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ESOPs are the rage

Victor Aspengren is a vice president at Prairie Capital Advisors Inc.

The Employee Stock Ownership Plan (ESOP) concept is gaining momentum as a business succession tool. The following is list of reasons for this increased interest in ESOPs:

  • People are tired of seeing jobs and companies leave their local communities
  • There are over 70 fellowships across the US doing research on the impact of employee ownership in the world of academia
  • ESOP companies lay off less workers than non-ESOP companies
  • ESOP companies provide higher retirement benefits than non-ESOP companies
  • ESOP companies allow employee owners to share in the sweat equity of the company
  • There is an increased bottom line performanace in ESOP companies vs. their non-ESOP peers

This is an incomplete list and there are many other valid reasons why the ESOP concept is growing in popularity.

Wise business owners consider the ESOP concept in their evaluation of how to transition their ownership. It may not work for all business owners, but it should be an idea that their business advisors discuss with them. 

-Victor Aspengren

 

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