Employee Stock Ownership Plans (ESOPs)

Employee stock ownership plans are used for a variety of purposes. ESOPs can be used by public and private companies as a corporate finance tool to allow companies to borrow on a tax-favored basis. Owners of closely held businesses often use ESOPs as a financial and estate planning strategy because sales to an ESOP are tax-deferred or tax-free. ESOPs also can be used to acquire or spin off a company, to facilitate a management buy-out, and to provide a valuable compensation element for employees.

Public companies use ESOPs to provide an excellent benefit to employees, as well as to borrow funds on a tax-deductible basis and to generate tax deductions by contributions of company stock. Closely held businesses use ESOPs to diversify a portion of the owners’ financial holdings, to buy out disgruntled shareholders or divorced spouses, and to borrow funds on a fully tax-deductible basis for capital improvements or acquisitions of other companies. S-corporations that are owned entirely by ESOPs are completely exempt from federal income tax.

Our lawyers are among the most experienced ESOP lawyers in the country, and we regularly serve as counsel for ESOP companies, ESOP trustees, and ESOP lenders. We have negotiated a wide variety of ESOP transactions and are recognized nationally for our work in ESOP structuring and finance. We counsel both public and private corporations, as well as trust companies and other financial institutions, on the use of ESOPs in numerous transactions, including leveraged buyouts, corporate stock repurchases, ownership-succession transactions, mergers and acquisitions, and hostile-takeover bids. Our experience representing all parties to ESOP transactions, combined with our broad range of experience in business transactions generally, enable us to successfully navigate the often complex planning considerations and negotiations involved in an ESOP transaction.