9
S P O N S O R
Surrounding oneself with the appropriate professionals, and planning properly, will position your company for a successful transition to ESOP ownership. Understanding ESOPs (Part 3)
T his article serves as a continuation of our “Understanding ESOPs” series, with Part 1 and Part 2 focusing on the tangible and intangible benefits of ESOPs. Here we look at the importance of education and planning when it comes to business succession.
Pat Stoltz
BOOKS & RECORDS – FINANCIAL INFORMATION. Wintrust ESOP Finance is one of the few national ESOP lenders that not only is involved in the structuring of the financing for an ESOP, but also manages the relationship with the ESOP-owned company after closing. A common part of our practice includes a “lessons learned” discussion with our clients to help other companies be best prepared for their ESOP transition. Among the most common re- sponses are those focused on the preparation of financial information. ❚ ❚ Make sure the company is in good standing in the states where it operates, as it may take an extended period to rectify. ❚ ❚ Confirm the organization’s documents are up to date and allow for the contemplated transaction. ❚ ❚ If financial statements consist of tax returns and
company prepared statements, consider getting a review or an audit. The improved integrity of the financials will allow for a stronger valuation and/or reduce the amount of closing diligence. ❚ ❚ Review current contracts to see if any Change of Control provisions exist. If so, the majority sale of a company will likely require consent in order to avoid a potential breach of contract. This, too, can take an extended period of time depending on the circum- stance. MANAGEMENT. Because the ESOP alternative allows a business owner to ease out of his position at his own pace, it is often viewed as the most flexible succession planning alternative. One essential way to insure this flexibility is to build the managerial bench. In order for the surviving company to
Jim Swabowski
See PAT STOLTZ & JIM SWABOWSKI, page 10
THE ZWEIG LETTER August 26, 2019, ISSUE 1310
Made with FlippingBook Annual report