ESOP Financial and Valuation Services

What is an ESOP?

An Employee Stock Ownership Plan, or "ESOP," is a type of defined contribution benefit plan that buys, holds, and sells company stock. It is a flexible, tax-favored tool, most often used by closely held companies, to create an internal market for company shareholders to achieve liquidity.

An ESOP is a tax-exempt entity which is a retirement trust for employees. Establishing an ESOP enables a company to make cash and/or company stock contributions to the trust that are used to acquire company stock on behalf of the company's employees. An ESOP Trustee appointed by the company's Board of Directors holds and manages the company stock.

ESOPs are a tax-favored employee benefit plan, governed by the Employee Retirement Income Security Act (ERISA). The non-profit National Center for Employee Ownership (NCEO) reports that there are about 11,500 ESOP companies nationally covering about 10 million employees - about 10% of the non-governmental U.S. Workforce.

Who uses ESOPs?

ESOPs are most often used by closely held companies to buy part or all of the shares of company stock from existing shareholders. In essence, the ESOP provides business owners a tax deductible market in which they can sell their stock.

Also, the types of businesses that use ESOPs are quite diverse:

This list is by no means exhaustive. Even if your company does not fit in the categories above, you may be able to implement an ESOP.

ESOPs were created by the Employee Retirement Income Security Act (ERISA) in 1974 as a  new type of retirement plan for employees. ESOPs offer tax benefits for the selling shareholders and the company as a whole. Employees' ESOP benefits are not taxed until they receive distributions - and this usually occurs when the employees leave the company.

We are a valuable resource not only to private business owners contemplating their ownership transition, but to vital corporate advisors including CPAs, financial consultants, and attorneys. We've worked with privately held family businesses with a handful of employees to large corporations employing thousands of people.

Meyers, Harrison & Pia, LLC has acted as independent financial and valuation advisors in many ESOP transactions. Whether you're just beginning to investigate the benefits of an ESOP or are looking for ongoing guidance and plan maintenance, Meyers, Harrison & Pia, LLC can help.