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Succession Planning, ESOPs, and Employee Ownership

This is a guide to NCEO resources for people who want to know more about using employee ownership as a strategy for business succession planning. The articles, books, online presentations, and other resources listed here can help you decide if an employee stock ownership plan (ESOP) is potentially a good option for you, what the alternatives are, and how to proceed from here.

Using Employee Ownership for Business Succession

NCEO brochure
Download our brochure on selling your business

Ownership Transitions
Download our comparison of an ESOP sale to a third-party sale

Articles

Selling Your Business (PDF format)
A brief overview of employee ownership as a succession tool.
Ownership Transitions: Selling to an ESOP Versus a Sale to Another Company (PDF format)
A comparison of the complexity, risks, and flexibility of selling to an ESOP versus selling to a third party.
Using an Employee Stock Ownership Plan (ESOP) for Business Continuity in a Closely Held Company
A more in-depth article about the logistics of selling to employees.
Ownership Transitions: ESOPs Compared to Other Strategies
A breakdown of the pros and cons of various transition strategies.
How State Workforce Systems Have Helped Business Owners Sell to Employees (PDF format)
An article on how the workforce systems in Ohio and Massachusetts are assisting companies with succession planning through employee ownership.

Case Studies (PDF format)

S&C Electric Company
Windings, Inc.

Information About ESOPs

Below are some articles, publications, and other resources that describe how an ESOP works and can help you determine whether an ESOP is the right choice for you.

Articles

How an Employee Stock Ownership Plan (ESOP) Works
ESOPs in S Corporations
Twelve Bogus Reasons Not to Do an ESOP (and Seven Good Ones)
How Small Is Too Small for an ESOP?

Books

An Introduction to ESOPs
Selling Your Business to an ESOP
Understanding ESOPs
Leveraged ESOPs and Employee Buyouts
S Corporation ESOPs

Other ESOP Resources

Webinars

ESOP Feasibility
A free recorded Webinar.
Recorded Webinars
Access to all of our recorded Webinars is by subscription, which provides unlimited viewings for six months ($100 for members, $150 for nonmembers).

Consulting

Interested in learning more? The NCEO provides consulting services to companies considering employee ownership as a succession tool. Contact Loren Rodgers at 510-208-1307 or LRodgers@nceo.org.

Additional Resources

See our full list of articles on topics including ESOPs in S corporations, ESOP tax incentives and contribution limits, vesting, distribution and diversification rules, data on the performance impact of ESOPs, and much more.

We have dozens of publications covering general issues and a number of specific topics, such as stock valuation, plan administration, issues specific to S corporations, executive compensation, fiduciary issues, communications, culture, and much more. Members receive a discount on all publications.

Live Webinars and seminars: Live Webinars are free for members. Seminars are discounted for members.

Annual conference: The annual conference is the premier gathering in the United States on employee ownership.

Is your company an LLC? LLCs cannot have ESOPs; however, we have an article on equity incentives in LLCs and a book on the subject. You also could convert to S or C corporate status and have an ESOP. Also see the publication below on selling directly to employees.

Selling Your Company Directly Without an ESOP

For many owners, ESOPs are the most effective way to sell their companies to employees, but in some circumstances other approaches make more sense. Our issue brief Selling a Company Directly to Employees explains how this works.