ESOP Fables: Reviewing The Myths and Facts About Employee Stock Ownership Plans

Employee stock ownership plans (ESOPs) can be an attractive way for an owner to sell a company and for employees to gain an ownership stake. ESOPs are qualified retirement plans that buy, hold and sell company stock for the benefit of employees. One of the main reasons ESOPs are often dismissed by business owners (and often their advisors) as a legitimate succession planning option is due to the many unfounded misperceptions about them.

In reality, many businesses are a perfect fit for ESOPs. However, business owners will never know because they think selling to a private equity or other third-party buyer are their only legitimate alternatives.

Our infographic helps dispel some of the most common myths associated with ESOPs. After reviewing the facts behind the fables, business owners will see that selling to an ESOP might be the best alternative and should be at least considered as an exit strategy. This is especially true in cases where the owner wants to reward his or her employees for their hard work in contributing to the company’s success.