Structuring an ESOP

For many privately‐held business owners, the sale of their company is a once-in-a-lifetime event. Faced with this inevitable decision, you want to make the right choice. This can be a confusing and emotional undertaking. After all, you have lived and breathed this business for a considerable portion of your life. Like one of your children, you want your business to grow and prosper long after your departure.

There is a point of self-reflection when the owner decides the primary motivator for transitioning the business, other than retirement of course. While price is important, it is not the only motivating factor. Thoughts such as company legacy, employee welfare and local community may be important factors. These qualitative factors can be an excellent setting for an Employee Stock Ownership Plan (“ESOP”). 

At the surface, the ESOP is merely a qualified retirement plan; however, it possesses other unique characteristics that make it an attractive option to someone seeking liquidity from their business.

Shaun McGehee is a Director at Prairie Capital Advisors, Inc. He can be contacted at 630.413.5579 or by email:

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