Pending Legislation for ESOPs

Last month, Republican Senator Steve Daines from Montana cosponsored the bill in the Senate titled S. 1589 – Promotion and Expansion of Private Employee Ownership Act of 2017. The pending bill was initially sponsored in the Senate by Republican Pat Roberts from Kansas last year on July 19th.

Employee Owned Companies are 235% Better at Job Retention

We have previously discussed how ESOP Companies are Better at Job Retention than their Non-ESOP Counterparts.

Ways to Develop an Effective ESOP Communication Committee

I am honored to be presenting on Struggling with How to Make an Impactful ESOP Committee on Thursday, March 8th, at 1:05 pm in Appleton, WI as part of the ESOP Association Wisconsin Chapter 2018 Spring Conference & Roundtables  being held at Lawrence University.

ESOP Repurchase Obligation: What is the ESOP Repurchase Liability?

What is the ESOP repurchase liability?

The ESOP repurchase obligation or liability is the company’s obligation to buy back shares from ESOP participants according to the company’s ESOP document and ESOP Distribution Policy. The ESOP repurchase obligation helps with planning for cash requirements and how to meet bank (or seller) requirements for leveraged ESOPs.

Companies With ESOPs Offer More

We have reviewed methods for transitioning your business compared to selling to an Employee Stock Ownership Plan (ESOP). One of the arguments against ESOPs is the perceived lack of diversification, because all the participants’ investments are in company stock. The National Center for Employee Ownership (NCEO) has done a great job of addressing this myth by showcasing how employee ownership can create jobs, strengthen the economy, and develop companies, illustrated in this infographic.

Recruiting Advantages as an Employee Owned Company

The landscape in today’s job market for hiring companies is difficult, especially with the unemployment rate at 4.1% for the past three months, according to the Bureau of Labor Statistics. Unemployment rates are at the lowest since 2000. Employers continue to need top talent to grow operations. This was evident with December’s jobs report indicating, once again, that we added jobs, another 148,000 to be exact. Companies have added 2.1 million employees in 2017 and 2.2 million employees in 2016, so it doesn’t appear to be slowing down anytime soon. 

2017 ESOP Benefit Payment Government Filings (IRS Forms 1099-R, 1096, 945)

If you paid any ESOP or other qualified retirement plan distribution of $10 or more last year you will have to prepare and file some government forms: Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

New Year, New Ownership Plan Part 3

In the initial start-up phase of your company, your personal and professional goals were aligned. Now, as you consider the next season of life away from your business, you must start researching your options for transitioning your business. In parts one and two of New Year, New Ownership Plan, I reviewed, at a high level, some of the advantages and disadvantages of selling to an ESOP or a private equity firm. In part 3, I will provide some insight on the advantages and disadvantages of selling to a third-party. When transitioning your business, you are faced with one basic question: Do you sell the business to an internal (employees or family members) or external (private equity or third-party) party? It is very important that you research each option and find the one that aligns with your vision for the future.

New Year, New Ownership Plan Part 2

In part one of New Year, New Ownership Plan, I reviewed, at a high level, the benefits associated with transitioning your business to an Employee Stock Ownership Plan. As I mentioned in the previous blog article, this is not the only option you have as a business owner. Another option could be selling to a private equity firm. I would like to highlight the advantages and disadvantages associated with this option.

New Year, New Ownership Plan

An Employee Stock Ownership Plan can be a perfect option for transitioning your business, but it is not the only option. The next series of articles will focus on the different ways a business owner can transition their business. This decision can and should involve a lengthy research process to ensure the best fit for you, the business owner!

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