Articles by John D. Menke
The Employee Stock Ownership Trust – A New Trend In Employee Benefits and Corporate Finance
January, 2012
An increasing number of companies are turning to Employee Stock Ownership Trust financing as a means to simultaneously raise low cost capital and provide increased employee incentives and retirement benefits while reducing the cost of qualified plan benefits. The Employee Stock Ownership Plan is a qualified plan under Section 401(a) of the Internal Revenue Code. As such it is in the same family as pension plans, profit sharing plans and stock bonus plans. Nevertheless, The Employee Stock Ownership Plan (which …Read More..
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Tags: employee benefit plan, employee benefit specialists, employee incentive, employee retirement, employee stock ownership, Employee Stock Ownership Plan, ESOP, Internal Revenue Code, pension reform act, profit sharing plans, retirement benefits, Retirement PlanThe Use of ESOPs to Finance Mergers and Acquisitions
January, 2012
Advantages to C Corporations
Many companies that have ESOPs fail to realize that their ESOP can be used to the finance acquisitions with pre-tax dollars. Normally, when debt is incurred to finance an acquisition, only the interest payments are deductible. Principal payments are not deductible. However, if the acquisition is financed through an ESOP, both the interest and the principal payments will be fully deductible, and this will be true whether the plan sponsor is structured as a regular C …Read More..
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Tags: acquisition, C Corporations, Employee Stock Ownership Plan, ESOP, Income Taxes, merger, S Corporation ESOP, shareholders, StockStock Distributions – An Occasional Trap for the Unwary
September, 2011
Distributions from an ESOP in the form of shares of company stock have many advantages. One of the compelling reasons for making distribution in the form of company stock, for example, is that distributions in the form of company stock enable participants to have a portion of their distribution taxed at long term capital gains tax rates rather than having the entire distribution taxed at ordinary income tax rates.
This tax benefit derives from IRC Section 402(e)(4)(B), which provides that …Read More..
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Tags: 401 K, Defined Contribution Plan, Employee ownership, Employee Retirement Income Security Act, Employee Stock Ownership Plan, ESOP, Internal Revenue Code, Internal Revenue Code section 409A, Internal Revenue Service, Joint Committee on Taxation, Senate Finance Committee, TRASOPFaltering Economy Highlights Need for a Restructuring of America
September, 2011
Why Is It Necessary to Restructure America?
Socialism and communism developed as a reaction to the concentration of ownership and the abusive labor practices that developed in the early stages of capitalism. However, after nearly a century of conflict between these two competing economic systems, a century that witnessed two world wars and a protracted cold war, we have seen in the past 10 years the almost complete collapse of all forms of socialism and communism which were based upon …Read More..
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Tags: Capitalism, Employee ownership, ESOP, Esop Finance Trust, George Soros, Internal Revenue Service, Jeff Gates, Louis Kelso, microeconomic solutions, National Center for Employee Ownership, Patricia Kelso, Public ownership, Public Works Administration, S Corporation ESOP, S-Corp, Social Security Administration, the Great Depression, the New Deal, Walter Lippmann, William BlackstoneSeptember, 2011
A “perfect storm” has hit the U.S. economy and its privately-held businesses. Consumer purchasing power has dried up, resulting in reduced revenues for almost all privately-held businesses. At the same time most banks have stopped or curtailed lending, and bank credit is no longer available to many businesses.
During the past two quarters many businesses have downsized their operations and have implemented reductions-in-force, yet they are still faced with negative cash flows.
Fortunately, there is a perfect solution to the …Read More..
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Tags: C Corporation, Corporate finance, Employee ownership, Employee Stock Ownership Plan, ESOP, ESOP Financing, how to buy an esop company, Internal Revenue Service, S Corporation ESOP, SR ESOPFour Ways That a Cash Flow ESOP Can Be Used To Help Your Company Survive the Credit Crunch
September, 2011
A “perfect storm” has hit the U. S. economy and its privately-held businesses. Consumer purchasing power has dried up, resulting in reduced revenues for almost all privately-held businesses. At the same time most banks have stopped or curtailed lending, and bank credit is no longer available to many businesses.
During the past two quarters many businesses have downsized their operations and have implemented reductions-in-force, yet they are still faced with negative cash flows.
Fortunately, there is a ready solution to …Read More..
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Tags: 401 K, Corporate finance, Economics, Employee ownership, ESOP, Internal Revenue Service, Recession, S Corporation ESOPESOP Marketability Discounts: Is the "Put Option" Argument Fallacious?
September, 2011
Virtually every ESOP appraisal that has been written in the past 10 years has concluded that, both in the case of purchases of company stock by an ESOP from direct shareholders and in the case of subsequent distributions and repurchases of company stock to and from plan participants, the discount for lack of marketability is greatly diminished by virtue of the ESOP “put option.” This article reviews the origin and development of the put option argument in the appraisal literature …Read More..
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Tags: Business valuation, Continental Training Services Inc., Corporate finance, CTS, Department of Labor, Employee ownership, Employee Stock Ownership Plans, ESOP Financing, Internal Revenue Service, investment banking firms, Menke & Associates Inc., Robert F. Reilly, Sansome Street Appraisers Inc., Shannon Pratt, U.S. Securities and Exchange CommissionMay, 2011
An Employee Stock Ownership Plan (“ESOP”) may be the solution to your succession-planning dilemma
by John D. Menke
President, Chief Executive Officer
as published in the January, 2006 issue of
Electrical Wholesaling – the Independent Voice of Electrical Distribution
The exit strategies available to owners of electrical wholesaling firms are somewhat limited. The available strategies include selling the business to a competitor, selling the business to the management employees, or selling the business to all of …Read More..
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Tags: advantages of an esop, buyouts, C Corp, Capital Gains Tax, Corporate finance, CPA, Employee ownership, Employee Stock Ownership Plan, ESOP, ESOP Buyout, ESOP Exit Strategy, Esop Finance Trust, ESOP Financing, ESOPs, exit strategies, Exit Strategy, law firms, Management Buyout, management employees, MBO, Mergers and acquisitions, S-Corp, Stock Ownership Plan, Succession PlanningAn Open Letter to Business Owners
May, 2011
Dear Business Owner,
Would you be interested in selling part or all of your stock in your company if you could sell it for more than twice what it is currently worth?
Case Study I: The Benefits of a Gradual Sale to an ESOP
We recently helped one of our clients do just that. Company X is a successful home health care company whose sales and profits have been growing at 15% per annum. The owner recently turned down an offer …Read More..
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Tags: business owner, Capital Gains Tax, Corporate finance, Employee ownership, ESOP, esop bonds, ESOP Buyout, ESOP Exit Strategy, Esop Finance Trust, ESOP Financing, federal income taxes, LLC, Management Buyout, tax provisionWhy Should You Consider an ESOP?
May, 2011
Dear Reader:
As president of Menke & Associates, Inc., I believe there is significant untapped growth potential in most privately held companies.
Whether you want to sell some or all of your stock in the company in the next five years or whether you plan to remain active for the long term, Menke & Associates, Inc. proposes to work with you to develop a program which should help you achieve your growth …Read More..
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Tags: 401 K, Corporate finance, definitely consider establishing an ESOP, Employee ownership, Employee Stock Ownership Plan, ESOP, ESOP Companies, Esop Finance Trust, ESOP Financing, ESOP Rollover, Menke & Associates Inc., ownership energy potential, Reflexite Corp, Springfield Remanufacturing, Stock market, Stock Ownership Plan, University of Michigan, Will-Burt CompanyThe Origin and History of the ESOP and Its Future Role as a Business Succession Tool
May, 2011
The First ESOP (1956)
San Francisco lawyer and economist Louis O. Kelso created the first employee stock ownership plan (ESOP) in 1956 as a way to transition ownership of Peninsula Newspapers, Inc. from its two founders (both then in their 80s) to their chosen successors, the managers and employees.
Kelso had long believed that the company’s own employees should be the logical buyers and the ultimate owners; they were the ones who made the business successful in the first place, …Read More..
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Tags: Business Succession, Business Succession Tool, Chrysler Corporation, Corporate finance, Employee democracy, Employee ownership, Employee Stock Ownership Plan, Employee-Owned S Corporations of America, ESOP, ESOP Association of America, ESOP Buyout, Esop Finance Trust, ESOP Financing, ESOP Leveraged Buyout, Hi-Shear Corporation, House Ways & Means Committee, Inc., Internal Revenue Service, J.C. Penney, Louis O. Kelso, National Steel Corporation, Peninsula Newspapers Inc., PILLSBURY, Polaroid, Primary PDC Incorporated, private equity investor, Proctor & Gamble, Profit Sharing Plan, Sears Roebuck, Stock Ownership Plan, United Airlines, UNITED CONTINENTAL HOLDINGS, UNITED STATES STEEL CORPORATION, United States Sugar Corporation., Weirton Steel CorporationMay, 2011
Dear Business Owner,
This may be the opportune time to take action to avoid the increase in capital gains tax rates that will take effect after 2010.
As you may know, the Bush tax rate cuts, including the current 15% capital gains tax rate, are slated to expire at the end of 2010.
In addition, if the U.S. economy starts to turn around in the third or fourth quarter of this year, we believe there is a strong possibility that …Read More..
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Tags: advantages of an esop, business owner, C Corporation, C Corporations, Capital Gains Tax, capital gains tax rate, ESOP, Information Section, S Corporation ESOP, tax strategy, Web SeminarA Modest Proposal for a New, New Deal
May, 2011
Capitalism collapsed in the fall of 2008. It’s collapse was also the direct result of a flaw in the system. Capitalism promised universal opportunity and a rising tide for everyone. To achieve this result, capitalism privatized and/or deregulated every possible industry. It glorified greed, extravagant executive compensation, and financial manipulation. Just as in the case of communism, it failed to place any real purchasing power into the hands of the workers. Over the past 20 years, the economic purchasing power …Read More..
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Tags: Capitalism, Conrail, Cooperatives, Economic Stimulus Plan, Employee democracy, Employee ownership, Employee Stock Ownership Plan, energy-independent systems, ESOP Financing, Federal Reserve System, Louis O. Kelso, Obama administration, Railroad Reorganization Subcommittee, Roosvelt administration, Russell Long, Stock Market Value, UNITED CONTINENTAL HOLDINGSMay, 2009
Economic Stimulation and Solutions for Creating New American Jobs and for Protecting Existing American Jobs
By John D. Menke, Esq.
Historical Background of the American Dream
Since the very founding of the original thirteen colonies, America has always been known as the land of economic opportunity and as the most capitalistic country on the face of the earth. During the 1700s and the 1800s, immigrants by the millions came to our shores in search of the …Read More..
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Tags: 401 K, american dream, capital formation, Capital Gains Tax, conventional buyout, economic opportunity, Economic Stimulus Plan, Employee ownership, Employee Stock Ownership Plan, Fannie Mae, Immigrants, Incentives, manufacturing companies, manufacturing competitiveness, National Center for Employee Ownership, Productive Capital, venture capitalESOPs and PHILANTHROPY: What Non-Profit and Tax-Exempt Organizations Should Know about ESOPs
October, 2000
Approximately 97 percent of our nation’s businesses are privately-held. In spite of this, charitable and tax-exempt organizations have not achieved particularly significant results in securing major gift income from owners of closely-held companies.
The reasons for this apparent oversight may be understandable. Although small business owners may head enterprises worth substantial amounts of money, frequently, the bulk of their net worth can be tied up in the companies they own. Thus, even if owners of closely-held companies express an interest …Read More..
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Tags: Corey Rosen, Employee democracy, Employee ownership, Employee Stock Ownership Plans, ERISA, ESOP, Louis O. Kelso, Menke Associates, National Center for Employee Ownership, Russell LongWhy Giving To The Esop Foundation Is Now Critically Important
October, 2000
By John D. Menke
Although the Employee Stock Ownership Plan (“ESOP”) concept continues to enjoy bipartisan support in Congress, this support is still not deep. Current support for the tax incentives that are essential to the adoption of new ESOPs comes from only a handful of key members of the House and the Senate.Meanwhile, during recent years many ESOP allies have retired or lost their seats. We now have fewer ESOP supporters than at any time during the last 20 …Read More..
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Tags: Beyster Institute, Center for Business Education, Chicago Tribune, Employee democracy, Employee ownership, ESCA, ESOP, ESOP Association, ESOP Foundation, Internal Revenue Service, Joseph Blasi, Louis O. Kelso, Rutgers University's School of Labor and Management, UNITED CONTINENTAL HOLDINGS
