Employee Stock Ownership Plans

An Employee Stock Ownership Plan can be an important business, tax, financial, and succession planning tool. It also provides employees with an opportunity to acquire an ownership interest through the purchase of company stock by a retirement plan. Because ESOPs are complex, their successful creation, implementation, operation, and use require coordinated legal, financial, tax, and business guidance.

With decades of experience advising on the rules governing ESOPs, we provide a full range of ESOP and related services. Our work includes structuring corporate transactions involving ESOPs, preparing IRS filings for plan qualification and termination, addressing fiduciary issues, and advising clients on tax opportunities and incentives associated with ESOP transactions.

Our Clients

We represent a broad range of clients in ESOP transactions, litigation, and regulatory compliance matters. Working with clients on all sides of these matters gives us a practical understanding of the issues involved and helps us develop solutions when disputes arise. Our clients include:

Our Team

Our ESOP lawyers work closely with attorneys in our Employee Benefits & Executive Compensation, Banking and Finance, Corporate, Securities, Mergers and Acquisitions, and Taxation practices to provide coordinated and efficient service.

Members of our team advise and present on a broad range of ESOP topics, from corporate governance at ESOP-owned companies to employee benefit considerations. Our lawyers also participate in organizations that keep them informed of legal, regulatory, and market developments, including the American Bar Association Section of Taxation, The ESOP Association, and state and regional ESOP organizations.

Our Services

• Designing and structuring ESOPs and ESOP transactions, including corporate reorganizations
• Representing founding shareholders, company ESOP sponsors, and lenders in transactions involving the company, selling shareholders, and the ESOP
• Preparing financing and loan documentation
• Advising on day-to-day operations, administration, and corporate governance
• Handling corporate transactions and ongoing ESOP administration
• Advising on ERISA and Internal Revenue Code requirements, including prohibited transactions and fiduciary responsibilities
• Addressing IRS tax qualification and compliance matters
• Structuring stock appreciation rights plans for key executives
• Preparing warrants for selling shareholders and private equity investors
• Restructuring and releveraging ESOPs to accommodate changing business needs and goals
• Handling purchases and sales of ESOP-owned companies
• Representing lending institutions in loans to ESOP-owned companies
• Advising on mergers, acquisitions, terminations, and downsizing involving established ESOPs
• Handling recapitalizations and redemptions
• Advising on succession and exit planning

Representative Matters

• Represented a commercial and residential electrical and HVAC contractor and its majority owner in the sale of 100% of the company’s stock to an ESOP. The representation included pre-transaction restructuring, a Section 1042 rollover, ongoing ESOP compliance, employee communications, refinancing of company and shareholder debt, and amendments to a management incentive plan involving stock appreciation rights.
• Represented an energy-sector company in the partial sale of its stock to an ESOP.
• Represented an ESOP-owned company in its sale to a foreign-owned company.
• Represented a lender to an ESOP plan sponsor in an equity-structured ESOP transaction involving private equity investors.
• Represented a lender in connection with an ESOP-owned borrower’s default arising from an ESOP compliance failure.
• Represented a manufacturer of custom and industrial hardware in advising its board of directors on ESOP fiduciary duties, preparing governance documents and plan amendments, and negotiating credit and loan agreements extending the term of an ESOP loan.
• Represented a chemical manufacturer in structuring a stock appreciation rights plan for executives, the chief executive officer, and independent directors, and advised on the releveraging of company stock in the ESOP to fund diversification and other distributions.
• Advised a company on fiduciary duties arising in connection with mergers and acquisitions.
• Represented an ESOP-owned bank in its merger with a publicly traded bank and coordinated the ESOP’s termination and distribution of plan assets.