Cash out with ESOPs

I’m still reading that Fortune issue. I read an article about Eileen Fisher, a clothing designer with stores throughout the US and Canada. They opted not to sell the business or go public. Instead, they used an ESOP. An ESOP is an employee stock ownership plan. It enables employees to participate in the ownership of the company while allowing the owner(s) to cash out some or all of his/her/their equity. It also conveys some tax benefits somewhat tied to deferred compensation and installment payments. If your employees have voiced interest in owning the company or in equity participation, or if you already provide stock options, this could be a highly viable option to cash out of your business. You need to install a professional management team so the company doesn’t go to Hades when you leave. (Otherwise that could be considered a breach of fiduciary responsibilities. An ESOP is an administered program. )

About Tiffany C. Wright - The Resourceful CEO

Tiffany C. Wright is the author of “The Funding Is Out There! Access the Cash You Need to Impact Your Business” and “Solving the Capital Equation: Financing Solutions for Small Businesses.” She is the founder of The Resourceful CEO, which helps owners of small/medium-sized businesses prepare their businesses for sale. Tiffany has an MBA from the Wharton School of Business, sits on non-profit boards and serves as a business mentor with the Cherie Blair Foundation.
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