Archives for May 2020

There are several reasons that come up for why you shouldn’t do an ESOP: They cost too muchThey are too complicatedMy employees don’t have enough cash for the buyoutThere has been some litigation with ESOPsMy current advisor is advising against using an ESOP. However, let’s examine each reason. You didn’t get this far in your business without doing your own research and looking into the facts and contrary opinions. REASON #1:  ESOPs cost too much ESOPs do cost some money to setup and maintain.  An ESOP might cost around 100k-300k to setup with annual costs of around 20k-30k.  However this cost is minuscule compared to the typical costs of selling your business.  Consider this: You’ve worked hard to build up your company and it is now worth 60 million dollars.  The taxes to eventually sell this business are an estimated 20 million dollars.  In reality, ESOPs are one of the most cost effective ways to pass on your business.  You spend a … [Read more...] about Why you shouldn’t do an Employee Stock Ownership Plan (ESOP)