Each company's journey to become an ESOP is unique. However the typical steps to establish an ESOP include:
1. Education - obtain a basic understanding of what an ESOP is, how it works, to be able to answer the question "is an ESOP the right solution for my company"
2. Feasibility Study - an ESOP service provider will analyze the financial condition of the company, understand the goals and expectations of the current owners, build a model, to be able to answer the question "Can we do it"
3. Partners - Interview and select the ESOP professionals that will guide you on this journey. This includes the Company ESOP Counsel, the ESOP Trustee, and the Third Party Administrator. Other professionals may be needed (bank, Counsel, another valuation company, etc.). The Trustee will select the trustee counsel, and the independent valuation firm to determine the value of the company.
4. Write the documents. This includes the ESOP plan documents (the guidebook the company will be required to follow), price negotiation, finalize financing, write the seller notes, develop incentive programs.
5. Implementation - Finalize the documents, and prep to launch the ESOP.
6. Launch - Initiate the ESOP, communicate to the employees, and launch initial and ongoing education and training of all employee-owners.
Have a question, Looking for answers? Contact INCEO.
The following resources cover a broad range of topics from business succession planning with employee ownership to building an ownership culture. This list includes links to information on employee ownership generally, as well as to resources specifically for Indiana companies.
- Employee Ownership: Building a Better American Economy (new Nov 2017)
- Free online articles on employee ownership from the National Center for Employee Ownership (NCEO)
- Free webinar on ESOP feasibility from the NCEO
- Additional free online articles from The ESOP Association
- Articles and statistics from the Employee Ownership Foundation
- Becoming Employee-Owned, a booklet published by the Democracy at Work Institute (DAWI)
- Succession planning resources from the NCEO
- Additional succession planning resources from the Ohio Employee Ownership Center (OEOC)
- The employee ownership blog from The ESOP Association
- Creating Better Jobs and a Fairer Economy with Worker Cooperatives, by DAWI
- The Curriculum Library on Employee Ownership
- Local offices of the Small Business Administration
Have a question on Employee Ownership? Contact INCEO.