Why Do Business Owners Sell Their Company Using an ESOP and Other Frequently Asked Questions About ESOPs

When business owners consider their business succession options, they often determine their objectives, analyze company resources and capabilities, and review strategic alternatives. Among these strategic alternatives are options such as a recapitalization or selling to a strategic buyer. But there is another viable option: an ESOP transaction.

ESOPs – or employee stock ownership programs – are an excellent exit strategy for many business owners. As qualified “defined contribution” retirement plans sponsored by the company, ESOPs are similar to a 401(k) plan, but there are several key differences. Business owners considering an ESOP often have many questions about the structure, including differences between an ESOP and direct employee ownership, reasons to sell to an ESOP, and the characteristics that make a company a viable candidate for an ESOP. Find out answers to these and several other FAQs regarding ESOPs here.

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