Leveraged ESOPs and Employee Buyouts [Paperback]

Corey Rosen (Author), Scott Rodrick (Author)

Book Description

Publication Date: August 1, 2001

An ESOP (employee stock ownership plan) is a tax-qualified benefit plan that is designed to invest primarily in company stock. Among other things, an ESOP can be used to purchase shares from retiring owners in closely held companies; buy out divisions, product lines, or entire companies; finance new capital; and provide a tax-advantaged employee benefit. There are over 11,000 U.S. companies with ESOPs, covering well over 8 million employees.

Many ESOPs are leveraged, meaning that the plan borrows money on the employer company's credit to buy company stock. It is the only qualified employee benefit plan that can do this. Moreover, the company can deduct ESOP contributions it makes for both principal and interest payments for the loan, and owners of closely held C corporations who sell to an ESOP can avoid paying capital gains tax on the sale proceeds by reinvesting them in qualifying U.S. securities.

Written by leading experts, this book is a practical tool for business owners, managers, and advisors dealing with both public and private companies. It covers contribution limits, valuation issues, accounting, the tax-deferred "rollover," due diligence, feasibility, employee buyouts, multi-investor issues, mergers and acquisitions, and other relevant topics. The book is designed to be used by both public and private companies as well as their professional advisors. (Note: This book is about the U.S. ESOP, not plans called "ESOPs" in other countries.)

The fourth edition has been revised to reflect the changes in ESOP law made by the Economic Growth and Tax Relief Reconciliation Act of 2001.

Editorial Reviews

From the Publisher

The National Center for Employee Ownership (NCEO) is a private, nonprofit membership and research organization that serves as the leading source of accurate, unbiased information on employee stock ownership plans (ESOPs), broadly granted employee stock options and related programs, and ownership culture. We are the main publisher and research source in the field, hold dozens of workshops and conferences annually, and provide services to our thousands of members. This book, which includes the changes to ESOP rules enacted in June 2001, is a guide to the complex issues involved in using an ESOP for a leveraged buyout.

From the Back Cover

During the past few decades, employee stock ownership plans (ESOPs) have become a familiar feature on the U.S. business landscape. There are currently over 11,000 companies with ESOPs; many of these ESOPs are leveraged, meaning that the ESOP has borrowed money on the credit of the employer or other related parties to buy company stock. It is the only qualified employee benefit plan that can do this. Moreover, the company can deduct ESOP contributions it makes for both principal and interest payments on the loan. This tax-advantaged leveraging capability makes the ESOP an ideal vehicle for several purposes, including buying out a company; divesting a subsidiary, division, or product line; enabling a public company to repurchase shares; restructuring existing benefit plans; and acquiring capital with a low-cost loan.

A leveraged ESOP can be the ideal vehicle for an employee buyout. In the past few decades, thousands of companies have been established through selling a company to an ESOP or through corporate divestitures to newly created companies that are at least 25% ESOP-owned.

ESOPs are complicated mechanisms, and using leverage increases that complexity. This book is designed to be a practical tool for anyone dealing with that complexity, whether the leveraged ESOP will purchase a small amount of stock or be used for an employee buyout of part or all of a company. Business owners, managers, their advisors, and others interested in employee ownership plans will all find this book helpful. --This text refers to an out of print or unavailable edition of this title.

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Product Details

• Paperback: 264 pages
• Publisher: National Center for Employee Ownership (August 1, 2001)
• ISBN-10: 092690275X
• ISBN-13: 978-0926902756
• Product Dimensions: 9.9 x 7 x 0.8 inches
• Shipping Weight: 1.2 pounds
• Average Customer Review: 5.0 out of 5 stars  See all reviews (2 customer reviews)
• Amazon Best Sellers Rank: #3,293,205 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

1 of 1 people found the following review helpful:

5.0 out of 5 stars Leveraged ESOPs and Employee Buyouts, November 7, 2010

By 

Robert W. Smiley (Logandale, Nevada United States) - See all my reviews
(REAL NAME)   

This review is from: Leveraged ESOPs and Employee Buyouts (Paperback)

Outstanding book. Could not have completed our deal without the help this book was.
If you are doing a deal, you need this book.
We got a much better overall return because of the benefits that using the strategies in the book brought.

We recommend it highly.

Bob Smiley

1 of 1 people found the following review helpful:

5.0 out of 5 stars Leveraged ESOP, October 7, 2010

By 

troback - See all my reviews

This review is from: Leveraged ESOPs and Employee Buyouts (Paperback)

This is not a basic book. It is a strong resource and very useful for financial professionals.