Structuring M&A and Private Equity Sales Involving Employee Stock Ownership Plans

Evaluating Advantages and Risks, Best Practices for Structuring the Deal

June 26, 2018

Employee stock ownership plans (ESOPs) provide an alternative strategy for selling a business. ESOPs allow company owners to achieve various degrees of liquidity for their ownership rights sold in an employee stock ownership trust (ESOT) transaction—while simultaneously rewarding a broad-based group of employees who will continue to help build the business.

When structuring an ESOT transaction, counsel should consider the advantages and risks of using leveraged ESOPs as an alternative for transitioning ownership. Counsel also must understand the mechanics of structuring a leveraged ESOT transaction as ESOPs are highly regulated and many technical tax and ERISA fiduciary issues need to be addressed to ensure an ESOT transaction that satisfies regulatory, statutory, and case law compliance mandates.

David R. Johanson, senior partner at Hawkins Parnell Thackston & Young LLP, will examine the growing use of leveraged ESOPs in structuring acquisitions, divestitures and private equity sales and purchases. His panel will discuss the advantages and challenges of selling all or part of a business to an ESOT and best practices for structuring the transaction.

The presentation will review these and other key issues:

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