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Posts tagged ‘qualified retirement plan’

Dec 5

jerry ripperger's picture
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Alphabet Soup – The ABCs of ESOPs

If you have been reading my blog for the past few weeks you may have noted that I have spent quite a bit of time talking about the benefits of an ESOP.  This post is going to look at how an ESOP is formed.

ESOPs are unique.  Each is designed around the needs of the seller, the company, and the employees.  There are some commonalities however.  Let’s look at a simple leveraged ESOP transaction (a leveraged transaction is one where external financing is obtained).

They say a picture is worth a thousand words.  The following graphic can help explain the workings of the ESOP transaction. Read more

Nov 26

jerry ripperger's picture

What Would Aesop Say About ESOPs?

Aesop (pronounced ee-sop), the famous Greek story teller, had no knowledge of Employee Stock Ownership Plans (ESOPs).  In all fairness, it would be surprising if he did as they were not recognized until the Employee Retirement Income Security Act of 1974 was passed – almost 2,500 years after his death.

Why would Aesop support ESOPs?A picture of Aesop, the greek storyteller

I reviewed some of his quotations and it leads me to believe that he may be a supporter of such plans.  ESOPs address several issues that seemingly parallel quotes he had noted among his contemporaries in ancient Greece that still exist today.

It is thrifty to prepare today for the wants of tomorrow. – Aesop

Are most employee’s planning for their financial future?

Let’s look at some facts. According to the first quarter 2012 Principal Financial Well-Being Index, 67 percent of employees are very concerned about their long term financial future, but only 35 percent of employees indicate that they are saving enough money to live comfortably in retirement. Read more

Nov 15

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Timing is Everything

Our annual ESOP client meeting was held last Wednesday, November 7th  prior to the start of The ESOP Association Conference and Trade Show.  More importantly, it was held a mere 16 hours after the election polls closed on the west coast.  As you might expect, the election, and its aftermaths, took center stage.

It was evident from the participant’s comments that elections have consequences.  Whether you are red or blue, have an R or a D as your party affiliation, the results matter.  And what the election results mean is certainly less than clear.  What is clear, healthcare, regulation, and tax policy are major concerns to companies with Employee Stock Ownership Plans (ESOPs).

Clock

As with most other businesses, the attendees are struggling to quantify the impacts of the Affordable Care Act.  Last summer’s U.S. Supreme Court Ruling clarified many questions but others remain elusive prior to the rapidly approaching January 1, 2014 implementation date for many major provisions. Read more

Oct 29

jerry ripperger's picture

Hey you! What are you doing in that box? It’s time to starting thinking outside of it…

Exit SignWhen most people hear Employee Stock Ownership Plan (ESOP) they think exit planning (or maybe nothing at all). That’s not surprising given that historically ESOPs have been positioned as a succession planning approach.

Here’s an example, a key partner at a manufacturing company wants to retire, but the remaining partners can’t afford, or don’t want to buy him or her out. An ESOP could be used by the remaining partners to fund the buyout of the partner that’s leaving in order to avoid divesting the company.

However, to think of ESOPs as only a tool for exit planning sells them short. Let’s broaden our perspective for a second. Read more

Oct 23

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Galapagos Giant Tortoises Aren’t Interested in ESOPs

As the writer of a blog about employee stock ownership plans (ESOPs) I want to believe that everyone is interested in the topic.  But I know that isn’t true.

Galapagos Giant Tortoise

For example, the Galapagos giant tortoises (Chelonoidis nigra) aren’t interested in the plans.  Even if they owned businesses (which I realize that they don’t), they wouldn’t likely be very interested in ESOPs for several reasons. They: Read more

Oct 15

jerry ripperger's picture

Don’t be fashionably late to the ESOP party. You’ll miss out on the cake!

cake crumbsI have known for a couple of months that my “Employee Stock Ownership Program” (ESOP) blog would be launching soon.

Yet, here I sit in front of my keyboard the day before it is due preparing. Procrastination at its best (or worst).

This somehow seems entirely appropriate given that many business owners treat business succession in the same way.  When it comes time to transition ownership they start exploring options.  Unfortunately, they often find that some options are no longer available to them given their desired timing to exit. Read more

Oct 11

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I VISITED THE MOTHERSHIP…well not really…but I did go to the Inc. 500/5000 Conference

There is a reason we have two ears and one mouth.   This was sage advice to remember at the Inc. 500/5000 conference held last year in Phoenix.  You can learn a lot by listening.

It is humbling to be surrounded by so many successful entrepreneurs that have created fast growing privately held companies, and to learn about the risks that they took. Many of them have risked everything to get where they are.  I heard stories about working 16 hour days and stories about being both CEO and janitor, many times in the same day.  Read more

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