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Employee Stock Ownership Plans (ESOPS) & Stock Bonus Plans

Miles & Stockbridge's benefits lawyers regularly advise clients on all aspects of employee stock ownership plans (ESOPs).  We know that an ESOP can help a qualifying company achieve financing, business succession, strategic expansion, and employee relations objectives—but only if the plans are properly structured and documented.  We use our decades of ESOP experience to help companies of all sizes develop effective plans that defer taxes, diversify investments, and attract and retain quality employees.  We also frequently represent banks and other lenders in connection with loans to ESOPs and related ESOP financing transactions. 

An ESOP can be an effective tax management tool, and our benefits and tax lawyers regularly help small business owners sell their shares to a newly created plan.  We also advise clients with regard to the unique tax and other legal issues that surround the adoption and operation of ESOPs by S corporations.  We structure ESOP plans so that they are useful acquisition tools, including their use in leveraged buy-outs that involve the employees as owners. 

Miles & Stockbridge lawyers ensure that ESOPs meet all applicable legal and regulatory standards by:

  • Arranging for annual appraisals and re-valuation of company stock;

  • Submitting ESOPs to the IRS seeking favorable determination letters;

  • Preparing for audits by the IRS and the Department of Labor;

  • Handling ESOP distributions and implementing procedures for purchasing shares from departing employees;

  • Negotiating financing agreements on behalf of ESOPs, companies, and lenders; and

  • Litigating disputes over these plans on behalf of sponsors.

The decision to establish and sell stock to an ESOP results in major changes for any company.  Because Miles & Stockbridge has substantial experience working with the tax, finance, and employee-relations aspects of ESOPs, we can help business owners realize the advantages—and navigate the challenges—of transitioning to an employee ownership culture.