ESOP as an Exit Strategy

An Employee Stock Ownership Plan (ESOP) is a business exit strategy that offers benefits to the business owner and the employees of the business. ESOPs are often a win-win for the business owner and their employees. If your corporation has a strong management team, more than 20 employees, capacity for additional debt, and strong cash flows, an ESOP may be a great exit strategy for you.

Benefits of ESOPs

For business owners and their families:

  • Likely deferral of taxes on the transfer of business ownership
  • Potentially higher cash flows from the ESOP transaction than from a sale to a third party
  • Lower stress exit option
  • Funds for debt repayment and investment for growth
  • Allows business owners to maintain the company culture and stability for the employees over time
  • Family-owned businesses can maintain an interest in and control over a portion of their business

For employees:

  • ESOPs are a tax qualified defined contribution retirement plan
  • Allows employees to own stock in the company they work for without having to invest any of their own cash

WBL can help.

The accounting for ESOPs can be challenging for CPAs and firms that are unfamiliar with their specific reporting and compliance requirements. WBL literally wrote a manual on the proper accounting practices for ESOPs. To get a free copy of WBL's Employee Stock Ownership Plan (ESOP) Accounting Manual, click the button, below.

Download ESOP Accounting Manual


In addition, WBL can help with:

ESOP Transactions

WBL can help you evaluate potential exit strategies and recommend investment bankers, legal counsel and other consultants to structure the ESOP in the most advantageous way.

Get Transaction Advice

ESOP Tax Planning and Compliance

We’ll help you, your family and employees understand the tax advantages/consequences associated with ESOPs, including how to generate funds to repay ESOP loans.

Talk with Tax Experts

ESOP Accounting and Compliance

If the Department of Labor, lender or valuation consultant requires a review or audit of financial statements. we've got you covered. Our experienced team of auditors is ready to help. We can also coordinate with outside consultants, lawyers, wealth advisers and third-party administrators to answer questions management and employee stakeholders might have.

Get Business Accounting Support