The Entire Game
You have to play the entire game. This was very evident in game six of the recent Stanley Cup Championship. I missed most of the game, but tuned in with six minutes left and Boston leading 2 to 1. With just over a minute remaining, Chicago scored two goals in seventeen seconds to take a 3 to 2 lead. The Blackhawks took home the Stanley Cup trophy and bragging rights for the next year.
Countless athletes, coaches and fans have watched events such as this unfold. This is not limited to sports. Business owners also understand that you have to play the entire game if you are to be successful.
However, business owners can find themselves conflicted between playing the entire game and planning for the succession of their business or the diversification of their investment portfolio. An Employee Stock Ownership Plan (ESOP) may be able to help the business owners meet all of their goals.
An ESOP allows a business owner to sell all or a portion of their business to their employees through a retirement plan trust. The ability to sell a portion of the business to the ESOP may be attractive to the owner, as many times there are few (or no) buyers looking for a minority position. The ESOP can be this minority owner allowing the owner to advance their diversification or succession goals while staying in the game.
Alternately, the owner may elect to finance the ESOP from ongoing company earnings. The owner stays in the game during this transition and has a great deal of flexibility in how the timing and degree of exit occurs.
Some owners have no intention of ever retiring. But, the ability to control when the game is over is the most important aspect for many others. The ESOP allows the business owner to generally determine their ultimate exit date—allowing them to play their entire game.
In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Click to follow me on Twitter- @jlripperger.
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.