Employee stock ownership plan (ESOP) transactions, a highly specialized legal niche, offer both potential opportunities and unique challenges. Our lawyers have the know-how to structure, implement, and execute these complex transactions, as well as avoid the pitfalls that can delay or derail a client’s goals. Our team structures ESOP transactions that can guide business succession planning and boost employee productivity and morale all while mitigating corporate taxes.
ESOP-owned company management, institutional trustees, and equity sponsors seek out our respected lawyers’ counsel to navigate ESOP transactions and related matters. Our experience includes leading some of the largest transactions undertaken involving the sale of ESOP-owned companies to equity sponsors and strategic buyers.
Used as an alternative liquidity strategy, ESOPs may be an attractive option for companies seeking to create tax-advantaged liquidity; to facilitate management buyout of a subsidiary, division, or portfolio company; to engage in a roll-up transaction; or to permit tax-advantaged private equity investment.
Plaintiffs in ESOP litigation often complain that the ESOP paid too much for its stock in the transactions that established them. When the stock’s value declines after such a transaction, litigation is almost sure to follow. These cases usually involve closely held companies, where there is no public market for the stock, so plaintiffs often sue not only the company and those who sold stock to the ESOP but also plan trustees and others involved in these transactions.
The ERISA Litigation Group has defended ESOP cases for more than two decades, against both private plaintiffs and the Department of Labor. We have defended companies themselves, individual officers and directors, and independent ESOP trustees. Our results are unmatched, with most cases either dismissed or resolved on very favorable terms.