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At the NCEO Annual Conference in Kansas City, a husband and wife who were owners of a company considering an ESOP asked if I had some time to chat. They had come to the conference excited about the idea of selling their company to an ESOP, but now, they were not so sure. They liked the idea of employees being owners, and the tax benefits were appealing, but they said that in session after session, they kept hearing about all the litigation and investigation risks, that the DOL really does not like ESOPs, and that the plans were complex. They had been told to expect to pay hundreds of thousands of dollars to set up an ESOP in a company that had about 50 employees.

Lots of ESOPs today have a pleasant problem—what to do with excess cash. The default position for some companies is to be conservative and keep it in immediately accessible funds or shorter term interest-bearing investments.

Year after year, people come to the NCEO’s annual conference with big questions on their minds: who should own my company after me? Should I invite an outsider onto the board of directors? Do I want to be an employee-owner?

The new tax law changes the calculus for deciding to be an S or C corporation ESOP, especially when comparing non-100% ESOP owned companies.

By Matt Keene, NCEO Board of Directors Secretary

As the secretary of the board of directors, I am writing to update members of the NCEO about your organization after our second year of dealing with the COVID pandemic and its aftermath.

With the end of 2019, the NCEO completed its 38th year, and as the secretary of the board of directors, I have a chance to write a brief note to keep the members of the NCEO informed about your organization.

Another election—and another cycle of the left trashing the right, the right trashing the left, and the middle seemingly disappearing. It can make us despair about finding common ground. But that is exactly what has been achieved with employee ownership for decades.

The buyer may use cash in reserve to finance the deal. That is almost always the case in smaller deals. In other cases, the buyer may borrow money from a lender, usually a bank or non-bank debt in very large deals..

Last month, the NCEO released its 2022 Executive Compensation report, an analysis of compensation-related survey responses from 380 privately held ESOP companies.