ESOP’s (Employee Stock Option Plans) can be the best succession plan and exit strategy option for many business owners and their staff. ESOP’s are a tax advantaged exit strategy that promotes employee ownership through a retirement trust. When ESOP’s are structured and run properly (including a correct ESOP valuation) all parties benefit. Below are ten tips for creating and running an outstanding ESOP and a link to the complete NCEO article. Click Here to go to NCEO ESOP article.
- Don’t pay off your internal loan too fast.
- Create a succession plan for all critical people, not just CEO’s.
- Make sure your culture structures employee involvement, not just allows it.
- Make sure your fiduciary process is up to what the Department of Labor expects.
- Make sure your distribution policy fits what actually works best for you in the long term.
- Make sure your ESOP valuation reflects your repurchase obligation.
- Avoid the have/have-not problem.
- Consider having outsiders on your board.
- Use interactive communication tools
- Have a board policy on dealing with acquisitions.
These tips will take your ESOP from being a good one to being a great one.
Harvest Business Advisors preforms ESOP business valuations in New Jersey and the Mid-Atlantic Area.
Connect with Harvest Business Advisors today – email firstname.lastname@example.org or call 443.334.8000