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#324: How ESOPs Work: Trustees, Governance, Legal Structure, Employee Vesting, and More with Neil Brozen and David Solomon
Ep.10 [THEME FIVE]
In part two of our four-part ESOP series, we dive deep into the mechanical and legal relationship between you (the owner), the ESOP trust, the trustee, and the employees.
We cover the role of a trustee in depth as well as more technical nuances about the legal structure of the trust, how the trust is managed, and when and how employees get their shares.
In part one of this episode, Neil Brozen, a trustee who has been responsible for more than 300 ESOP transactions since 2005, talks about the role a trustee plays in an ESOP during the transaction as well as the ongoing management after the deal is done. Neil explains how the business owner gets to interview and select the trustee (the buyer) and what it’s like to negotiate the purchase of the business from the perspective of the trustee. Neil then shares the trustee’s involvement–and control–on an ongoing basis (which is much less involved than most people think), what rights the employees have, and why the company doesn’t turn into a “consensus-based” business after becoming an ESOP.
In part two, we have David Solomon, a corporate M&A and ESOP attorney, who has been working in the ESOP space for many years. David walks us through the technical and legal journey a business owner goes through in order to set up an ESOP, such as what goes into the legal document of the trust, how company stock is allocated to employees, the ongoing involvement of advisors to manage the ESOP trust, and the one very important differentiator between an ESOP sale and an M&A sale.
This episode is a deeper technical dive into ESOPs and answers questions many business owners have like, “who am I selling my company to and what will they do with my company?”; “what are the real benefits to my employees if I sell to an ESOP?”; and “what is it like to lead and what control do I have as a CEO after the transaction?”
// WATCH THE INTERVIEW ON YOUTUBE: Intentional Growth™ Podcast
What You Will Learn
Part 1
The role of a trustee during the transaction in an ESOP.
Why the trustee is the buyer that represents the ESOP and future employee shareholders.
The engagement between a trustee and seller (business owner).
What the process is like to pick a trustee.
Who makes up the board of advisors in an ESOP and how they are chosen.
The ongoing involvement of the trustee after the transaction.
How decisions get made on the board.
What happens if management and the board and the trustee don't agree.
View all episodes
By Arkona - Intentional GrowthEp.10 [THEME FIVE]
In part two of our four-part ESOP series, we dive deep into the mechanical and legal relationship between you (the owner), the ESOP trust, the trustee, and the employees.
We cover the role of a trustee in depth as well as more technical nuances about the legal structure of the trust, how the trust is managed, and when and how employees get their shares.
In part one of this episode, Neil Brozen, a trustee who has been responsible for more than 300 ESOP transactions since 2005, talks about the role a trustee plays in an ESOP during the transaction as well as the ongoing management after the deal is done. Neil explains how the business owner gets to interview and select the trustee (the buyer) and what it’s like to negotiate the purchase of the business from the perspective of the trustee. Neil then shares the trustee’s involvement–and control–on an ongoing basis (which is much less involved than most people think), what rights the employees have, and why the company doesn’t turn into a “consensus-based” business after becoming an ESOP.
In part two, we have David Solomon, a corporate M&A and ESOP attorney, who has been working in the ESOP space for many years. David walks us through the technical and legal journey a business owner goes through in order to set up an ESOP, such as what goes into the legal document of the trust, how company stock is allocated to employees, the ongoing involvement of advisors to manage the ESOP trust, and the one very important differentiator between an ESOP sale and an M&A sale.
This episode is a deeper technical dive into ESOPs and answers questions many business owners have like, “who am I selling my company to and what will they do with my company?”; “what are the real benefits to my employees if I sell to an ESOP?”; and “what is it like to lead and what control do I have as a CEO after the transaction?”
// WATCH THE INTERVIEW ON YOUTUBE: Intentional Growth™ Podcast
What You Will Learn
Part 1
The role of a trustee during the transaction in an ESOP.
Why the trustee is the buyer that represents the ESOP and future employee shareholders.
The engagement between a trustee and seller (business owner).
What the process is like to pick a trustee.
Who makes up the board of advisors in an ESOP and how they are chosen.
The ongoing involvement of the trustee after the transaction.
How decisions get made on the board.
What happens if management and the board and the trustee don't agree.