An Employee Stock Ownership Plan (ESOP) is an employee benefit plan which makes the employees of a company owners of stock in that company. Several features make ESOPs unique as compared to other employee benefit plans. First, only an ESOP is required by law to invest primarily in the securities of the sponsoring employer. Second, an ESOP is unique among qualified employee benefit plans in its ability to borrow money. As a result, “leveraged ESOPs” may be used as a technique of corporate finance.
An ESOP is funded with tax-deductible contributions by the employer, which can be in the form of company stock or in cash used to purchase company stock. An ESOP operates through a trust under the direction of a trustee or other named fiduciary.
To be an ESOP, the plan must be specifically designated as an ESOP in the plan document. It must also comply with special ESOP requirements of the Internal Revenue Service (IRS).
A qualified, defined contribution, employee benefit (ERISA) plan designed to invest primarily in the stock of the sponsoring employer. ESOPs are “qualified” in the sense that the ESOP’s sponsoring company, the selling shareholder and participants receive various tax benefits. ESOPs are often used as a corporate finance strategy and are also used to align the interests of a company’s employees with those of the company’s shareholders.
Employee stock ownership plans can be used to keep plan participants focused on company performance and share price appreciation. By giving plan participants an interest in seeing that the company’s stock performs well, these plans are believed to encourage participants to do what’s best for shareholders, since the participants themselves are shareholders. Tenor Capital has the experience and knowledge to assist our clients in selling, buying, and leveraging ESOP plans.
ESOPs Credit Benefits:
Large and undeserved market:
New ESOP plans are likely to increase:
Tenor Capital has the experience and knowledge to assist our clients in all aspects of selling, buying, and leveraging ESOP plans.
We are focused on closely-held, middle market companies and their shareholders. We deliver the highest level of service with unwavering integrity and consistently meet the goals of our clients.
Tenor Capital Partners
1266 W Paces Ferry Rd Suite 419
Atlanta, GA 30327-2306
Toll Free: 1-800-964-8681