ESOP Red Flags: Signs You Should Reconsider Your ESOP Transaction

Data from our transaction survey shows that most ESOP transactions work out well for the seller, the company, and employees, but sometimes the phone rings at the NCEO with a story that went the other way. An ESOP transaction may have been designed by someone whose knowledge was a couple years out of date, an advisor who promised a bit more than was wise, or someone who followed a seemingly harmless shortcut that wasn't so harmless. What are the signs that an ESOP transaction may cause problems in future years?

The NCEO compiled a list of bad outcomes and how to recognize them. It draws on litigation, stories from companies and service providers, and our staff's experience working with members. Take a look at Red Flags in ESOP Transactions for tips about recognizing inexperienced or biased advisors, transaction structures that deserve a second look, warning signs about valuation, and more.