On Demand Audio

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

(86 reviews)

Produced on October 03, 2019

$ 89 Business, Corporate, & Securities Law and Employee Benefits In Stock
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Course Information

Time 91 minutes
Difficulty Intermediate

Course Description

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 access 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 an employee benefit plan that allows a business owner to attract and retain key personnel.

This program, taught by Stan Bulua of Robinson Brog and Stephen Berman of CSG Partners, explains the overall legal structure of a leveraged ESOP transaction and discusses valuation and financing aspects of such transactions. This 2019 program provides an update to the original basic overview of key practical and strategic aspects of Employee Stock Ownership Plans.


Learning Objectives:

  1. Discuss how to use ESOPs as a business succession strategy
  2. Integrate an ESOP transaction with estate planning techniques
  3. Identify how an ESOP sale can be an alternative to an M&A transaction
  4. Update clients on financing options in the current business environment
  5. Review the fiduciary rules under ERISA applicable to ESOP transactions
  6. Summarize the special tax rules applicable to ESOP transactions

Credit Information

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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

Formerly a Managing Director of Prudential-Bache Interfunding, Inc., the merchant-banking arm of Prudential Securities Incorporated, Steve co-managed a fund that made private equity and debt investments in leveraged transactions. He 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 is also President of Synergy Capital I LLC, CSG Partners' wholly owned broker-dealer subsidiary. Steve holds Series 24, 7, 79, and 99 securities licenses.



Reviews

TD
Thomas D.

Very knowledgeable faculty!

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