Consider Leaving Your Idaho Small Business To Your Employees

MB900382652[1]A family business goes to thefamily, right? Well, sometimes. And if passing the biz on to family is not anoption, you can always look at an outside buyer … or an ‘inside” buyer too.Would your employees be good candidates for ownership?

When all is said and done, theonly ones who know and care enough about the company may just be youremployees. Sound intriguing? If yes, then you need to explore a win-win meansthrough which your employees can become owners.

Have you ever heard of anEmployee Stock-Ownership Plan, or ESOP?

ESOPs have been growing inpopularity, especially when the market was down and outside buyers were scarce.That said, their popularity has not waned, although ESOPS can be a strange andcomplicated breed.

Essentially, an ESOP mixes afamily exit strategy with a company retirement plan. There is a great deal toit with many layers of protection regarding the operations and management ofthe business.

Of course, there are some thatare wary of the ESOP model. MarketWatchrecently featured the ESOP and some criticisms of the approach in an articletitled “When founder cash out, do workers lose?”Some of the criticisms are broad generalizations, especially as to the topic ofvaluation. Other criticisms are well taken.

As the article points out, thisdoes affect the employees by opening them up to some of the risks of actualownership. Is this a good thing? It can mean a whole new kind of motivation andsource of innovation, as many have experienced, but it can also become a trickygame of all-your-eggs-in-one-basket for employees-turned-owners. There is areason some people have the mettle to be owners and others are content to beemployees.

From success stories tocriticisms there are many voices talking about the ESOP. The original articleis worth reading for due diligence purposes if you are on the employee side ofthe table. Regardless, an ESOP can be a very special tool for all parties atthe table and one worth understanding and, just maybe, putting into force.

At IdahoEstate Planning we are the expertsyou need to know and trust. Work with us and we'll put together a plan thatworks for you and your loved ones. Remember, goodplanning is no accident.

 

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