Employee Stock Ownership Plans

Employee Stock Ownership Plans (ESOPs) are excellent vehicles for accomplishing a number of tax and corporate strategies and can be beneficial to selling shareholders, employees, and corporations. But ESOP transactions are complex and require successful navigation of planning considerations and challenging negotiations.  Furthermore, ESOPs routinely receive scrutiny from the IRS and DOL, which have concerns over conflicts of interest between the company, or its advisors, and the plan participants. 

HOW WE HELP

We have a deep understanding of the value of ESOPs for accomplishing key business and tax goals, and have long counseled our clients in successfully establishing, maintaining, and transforming their plans. Whether our clients are using an ESOP as an employee benefit plan, as a financial and estate planning tool, as a corporate finance technique, in a management buy-out, in a corporate acquisition, or to spin off a subsidiary, we can navigate the intricacies of these transactions.

We regularly represent ESOP companies, business owners, trustees, and lenders, and we support their ongoing legal counseling needs. We have counseled both public and private corporations—as well as trust companies and financial institutions—on the use of ESOPs in hundreds of transactions, including leveraged buyouts, corporate stock repurchases, ownership-succession transactions, mergers and acquisitions, and hostile takeover bids.

Our team has considerable experience with ESOP transactions and ongoing administration of ESOPs. We help public company clients review the potential liabilities associated with maintaining an employer stock fund as an investment option under their 401(k) plans. We also assist publicly-traded clients in converting existing employer stock funds into employee stock ownership plan components to take advantage of the favorable tax benefits related to the payment of dividends.

Our team counsels clients on ESOP fiduciary governance structures, including formation and operation of plan fiduciary committees, and the need for an independent fiduciary. We advise on best practices to help fiduciaries comply with ERISA and effectively manage risk.

THE SEYFARTH EXPERIENCE

Our extensive track record of representing all parties in ESOP transactions, combined with our broad range of experience in business transactions generally, provides us with a unique perspective that helps to successfully navigate complex planning considerations and challenging negotiations involved in ESOP transactions. We incorporate proprietary technology tools to add transparency, responsiveness, and accountability for our clients.

Our ESOP clients also benefit from the full-service platform of our firm, which allows us to build interdisciplinary teams with substantial experience in all the legal disciplines necessary to the success of an ESOP transaction, including federal taxation, employee benefits, corporate law, securities regulation, mergers and acquisitions, corporate finance, banking law, environmental law, and litigation.

Our firm is a contributing member of The ESOP Association and of the National Center for Employee Ownership. Our attorneys actively participate in the activities of these organizations in related educational and lobbying efforts, and we speak and write frequently on the subject of ESOPs.