "ESOP" (Employee Stock Ownership Plan): A Liquidity Strategy for Business Owners

(822 Ratings)

Produced on: October 28, 2015

Course Format On Demand Audio

Taught by

Categories:

Course Description

Time 92 minutes
Difficulty Intermediate

This seminar provides a basic overview of key practical and strategic aspects of Employee Stock Ownership Plans.  

 

An ESOP is a qualified, defined contribution employee benefit plan that invests primarily in the stock of a company. ESOPs are “qualified” in that, in return for meeting certain rules designed to protect the interests of plan participants, ESOP sponsors receive substantial tax benefits.  

 

Business owners can sell all or a portion of their stock in a business that may otherwise be illiquid or have no established market, to an Employee Stock Ownership Plan, in a highly tax-advantaged transaction. ESOPs are permitted to borrow money, from or on the credit of the employer, to purchase stock from the selling shareholder. Depending on structure, an ESOP-owned company can become a nontaxable entity and use money that would have otherwise been paid to taxes, to amortize the debt used to finance the transaction.

 

In addition to providing business owners a means to diversify their assets and gain liquidity, an ESOP is also an employee benefit plan that allows a business owner to attract and retain key personnel.

 

Stan Bulua of Robinson Brog and Stephen Berman of CSG Partners explain the overall legal structure of a leveraged ESOP transaction and discuss valuation and financing aspects of an such transactions. Attendees gain the following skills and benefits from attending this program:

 

Learning Objectives:

I.    Know how to use ESOPs as a business succession strategy

II.   Understand how to integrate an ESOP transaction with estate planning techniques

III.  Identify how an ESOP sale can be an alternative to an M&A transaction

IV.  Become updated on financing options in the current business environment

V.   Learn the fiduciary rules under ERISA applicable to ESOP transactions

VI.  Summarize the special tax rules applicable to ESOP transactions

Faculty

Stanley E. Bulua

Robinson Brog Leinwand Greene Genovese & Gluck P.C.

Stanley E. Bulua is the chairman of the Firm’s Tax, Trusts and Estates and ESOP/ERISA Departments. Mr. Bulua has been practicing law for over thirty years and concentrates in the areas of income tax, estate planning, estate administration, ERISA and ESOPs.

 

In the area of income taxation, Mr. Bulua advises individuals, partnerships, trusts, limited liability companies and corporations on income tax issues affecting their operations and businesses. He has also represented individuals and entities on contested tax matters.

 

Through sophisticated trust and estate planning techniques involving both lifetime and testamentary transfers, Mr. Bulua’s estate planning clients have significantly reduced their projected estate tax liabilities. These techniques have included the use of complex wills, irrevocable trusts, qualified personal residence trusts, grantor retained annuity trusts, defective grantor trusts, charitable remainder trusts, family limited partnerships and limited liability companies. Mr. Bulua has also represented executors and trustees in the administration of trusts and estates and is well versed in advanced post-mortem techniques of estate administration.

 

Mr. Bulua has overall responsibility for the firm's ESOP practice which includes representation of ESOP sponsors and ESOP trustees. He is a recognized expert in the ESOP area, has lectured to professional groups on this topic and has vast experience in the design and implementation of ESOPs to deal with a broad range of business succession issues.

 

Education: 

LL.M. in Taxation, New York University School of Law, 1984

J.D., Order of the Coif, New York University School of Law, 1979

B.A., cum laude, Brandeis University, 1976

Professional Associations and Memberships: 

Chairman, Tax Section of the Westchester County Bar Association (1998-2001)

Director, Estate Planning Council of Westchester County Inc. (2000-2003)

Member, ESOP Association and National Center for Employee Ownership

 

Honors and Awards: 

Best Lawyers in America - Tax Category (2006-2014)

Westchester Magazine list of top lawyers - Tax category

AV Rated in Martindale-Hubbell

Stephen Berman

CSG Partners, LLC

Steve was formerly a Managing Director of Prudential-Bache Interfunding, Inc., the merchant-banking arm of Prudential Securities Incorporated. He co-managed an $800 million fund that made private equity and debt investments in leveraged transactions, which closed transactions with aggregate investments and commitments of $1.4 billion. Steve was also the co-founder of Seaport Capital Inc., a merchant banking operation formed to manage the private equity portfolio of Prudential-Bache Capital Partners I and II, L.P.

 

Between 1976 and 1987, Steve worked in other investment areas of The Prudential, during which time he was involved in over 35 leveraged corporate restructurings, the development of portfolio investment strategies in restructurings, and the oversight of credit procedures.

 

Steve was previously on the board of directors of Dr. Pepper / Seven-Up Companies, Inc., Leewards Creative Crafts, Inc., Fairmont Communications, and Casfam, Inc. He graduated with a Bachelor of Arts degree from the University of Rochester in 1974 and a Masters of Business Administration degree from New York University in 1976. He holds Series 24, 7, 79, and 99 securities licenses.

Reviews

MM
M Rogan M.

Nice general overview

ES
Evan S.

Very useful and timely info.

TR
Thomas R.

Great program

KM
Kathleen M.

excellent - innovative ideas and practice

BL
Benjamin L.

Best, most informative of the classes I've taken so far.

EC
Eugene A C.

Fine presentation accompanied by high quality, additionally detailed reading notes.

CW
Cynthia W.

Extremely informative and easy to follow with what can be a complex issue.

CS
Charles S.

Did not know what to expect. These guys are good. In house at a company that is not exactly "closely held" at this point, but the topic was fascinating. I know who to recommend if I ever encounter entities in this space exploring these kinds of options.

PG
Peter G.

Very interesting topic, but warrants more time to cover.

JD
John D.

The presenters were excellent in explaining the subject matter of the presentation...

JS
Jo Anna S.

Loved it!

EL
Eve L.

Excellent presentation!

MU
Mark U.

Very technical and helpful.

RS
Robert S.

Complex matter. This is a preliminary introduction. Well done.

LL
Lawrence L.

nice work good speakers

JS
Jill S.

Good.

LG
Loren G.

Great prime on this topic!!!!

BF
Brian F.

Another surprisingly good program at Lawline

DB
Drake B.

Good job.

WK
William K.

Good course for lawyers who help small enterprises raise capital

BF
Ben F.

One of the best CLEs on this site.

MA
Marc A.

Speakers certainly expert on subject-- good introduction to an extremely complex area-- more time would be helpful

ED
Edward D.

Great lecture--eye-opening

CO
Chukwuka O.

Great Instructors!

JK
Joseph K.

Of the many Lawline course I have taken over the years, this was one of the best (assuming you have an interest in the sale-to-ESOP subject matter). The two presenters had a very effective tag team approach and conveyed substantive information clearly an

KB
Kristina B.

While the subject is very complex, the speakers were both extremely knowledgeable. I would recommend this course to anyone with a client who has an ESOP or is contemplating one.

KB
Kelly B.

The seminar may have been "basic" for ERISA lawyers, but it was anything but that for generalists. Admittedly a complex area.

SP
Stuart P.

good course

FB
Frank B.

It probably could have been a two-hour course. Very informative.

GK
George K.

a lot of information

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$89

$ 89 Tax Law, Business, Corporate, & Securities Law, Labor & Employment Law, and Employee Benefits In Stock

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