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Employee Stock Ownership Plans, or ESOPs, are an effective exit strategy for shareholders of closely held companies.

ESOPs are a form of a stock bonus and retirement plan, designed to invest in company stock.

ESOPs can be an effective solution for most business with more than 20 full time employees. And, ESOPs do not need to be used only as an exit strategy. ESOPs can also be used to borrow money for the acquisition of new assets, or as a reward system to motivate and retain employees.

Additional ESOP strengths include:

  • Allows owners to defer taxes related to the sale of their business
  • May provide owners with the highest sales price for their business
  • Employee and Company Tax Benefits
  • Employers are also able to deduct contributions made to the ESOP
  • Flexibility in terms of how much of the business is liquefied
  • Ability to maintain existing management team
  • Business owners may continue to run their company
  • Increased ability to service debt

When employers engage the right Merger & Acquisition Advisors, the process for implementing an Employee Stock Ownership Plan is straightforward and runs smoothly. Success Business Services has perfected the art of ESOP implementation and designed a results-oriented process for successful execution:

Step 1: Feasibility Study - Performed to ensure the company is a good ESOP candidate
Step 2: Preliminary Valuation - Performed by a Qualified Independent Appraiser
Step 3: ESOP Funding Determined
Step 4: Owner has Legal, Business, and Tax Questions Answered
Step 5: Owner Decides if ESOP is An Appropriate Option
Step 6: Employee Stock Ownership Plan & Stock Ownership Trust Agreement Drafted
Step 7: Application to IRS for Letter of Determination Submitted with Plan & Trust Agreement
Step 8: Fiduciary or ESOP Committee Selected
Step 9: Communication Plan Designed to Educate Employees
Step 10: Selection of Plan Administrator
Step 11: Sale of Stock to the ESOP
Step 12: Possible 1042 Exchange


5420 Lynx Lane, Unit 228, Columbia, Maryland 21044
Telephone: 443-512-8991 • Fax: 443-512-0391