Employee Benefits Law Blog
Posts in Private Employers.
Posted by: Mindi M. Johnson
The short answer is YES! Here’s the plain‑English, straightforward version of how an ESOP works as a succession strategy:
1. The company sets up an ESOP trust.
2. That trust then buys some or all the owner’s stock.
3. Employees earn shares over time as a retirement benefit.
4. The company keeps operating - same management, same board.
5. Finally, instead of having to sell the business to a competitor, or shutting the doors completely, the owner ultimately sells to the people who helped build the business.
Sounds great, so what’s the catch? There is fine print and I wouldn’t be ...
