Employee Stock Ownership Plans

Overview

Our attorneys are experienced in the full spectrum of services involved in the design, formation, management and compliance aspects of employee stock ownership plans (ESOPs). We provide complete cross-practice support that covers the Employee Retirement Income Security Act (ERISA), taxes, corporate finance and fiduciary governance, lending, securities law, labor and employment issues, and much more.

We have assisted with ESOPs across various industries and throughout every stage of an ESOP, representing company owners, trustees and lenders. Our robust relationships with accounting firms, investment bankers, valuation companies and others mean we can help build a reliable network of professionals to support and advise ESOPs throughout their lives.

We also help companies prepare for and navigate IRS audits and U.S. Department of Labor investigations, and we are experienced in managing controversies, compliance resolution issues and litigation.

Our services also cover:

  • Succession planning and owner estate planning
  • Structuring complex leveraged purchases
  • Fiduciary education
  • Repurchase liability strategies
  • Employee benefits and executive compensation
  • Acquisitions
  • Sales to third parties
  • Unwinding strategies
  • Plan termination
  • ERISA litigation

Select Experience

  • Represented a company and a 100% shareholder in the leveraged sale of 100% of shares to an ESOP.
  • Represented an ESOP trustee in the sale of 100% of shares to an ESOP in a leveraged transaction.
  • Advised an ESOP trustee regarding the sale of a 100% ESOP-owned company to a third party, including counsel regarding pass-through voting rights and communications to participants.
  • Amended and restated selling shareholder subordinated notes and implemented warrants to adjust for a decline in the fair market value of an ESOP company.
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Experience

  • Represented an employee group of a division of a Fortune 500 company that, through the use of an ESOP, bought out the ownership of the division.
  • Advised the matriarch of a multigenerational family on the development of a private wealth strategy to transfer majority ownership in a privately held company to a private foundation to both minimize federal estate taxes and permit the company to smoothly transition to a 100% ESOP-owned company. Considerations of the strategy included eliminating both self-dealing and excess business holdings tax issues and providing sufficient cash flow to the private foundation to satisfy its minimum annual distribution requirement. The representation also involved delicate succession planning issues for the company, the ESOP and the private foundation as well as making efforts to avoid putting an unreasonable financial strain on the company.
  • Counseled a privately held company ESOP regarding the documentation and administrative requirements necessary to comply with ESOP regulations, including diversification, voting and distribution requirements.
  • Advised a private equity firm in acquiring a majority interest in a formerly 100% ESOP-owned company, while allowing the ESOP to maintain a significant minority interest.
  • Terminated and wound down an ESOP company and the ESOP after the sale of assets of the company and expiration of an earn-out provision, including advising regarding a Department of Labor Employee Benefits Security Administration investigation.
  • Defended an ESOP trustee in litigation regarding the fair market value of shares at the time the ESOP purchased the shares and at the time the ESOP subsequently sold the shares to a third party.

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