Employee Stock Ownership Plans

An Employee Stock Ownership Plan (ESOP) is an employee benefit plan that holds shares of stock in trust for the benefit of company employees. Owners of closely-held companies often use ESOPs to buy part or all of the shares of company stock from existing shareholders. ESOPs create liquidity, ease succession strategies, and motivate employees.

ESOPs can be used to:

Provide business owners a tax-deductible market in which they can sell shareholder stock.
Provide a seamless financial succession plan.
Borrow money to purchase a shareholder stock and repay loan with pre-tax dollars.
Lenders may avoid tax on some interest they earn from certain ESOP loans.
Avoid capital gains tax on ESOP sales.
Provide stockholders with the ability to diversity their investment in company stock.
Decrease income tax bills, which in turn provides new capital for investments and debt reduction.
Motivate employees by providing a tax-deferred method for acquiring a beneficial interest in the company for which they work.

Prather Kalman, PC specializes in ESOPs. Founding partner, Herbert L. Kalman, has more than 25 years of ESOP experience. Prather Kalman, PC has acted as financial advisor to ESOP trustees and performed valuations on dozens of companies completely and partially owned by such plans. In 2008 alone, Herbert L. Kalman advised trustees regarding nine ESOP transactions.

Contact Herbert L. Kalman today to learn how an ESOP may be a right fit for your business.