Employee Ownership Fundamentals
An employee stock ownership plan is a defined contribution plan that invests in employer securities. Unlike other ERISA-authorized retirement plans, an ESOP can borrow money to purchase stock.
As a result, ESOP can function as a tax-advantaged leveraged buyout of one’s own company. For closely-held companies seeking business transition and shareholder liquidity options, employee ownership offers an independent-minded alternative to private equity and third-party sales.
Take 90 seconds to learn about the basic mechanics and core benefits of ESOPs.