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Mature ESOP Planning

A "mature" ESOP generally refers to a leveraged ESOP whose debt has been repaid. At this point in an ESOP's lifecycle the company's board of directors can begin thinking about the following issues.

  • How can the company best utilize the cash it was spending on the ESOP debt service to enhance the company's value?
  • If the company is not 100% ESOP owned should the board consider a "second-stage" transaction in which the ESOP would purchase addictional shares?
  • Should the company use its ESOP as a competitive advantage to acquire other companies?
  • How should the company deal with new employees who will not have shares allocated to their ESOP accounts - the "Haves and Haves Not" issue?
  • How will the ESOP repurchase obligation impact the company's future cash flow and value?
  • Are the Plan's distribution (payout) provisions structured to suit the company's and participants' need?

We have extensive experience working with companies on these issues and can help you develop strategies to achieve your goals. 

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