Articles by John D. Menke

  • An Open Letter to Business Owners from John D. Menke
    Abstract: 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? We recently helped one of our clients do just that...
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  • Tax Alert for Business Owners!
    Abstract: This may be the opportune time to take action to avoid the increase in capital gains tax rates that will take effect after 2010. The first tax strategy is to sell part (or all) of your stock to an ESOP and elect tax-free rollover treatment under a special tax code section that only applies to ESOPs. The second tax strategy is to sell part (or all) of your stock to an ESOP and elect to pay tax on the entire transaction in 2009 or 2010...
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  • Why Should You Consider an ESOP?
    Abstract: 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 potential and multiply the total value of your investment in the company...
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  • The Origin and History of the ESOP and Its Future Role as a Business Succession Plan
    Abstract: The first ESOP (employee stock ownership plan) came into being in 1956. During the 50-plus years since then, ESOPs have become a popular alternative to a sale or merger as a tool of business succession, and there are now more employee owners—approximately 10 million of them—than union members in the private sector. This article describes the origin and history of the ESOP and explains why ESOPs will increasingly become the business succession tool of choice for many owners of privately held businesses.
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  • A Modest Proposal for a New, New Deal
    Abstract: Perhaps it's time that we realized that neither pure capitalism nor pure communism is the right answer to the perennial problem that plagues all market economies, i.e., how to achieve a balance between the ability to produce goods and services and the purchasing power that is needed to purchase these goods and services. Such a system was designed by the San Francisco economist and attorney Louis O. Kelso. It is called the Employee Stock Ownership Plan ("ESOP".)
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  • ESOP Marketability Discounts: Is the "Put Option" Argument Fallacious?
    Abstract: 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 and concludes that (1) the put option argument is fallacious with respect to purchases of company stock from direct shareholders and (2) nevertheless, there should be no mal'ketability discount with respect to purchases of company stock from direct shareholders.
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  • Exit Strategies: An Employee Stock Ownership Plan (ESOP) May Be the Solution to Your Succession-Planning Dilemma
    Abstract: 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 its employees under the provisions of an employee stock ownership plan (ESOP).
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  • Restoring the American Dream: Economic Stimulation and Solutions for Creating New American Jobs and for Protecting Existing American Jobs
    Abstract: How did it happen that over the course of the last thirty years, America has gone from being the land of economic opportunity, from being the land where almost everyone could aspire to become a capital owner, to being a country where wages have declined, jobs have disappeared, and job and ownership expectations have become greatly diminished? The answer lies in the fact that over the last thirty years, we have failed to create sufficient incentives for capital formation, and for broadening the ownership of capital by average Americans.
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  • Distributions from an ESOP in the Form of Employer Stock: An Unfortunate Trap for the Unwary
    Abstract: Distributions in the form of employer securities can enable the plan sponsor to shrink the percentage of company stock that is held by the ESOP and, in the case of lump-sum distributions, can result in significant tax savings for employees. In the author's opinion, however, such distributions pose a trap for the unwary in that, contrary to the generally accepted interpretation, even in those cases where the employer is an S corporation or has a bylaw provision that restricts ownership of substantially all employer securities to employees, the language of Section 409(h)(1)(B) of the Code does not give the employer a call option on these securities. The author recommends that Section 409(h) should be amended to effectuate the Congressional intent that a call option be permissible in these circumstances.
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  • Faultering Economy Highlights Need for a Restructuring of America
    Abstract: Why Is It Necessary to Restructure America? From the history of political thought, we know that modem day 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 early 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 public Of state ownership of the means of production.
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  • Why China Must Support and Encourage the Development of ESOPs
    Abstract: The following is to enumerate why China, like all other developing nations, should act now to encourage and support the development of Employee Stock Ownership Plans ("ESOPs") as well as increased stock ownership by the general public.
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  • The ESOP as Defined by Final IRS Regulations
    Abstract: Since the enactment of the Employee Retirement Income Security Act on September 2, 1974, Employee Stock Ownership Plans (ESOPs) have enjoyed increasing popularity among privately held firms. This increasing popularity has been restrained, however, by the absence of regulations defining the IRS requirements for these types of plans.
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  • The Employee Stock Ownership Trust: A New Trend in Employee Benefits and Corporate Finance
    Abstract: An increasing number Q( 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 offunding qualified plan benefits.
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