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An Employee Stock Ownership Plan (ESOP) is an important business, tax, financial, and succession planning tool. It is also a means by which employees can acquire ownership interest through the acquisition of company stock by a retirement plan. Due to their complexity, assuring the successful creation, implementation, operation, and use of ESOPs requires a combination of legal, finance, and tax knowledge along with business acumen.
With decades of experience navigating the rules that apply to ESOPs, we offer the full range of ESOP and ESOP-related services, including the structuring of corporate transactions involving ESOPs, preparation of IRS filings for ESOP tax qualification and plan termination; resolving fiduciary issues, and advising on the various tax opportunities and incentives associated with ESOP transactions.
We serve as counsel to a broad range of clients in ESOP transactional, litigation, and regulatory compliance matters. Representing such diverse interests enables us to view transactions from all sides and enhances our ability to devise creative solutions when disputes arise. Our clients include:
Working collaboratively with attorneys from our Employee Benefits & Executive Compensation, Banking and Financing, Corporate, Securities, Mergers and Acquisitions, and Taxation groups, we assure comprehensive and efficient service. Members of our ESOP team advise and present on a wide variety of ESOP topics ranging from best practices in corporate governance with ESOP-owned companies to ESOP benefits for employees. Additionally, our lawyers participate in professional organizations that keep them current on legal and regulatory developments, and the latest ESOP trends and strategies, including The American Bar Association, Section of Taxation, the ESOP Association, and various state and regional ESOP Associations.
Designing and structuring ESOPs and ESOP transactions, including corporate reorganizations
Representation of founding shareholders, company ESOP sponsors, and lenders in acquisition transactions between the company, selling shareholders and ESOP
Financing and loan documentation
Day-to-day operational, administration, and corporate governance issues
Corporate transactions and ongoing ESOP administration and operations
ERISA and Internal Revenue Code regulation matters including prohibited transactions and fiduciary responsibilities
IRS tax qualification and compliance issues
Stock appreciation rights planning for key executives
Warrants for selling shareholders and private equity investors
ESOP restructurings and leveraging to accommodate our clients’ changing needs and goals
Purchases and sales of ESOP-owned companies
Representation of lending institutions in connection with loans to ESOP-owned companies
Merger, acquisition, termination, and downsizing of established ESOPs
Recapitalizations and redemptions
Succession and exit planning
–Represented commercial, residential electric, and HVAC contractor company and majority owner in the sale of 100% of stock to ESOP, including pre-transaction restructuring and Section 1042 rollover as well as post-transaction matters including on-going ESOP compliance, roll-out to employee-participants, refinancing of Company loan and shareholder note and amendment to Management Incentive Plan (Stock Appreciation Rights).
–Represented company in the energy sector in the partial sale of stock to ESOP.
–Represented ESOP-owned company in its sale to a foreign-owned company.
–Represented lender to ESOP plan sponsor in connection with equity-structured ESOP transaction with private equity investors.
–Represented lender in connection with ESOP-owned borrower default due to ESOP compliance failure.
–Represented manufacturer of custom and industrial hardware including presentation to Board of Directors regarding ESOP fiduciary duties, preparation of ESOP governance documents, and preparation of ESOP amendments, credit and loan agreements in connection with the extension of the term of ESOP loan.
–Represented chemical manufacturer in structuring Stock Appreciation Rights Plan for executives, CEO, and independent members of Board of Directors as well as counsel in connection with the re-leveraging of company stock in ESOP to fund diversification and other distributions.
–Represented company regarding fiduciary duties in connection with mergers and acquisitions.
–Represented ESOP-owned bank in its merger with a publicly-traded bank and coordinated ESOP termination and distribution of plan assets.