Who you gonna call?

HZ1226 MOBILEGHOSTI won’t ask for names, but I imagine a few of you recognize 555-2368 as the phone number for Ghostbusters.

This iconic 1984 film features three paranormal scientists, Drs. Venkman, Stantz, and Spengler (played by Bill Murray, Dan Aykroyd, and Harold Ramis) as they trap ghosts in New York City.

Their signature line: who you gonna call?

I imagine that some of you are asking that same question as you contemplate an Employee Stock Ownership Plan (ESOP) for your company.

You may not be familiar with this form of retirement plan and your current advisors may not be either. Engaging the right team can help protect you from the fate of Dr. Venkman – “He slimed me.”

So who do you need on that team?

  • An ESOP consultant to help with benefit level modeling and plan design. This is likely one of the first (if not the first) team members that you will engage. Often times the ESOP consultant can also provide project management expertise for the transaction.
  • Legal counsel to prepare the documents required by the plan and to make sure that the transaction documents are in good order.
  • Valuation experts to determine the fair market value of the company (this needs to be done on an annual basis).
  • A Trustee that is involved in tasks such as voting the ESOP shares, overseeing the determination of fair market value of the stock, and managing investments.  The trustee may be external or internal.
  • Accountants to ensure that the financial records are in good order and reflect the changes being made with the introduction of the ESOP.
  • Education and communication consultants to help you explain the program to your employees.

As you staff the team, you should talk with several service providers as not everyone has expertise in ESOPs. As a result, it is not uncommon to use different professionals for the ESOP than for other business activities. Your ESOP consultant can provide recommendations for you.

It is important to keep the lines of communication open between the various professionals. As in most endeavors, a good team can make all the difference in the world.

Who you gonna call?

In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Click to follow me on twitter- @jlripperger.

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Affiliation Disclosures

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.
Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.
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