In April, the National Center for Employee Ownership (NCEO) hosted their annual Employee Ownership Conference in Seattle, Washington. Over a thousand ESOP owners, service providers and prospects attended the event where contemporary issues of interest to employee owned companies were discussed.
With there only being about 11,000 companies with Employee Stock Ownership Plans (ESOPs) in the United States this was a good showing1. But, there have been about 11,000 ESOPs for over a decade.
Given the significant tax advantages and flexibility of ESOPs, why aren’t there more?
When you want to buy a new car, you go to a car dealership (or a website that is operated by a car dealership). If you need a prescription filled, you go to a pharmacy. Food? The grocery store is a good bet.
But, if you are looking to sell all or part of your company who do you go to?
Business owners often turn to their accountant, attorney, banker or financial planner as they begin the succession conversation. While some of these individuals may be knowledgeable about ESOPs, most are not. As a result, using an ESOP is not even considered by the business owner.
To grow the number of ESOPs, we need to spread the message widely. We don’t need to create a legion of ESOP experts, but we do need to develop enough of an understanding to identify if an ESOP is appropriate for a business owner.
Organizations such as the NCEO offer a wealth of information about employee stock ownership plans. Additionally, existing ESOPs and ESOP professionals are typically well-versed about these resources.
The challenge is to get the message to those that aren’t already aware of ESOPs. To assist with this, the Principal Financial Group® recently launched a new online resource to provide information and resources to existing and potential ESOPs at:
When you have a few minutes I would encourage you to explore the site. Please let me know what you think.
In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Click to follow me on Twitter- @jlripperger.
1The National Center for Employee Ownership, 2013. ESOP (Employee Stock Ownership) Facts.
No investment strategy, such as asset allocation or diversification, can guarantee a profit or protect against loss in periods of declining values. Company stock is not a pooled investment. Stock may experience greater volatility and should not be directly compared to investment options that have a more diversified investment mix. It is not intended to serve as a complete investment program by itself.
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.