Innovative ESOP Transaction Structures (digital)

The employee stock ownership plan (ESOP) is a very flexible financial and employee benefit vehicle. Almost all discussion of ESOPs, however, focuses on a small number of typical transaction structures, such as using a leveraged ESOP financed by a bank or seller note to buy the owner's shares or using the ESOP as an employee benefit plan funded by company contributions of shares. While these structures account for over 90% of all ESOP transactions, there are many innovative ideas for how to use these plans. This issue brief describes a variety of innovative transaction structures for ESOPs, ranging from using profit sharing funds to having the ESOP co-invest with private equity.