ESOPs - "Wow, that's really smart!"

I recently had the nerdy pleasure of a family member asking about how an Employee Stock Ownership Plan (ESOP) works and I was so excited to explain!  After I was done, it was a great reminder of how great of a tool an ESOP is for business succession, especially when it comes to the tax advantages!

My daughter recently started a job with Publix, a large regional grocery chain in the Southeast that also happens to be an employee owned company. ESOPs have been around forever but are widely under-utilized, are complicated, so explaining how they work to a non-nerd was an interesting challenge.  The truth is, the more I talked about how an ESOP works, the easier I found it was able to explain the advantages of this type of ownership structure.  I knew I had done a good job of explaining when I got the reaction of “Wow, that’s really smart”!

As a new employee for the company, she is excited for the opportunity to grow her interest in the company and it has already motivated her to look forward to her future with Publix. After hearing her say this, it’s no surprise to me that the National Center for Employee Ownership has found in multiple studies that employee owned businesses find increased growth after transitioning to an ESOP.

It also helped renew my excitement in my role as an advisor to my clients about how ESOPs work and how they can benefit from this type of succession vehicle.  I know I’m a nerd, but I think helping clients successfully pass along their business to the next generation of business owners is really smart.

 
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Written by

Katie Hardin, CPA

Senior Audit Manager

hardin@bermanhopkins.com