Sunday, September 18, 2011

Cash out with ESOPs

I'm still reading that Fortune issue. I read an article about Eileen Fisher, a clothing designer with stores throughout the US and Canada. They opted not to sell the business or go public. Instead, they used an ESOP. An ESOP is an employee stock ownership plan. It enables employees to participate in the ownership of the company while allowing the owner(s) to cash out some or all of his/her/their equity. It also conveys some tax benefits somewhat tied to deferred compensation and installment payments. If your employees have voiced interest in owning the company or in equity participation, or if you already provide stock options, this could be a highly viable option to cash out of your business. You need to install a professional management team so the company doesn't go to Hades when you leave. (Otherwise that could be considered a breach of fiduciary responsibilities. An ESOP is an administered program. ) Sent via BlackBerry from T-Mobile


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