47 - ESOP's: Are They For You?

This week on #PoisedforExit we featured Nina Hale, a pioneer in the world of digital advertising, who sold her company Nina Hale to an ESOP in 2014. The company has been renamed Collective Measures and is growing strong, with many of the same employees who worked for Nina. She now sits on several non-profit Boards and helps educate business owners on what ESOP's are and are not. 

ESOP is an acronym for Employee Stock Ownership Plan. 

We certainly could have extended this interview longer; there's so much to talk about. What we did cover is essential for you to know, if you are considering an ESOP for your company. 

Nina said ESOP's provide for significant tax savings for a company and its' owners and creates a winning situation for all stakeholders. But ESOP is not for everyone. 

It takes competent advisers and a strong leadership team to pull this off, she said, and lots of hard work. Not everyone thinks that ESOP's are a good thing, especially younger generations who think more about buying a house than setting themselves up for retirement. You really have to make sure it's the right fit for most of your stakeholders as well as for you, the owner. Thus, the need for competent advisers!

Valuation calculations also differ between ESOP's and common external options. When selling to a Strategic Buyer, a Valuation would include more of the intangibles, like customer satisfaction, brand and human capital. An ESOP's Valuation weighs heavily on the financial side and not as much on the intangible side. When stock ownership will be shared by so many, there has to be enough assets up front to support the ESOP and keep it going. 

Find out if ESOP is right for you by consulting with your trusted advisers and by listening to this episode now.

Find Nina here and find Julie here.


Thank you to our Sponsors! Baker Tilly & Sunbelt Business Advisors 

Connect with Julie Keyes, Keyestrategies LLC
Founder, Consultant, Author, Pod-caster and Instructor