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Succession Planning: Is an ESOP the Right Tool for Your Business?

  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
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  Article Summary  
One of the first steps in succession planning is identifying your primary succession goals. This will help you determine whether you should focus on selling your business to an inside (employees and/or family members) buyer or an outside (a competing or complimentary business) buyer.

If you decide to sell your business to insiders, you may want to consider doing this via an Employee Stock Ownership Plan. ESOPs are one of the most popular ways for closely held business owners to transition ownership of the company to their employees.

This article looks at four key succession objectives; how ESOP companies have recently outperformed non-ESOP private companies in revenue and wage growth; how they work; their benefits; the primary key to their success; and preparatory questions that are part of early planning.

Los Angeles and Southern California CEOs and CFOs who want to transition their businesses to employees should seriously consider the potential benefits of an ESOP. However, the details of planning and executing an ESOP can be complex, which makes it critical to assemble an experienced team of experts including an attorney, banker and CPA. An experienced outsourced CFO services provider can also offer valuable assistance in the ESOP planning, preparation and execution phases.

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