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ESOP Services

Our unique capabilities in representing companies that are transitioning to ESOP ownership begin with assisting in evaluating the feasibility of the company adopting an ESOP. We then advise on the corporate preparations that are necessary to facilitate a sale of the company to an ESOP, including facilitating corporate reorganization, evaluating vendor and client contracts, and reviewing any related party agreements, such as real property leases. Next, we assist the company in negotiating the terms of the sale of company stock to the ESOP and help prepare the necessary documentation to facilitate that transaction. This includes the adoption of the ESOP and its related trust, the preparation of the sales transaction documents and the negotiation of the terms of any financing agreements that provide the seller with liquidity upon the sale of the company. After the transaction, our multidisciplinary team is uniquely positioned to advise on the compliance matters involved in maintaining the ESOP and running the company with an eye toward employee ownership and sustainability. We also represent plan sponsors in divestures of stock or substantially all of the assets of the company sponsoring the ESOP.

We have advised a broad range of plan sponsors, including:

  • The largest franchisee of a national automobile service company
  • A food manufacturer for private label meats
  • An electric company with both union and non-union employee bases
  • A heating, ventilation and air conditioning company with both union and non-union employees
  • A temporary staffing company

We can assist selling shareholders with the various aspects of selling their equity in the company, including providing personal tax guidance, which may encompass family wealth planning, including distribution of equity or transaction proceeds to children, and/or the creation of estate planning trusts or family limited operating companies. In representing the selling shareholder, our goal is to protect their interests from the risks associated with regulatory oversight of the related party ESOP transaction.

Representative shareholder clients include:

  • The shareholder of an industrial food manufacturer
  • The shareholder of an integrated craft company

We have significant experience in representing ESOP trustees, including institutional trustees (e.g., banks and trust companies) and individuals serving as ESOP trustees. We represent trustees in negotiating and documenting their fiduciary processes in connection with transactions in which the ESOP buys shares of the company’s stock; in connection with corporate events that require trustee oversight following the ESOP’s acquisition of the company’s stock; and in divestures of the company’s stock or substantially all of the assets of the company sponsoring the ESOP. We also represent trustees in regulatory investigations and litigation involving the trustee’s discharge of its fiduciary duties.

Trustee clients we’ve advised include:

  • A multinational bank’s institutional trust company in various acquisition and divesture transactions
  • A community bank’s institutional trust company in various acquisition and divesture transactions
  • A state chartered trust company in various acquisition and divesture transactions and in regulatory review of party-in-interest transactions
  • An individual serving as ESOP trustee and independent fiduciary in connection with various acquisition and divesture transactions, regulatory review of party-in-interest transactions, and litigation involving the trustee’s fiduciary obligations in connection with ESOP operation and administration
  • Internal employees serving as trustees and named fiduciaries of an ESOP in connection with plan administration

We have a long history of assisting banks and other lending institutions in connection with lending to companies that are taking on leverage to facilitate a sale of the

company’s stock to an ESOP. We combine the know-how of our Commercial & Public Finance group with the experience of those in our Employee Benefits group who focus on ESOPs to provide a cost-effective solution for the bank and the borrower. In addition, the depth of both practices allows us to effectively assist in real estate-based and syndicated lending transactions undertaken to facilitate an ESOP transaction.

Representative lending institution clients include:

  • A multi-state bank in connection with lending into various ESOP transactions
  • A regional bank in connection with facilitating a term loan for a company that was utilized to fund the sale of the borrower’s stock to an ESOP