ESOP Tip

When potential acquirers express a serious interest that is hard to say no to, the next step is often to perform a due diligence assessment. That is a demanding and costly process for the CFO and other managers at an ESOP company. Torch Technologies, a 100% ESOP-owned company, requires these suitors to pay for the due diligence based on the time Torch staff would need to spend. That helps discourage acquirers the company does not want to pursue, but who may be offering an attractive price. Because this is a legitimate company expense, it should not raise a legal issue. Of course, a company that wants to find a buyer can waive it.