ESOP Information

What is an ESOP

An ESOP or Employee Stock Ownership Plan is a qualified Defined Benefit Pension Plan with two important characteristics:

1. An ESOP invests exclusively in the stock of its sponsoring company

2. An ESOP can borrow money to facilitate its investment in the company stock.

Emerson Rickstrew CPA has been providing ESOP trustee services for many years and can help you to plan your ESOP for your company.

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Who Might Benefit from an ESOP

Many businesses will benefit from an ESOP created by Emerson Rickstrew. Your business may qualify if you are

- A successful, privately owned “C” or “S” corporation with debt capacity.

- A company large enough that the tax savings of the ESOP clearly justify the costs incurred to implement and maintain the ESOP.

- A company with adequate payroll to create deductibility of the ESOP contribution - generally at least $1,000,000 in nonowner, non-family member payroll.

- A company with strong successor management in place.

If your business fits these characteristics and you think an ESOP may be right for you, call Emerson today at (806) 683-4324

Employee Stock Ownership Plans (ESOPs)

Do You Want To Sell Your Successful, Privately-held business?

An ESOP, properly structured, can allow you to:

Receive all or part of the value of your company stock without income or estate tax consequences;
Have your company purchase your stock and deduct the entire purchase price;
Maintain management control while ownership transitions away from you;
Spread ownership among all employees and develop a stronger company culture.

An ESOP can also be used to:

Purchase capital assets, or another company, with pretax dollars;
Re-structure existing debt and deduct both the principal and interest on repayment of the debt.

Steps to a successful ESOP:

Preliminary feasibility study—will an ESOP work for my company?
Locate and engage experienced professionals:
- Competent ESOP attorney.
- Competent independent trustee for the ESOP transaction and the continuing ESOP.
- Qualified valuation firm to value your company for the ESOP transaction.
- Arrange financing for the ESOP transaction (if needed)
Qualified, experienced asset manager for the assets received by the sellers.
Evaluation of the future emerging liability to purchase stock as the covered employees reach retirement age.

Emerson Rickstrew, Certified Public Accountant, has been assisting companies implement ESOPs, as
ESOP transaction trustee and continuing ESOP trustee for many years. We can bring the right team of professionals to help you evaluate, and if feasible, implement a successful ESOP for your company.

Emerson Rickstrew C.P.A.