NCEO ESOP ValuationESOP’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.

  1.  Don’t pay off your internal loan too fast.
  2.   Create a succession plan for all critical people, not just CEO’s.
  3.  Make sure your culture structures employee involvement, not just allows it.
  4.  Make sure your fiduciary process is up to what the Department of Labor expects.
  5.  Make sure your distribution policy fits what actually works best for you in the long term.
  6.  Make sure your ESOP valuation reflects your repurchase obligation.
  7.   Avoid the have/have-not problem.
  8.   Consider having outsiders on your board.
  9.  Use interactive communication tools
  10.  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 or call 443.334.8000