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ESOP Sustainability:


Plan for Your Repurchase Liability

Proactively Manage Your ESOP

With Timely, Accurate Sustainability Studies

Managing cash flow is fundamental to long-term ESOP success and sustainability and that requires a clear view of the cash needed to meet your ESOP’s short-term and long-term stock repurchase obligations.

Why? A closely held ESOP company is required to buy back shares according to the plan’s distribution policy. Distributable events can include retirement, termination of employment, death, or disability; and diversification opportunities can begin when participants reach age 55 and have 10 years of participation in the ESOP. 

Without a clear understanding of the potential demands for cash to repurchase those shares, any ESOP company could have a hard time planning ahead to meet all its cash needs. Even worse, it could end up leaving potential savings on the table.

A sustainability study can help you proactively manage cash flow to meet repurchase liabilities while maintaining company stability and a successful ESOP. Download our free tip sheet to learn more.

What is an ESOP Sustainability Study?

An ESOP sustainability study is a repurchase obligation forecast that begins by using your individual business information and actuarial data to generate a projection of the cash your company will need to satisfy ESOP distribution liabilities following the distribution timing, form, and method requirements articulated in your plan documents and policies.

From that foundation, the sustainability study creates an iterative, enduring approach to maximize the repurchase obligation process in a way that best addresses the company’s long-term goals and objectives.

Given that your ESOP plan design is unique, your sustainability needs are likely just as individual.

As your ESOP matures and/or your business grows, it becomes even more important to keep a close eye on repurchase liability. In most cases, companies should perform a sustainability study anywhere from annually to every few years — but it’s important to note that your ESOP plan design and policies, company performance, and employee demographics all contribute to your repurchase liability.

While a cadence of one to three years is common for ESOP sustainability studies, you may find circumstances arise that generate some urgency, such as:

Is it time for your ESOP sustainability study?

Find out. Schedule a free consultation with ESOP Partners.

Your ESOP Partners Sustainability Study

We make the process easy for you. Our ESOP PROS™ (Proactive Repurchase Obligation and Sustainability) process combines our in-depth, one-on-one consulting experience with repurchase obligation best practices to project your liability well into the future. 

Here’s how our ESOP PROS™ process works:
Step 1


We collaborate with you to develop assumptions based on a variety of scenarios, using your individual company data, as well as actuarial data, as a basis for analysis and projection.

Step 1
Step 2


We analyze the data and create reports that help you visualize the impact of stock repurchase obligations on your company and the ESOP.

Step 2
Step 3


We consult with you to incorporate the projections into a comprehensive, long-term strategy designed to achieve your business and ESOP objectives.

Step 3

The result is a 20-year snapshot of your ESOP’s future repurchase liabilities — which helps inform your business decisions and contributes to the sustainability of your ESOP.

Do you know what obligations lie ahead for your ESOP and your business?

Find out — schedule your free consultation.