The Menke Group | The Nation's Premier ESOP Advisors and Administrators

The Employee Stock Ownership Trust – A New Trend In Employee Benefits and Corporate Finance

The Menke Group — Mon, 09 Jan 2012 22:32:08 +0000

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..

The Use of ESOPs to Finance Mergers and Acquisitions

The Menke Group — Tue, 03 Jan 2012 23:18:49 +0000

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..

The ABC's of ESOPs Webinar

The Menke Group — Tue, 20 Dec 2011 18:58:36 +0000

Click here to begin the presentation

To download a pdf of the presentation slides, click here

This is a one-and-a-half hour live Audio/Web Seminar that covers the basics of ESOPs from A to Z.

This Audio/Web Seminar is designed for company owners and financial officers who want to determine whether ...Read More..

How to Structure Stock Ownership Plans for Management Employees

The Menke Group — Wed, 07 Dec 2011 04:07:36 +0000

WHY IT IS IMPORTANT TO MOTIVATE MANAGEMENT EMPLOYEES

Attracting and retaining key employees is necessary to the success of any corporation. This factor is even more important in an ESOP company, since the number of beneficial owners in an ESOP company is much greater than in a non-ESOP company.

The most effective way to motivate management employees is to give them a piece of the action. Management employees are accustomed to getting a substantial piece of the action whenever a ...Read More..

Howard's Appliance Celebrates Being 100% Employee Owned

The Menke Group — Mon, 14 Nov 2011 18:45:09 +0000

The Los Angeles Times featured an article about Howard’s Appliance & Flat Screen Superstores, which has been 100% employee-owned since 2000.

The company, which started as a radio repair shop in San Gabriel, sold nearly half of the company over to the employees when the government approved employee stock ownership plans in 1976. Employees acquired 100% of the company in 2000. Howard Roach still retains his place as chairman of the board. ...Read More..

Mills James Produces Animated Film About ESOPs

The Menke Group — Thu, 10 Nov 2011 23:37:56 +0000

Mills James, a comprehensive creative media production company based out of Columbus, Ohio has made an animated film explaining how their Employee Stock Ownership Plan (and how ESOPs in general) work. Mills James employs about 150 employees and specializes in the following areas: Teleproduction, Broadcast Production, Business Video, Meetings & Events, Web Interactive and Original TV Productions.

To read more about Mills James and their ESOP, you can visit their website here.

ESOP Technical Issues Web Seminar – October, 2011

The Menke Group — Tue, 01 Nov 2011 02:09:39 +0000

Below you will find the links to watch each of the Technical Issues Webinar Sessions On-Demand:

Session 1: Introduction
- What is an ESOP?
- History of ESOPs

CLICK HERE TO WATCH SESSION 1

Session 2: Retirement Plan Basics

Qualified vs. Nonqualified plans
Types of Plans

CLICK HERE TO WATCH SESSION 2

Legislative Information: Pro-ESOP Bill — H.R. 1244

The Menke Group — Mon, 31 Oct 2011 23:30:13 +0000

H.R. 1244, the “Promotion and Expansion of Private Employee Ownership Act of 2011,” was introduced March 29, 2011by a bi-partisan group of key members of the House Ways and Means Committee: Congressmen David G. Reichert (R-WA), Ron Kind (D-WI), Charles W. Boustany, Jr. (R-LA), Earl Blumenauer (D-OR), Erik Paulsen (R-MN), and Bill Pascrell (D-NJ).

“This bi-partisan declaration of support for employee ownership through the ESOP (employee stock ownership plan) model among privately ...Read More..

Great Falls Business Owners Explain "ESOPs"

The Menke Group — Fri, 28 Oct 2011 16:49:49 +0000

Local business owners say they’re spreading the wealth in Great Falls by offering long term employees stock ownership plans or ESOP’s.

It’s a structure that is set up and its federally recognized, so the employees are then part of a trust that then owns either a 100% of the company or some portion of the company,” said Sletten President Erik Sletten.

Today at Sletten Construction company, ESOP’s were the main topic of ...Read More..

Options and Alternatives for Structuring ESOP Transactions Webinar

The Menke Group — Wed, 19 Oct 2011 21:09:27 +0000

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To download a pdf of the presentation slides, click here

Program Agenda

Valuation Considerations

Sell Now Or Sell Later?

Tax Considerations

Pay Uncle Sam Now Or Pay Uncle Sam Later?
To Participate In Esop Or Not To Participate?

Financing Considerations

To ...Read More..

Read about the Cal-Tex Protective Coatings ESOP

The Menke Group — Thu, 13 Oct 2011 00:43:49 +0000

Read the original posting at the Cal-Tex Website

Cal-Tex is 97% employee-owned through an Employee Stock Ownership Plan (ESOP).As the 2011 Grand Prize Winner of theNational Center for Employee Ownership’s Innovations in Ownership Award and the 2011 ESOP Association’s Best Communications Award (Small Company), Cal-Tex is committed to providing a company structure that will benefit the employee and the customer. If you are considering becoming a Cal-Tex employee or customer, ...Read More..

NCEO's: Employee Ownership Update for Oct. 3rd, 2011

The Menke Group — Wed, 12 Oct 2011 21:15:16 +0000

Topics Covered:

Loren Rodgers

October 3, 2011

Two M&A Transactions at MYI in One Week
Documentary in Progress
Department of Labor to Re-Propose Fiduciary Regulation

Click here to read the the update at the NCEO website

ACG Kentucky panel talks about benefits of ESOPs

The Menke Group — Tue, 11 Oct 2011 23:49:49 +0000

Click here to read the original article at bizjournals.com

For business owners who want to cash out but still oversee the direction of the company and take care of their workers, an employee stock ownership plan might be the best bet.

That was the message from panelists Tuesday morning at the monthly meeting of ACG Kentucky, the local affiliate of the Association for Corporate Growth.

Many entrepreneurs get caught up in the tax benefits of ESOPs, but sellers ...Read More..

Consider an ESOP as a Better Alternative When It Comes Time to Exit Your Business

The Menke Group — Tue, 11 Oct 2011 03:48:06 +0000

(Why Selling Your Stock to an ESOP is Better than Selling to a Third Party)

Click here to download a PDF version of this article as it originally appeared in the DPHA Newsletter, Newsleak

If you are the owner of a successful decorative plumbing or hardware business, sooner or later you will face the prospect of having to exit the business, either because you wish to retire or because you wish ...Read More..

National Van Lines Becomes ESOP-Owned

The Menke Group — Thu, 06 Oct 2011 01:40:14 +0000

National Van Lines Inc. said it has changed the company’s structure, selling itself to an employee stock ownership plan entity.

The third-generation, family-run business said it has been working on transitioning to an ESOP-owned S Corp. structure since July 2010 effort to “find an ownership and liquidity succession plan that did not disrupt the culture or the people.”

The ESOP structure gives National Van Lines with tax savings, improved employee benefits and financial flexibility, the Broadview-based company said in a ...Read More..

Ten Steps to a Successful ESOP

The Menke Group — Wed, 05 Oct 2011 19:04:22 +0000

Employee Stock Ownership Plans (“ESOPs”) are federally qualified employee benefit programs governed by U.S. law. Since our president and founder, John Menke, wrote some of the original ESOP legislation in 1974, more than 25 additional laws have been passed to promote and broaden the benefits of ESOPs.

In general, ESOPs offer owners of companies tax efficient means to sell all or part of their shares to their employees, on a timeline of their choosing. ESOPs have the added benefit of ...Read More..

ESOP Companies Report Positive 2010 Even Amid Slow Economic Recovery

The Menke Group — Tue, 04 Oct 2011 23:13:31 +0000

WASHINGTON, Sept. 14, 2011 /PRNewswire-USNewswire/ — Results from the Employee Ownership Foundation’s 20th Annual Economic Performance Survey of ESOP (employee stock ownership plan) companies that are members of The ESOP Association show that ESOPs, while not immune to economic developments beyond their control, have seen an upturn over the past year. The survey shows ESOP companies, by significant percentages, continue to have increased share value, better productivity, and overwhelming support among leaders of the companies.

Since the survey’s beginnings 20 ...Read More..

Stock Distributions – An Occasional Trap for the Unwary

The Menke Group — Wed, 28 Sep 2011 18:56:03 +0000

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..

Faltering Economy Highlights Need for a Restructuring of America

The Menke Group — Tue, 27 Sep 2011 18:53:55 +0000

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..

The Joys Of An ESOP

The Menke Group — Tue, 27 Sep 2011 02:59:57 +0000

NOVEMBER 1, 2004

The following article was originally published in Bloomberg Businessweek and written by Amey Stone

Employee ownership can be a powerful tool

Last November the 100 employees of Superior Plumbing & Heating, a mechanical contractor in Anchorage, Alaska, gathered on the snow-covered ground to celebrate their new status as full owners of the $20 million company. Cutting the ribbon and symbolically reopening the company was Jan Van Den Top, the 60-year-old president, who had sold his shares to ...Read More..

The Will-Burt Company Celebrates its 25th Anniversary as an Employee Owned Company

The Menke Group — Mon, 26 Sep 2011 23:42:11 +0000

For additional information, contact: Angie Lamielle, Senior Marketing Associate 330-684-4002 alamielle@willburt.com

For Immediate Release: Monday, June 06, 2011

The Will-Burt Company is celebrating its 25th year as an Employee Owned Company. Will-Burt employees have been participating in the Employee Stock Ownership Program (ESOP) since its inception on December 31, 1985. Will-Burt will be holding a celebration for its employees and retirees on June 16, 2011 with a special recognition for over 60 employees who have participated in the ESOP ...Read More..

The Perfect Solution to the Perfect Storm: How an SR ESOP Can Be Used to Save Your Business from Bankruptcy

The Menke Group — Mon, 26 Sep 2011 18:41:32 +0000

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..

Options for Mature ESOPs

The Menke Group — Sat, 24 Sep 2011 20:14:27 +0000

Background

One of the concerns that arises in the case of a company that is 100% owned by its ESOP (or where an ESOP owns less than 100% of the outstanding stock, all of the stock held by the ESOP is allocated, and the ESOP will not be acquiring any additional stock) is that once all of the outstanding shares have been allocated to the participants, there will be no stock left to allocate to new participants, except for (a) ...Read More..

Four Ways That a Cash Flow ESOP Can Be Used To Help Your Company Survive the Credit Crunch

The Menke Group — Fri, 23 Sep 2011 17:29:49 +0000

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..

ESOP Marketability Discounts: Is the "Put Option" Argument Fallacious?

The Menke Group — Thu, 22 Sep 2011 20:32:31 +0000

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..

Why Selling To An ESOP Gives Better Financial Returns vs. Other Options

The Menke Group — Sat, 13 Aug 2011 06:24:37 +0000

You own a successful privately-held business which you may be thinking about selling. Very likely your business is your most important financial asset. You want maximum financial advantage when you sell, of course, but there are other concerns. For example, how will the sale affect your key employees? Will your firm continue as an independent entity or will it be absorbed into the buyer’s operations? If there are minority shareholders, how do you deal with them? And then there’s the ...Read More..

Equity Compensation Alternatives for ESOP Companies

The Menke Group — Wed, 20 Jul 2011 17:57:29 +0000

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Webinar with Jack Stack

The Menke Group — Wed, 20 Jul 2011 17:56:28 +0000

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ESOPs for Consulting Firms

The Menke Group — Wed, 20 Jul 2011 17:52:03 +0000

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ESOPs for Insurance Agencies

The Menke Group — Wed, 20 Jul 2011 17:51:13 +0000

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ESOPs for Construction Firms, Contractors and Subcontractors

The Menke Group — Wed, 20 Jul 2011 17:48:50 +0000

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ESOPs for Wholesaler and Distributors

The Menke Group — Wed, 20 Jul 2011 17:45:15 +0000

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ESOPs for Government Contractors

The Menke Group — Wed, 20 Jul 2011 17:42:41 +0000

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WinSystems, an Employee-Owned Corporation on Youtube

The Menke Group — Wed, 25 May 2011 20:34:29 +0000

Here is a video posted by one of The Menke Group’s Clients:

WinSystems, an embedded PC designer and manufacturer, provides a high level of quality and customer service through an Employee Stock Ownership Plan (ESOP). This leads to employees holding a direct stake in maintaining a high level of customer service.

Here is the full press-release:

WinSystems Adopts Employee Stock Ownership Plan September 19, 2007, Embedded Systems ...Read More..

ESOP plans let founders cash out and employees cash in

The Menke Group — Wed, 18 May 2011 20:10:01 +0000

By Nancy Mann Jackson, contributing writer June 17, 2010: 4:45 AM ET

(CNNMoney.com) — On his 81st birthday, entrepreneur Bob Moore signed the papers to hand nearly a third of his company over to his 200 employees. But it’s a gift Moore and his three partners hope will pay off for them as well: By launching an employee stock ownership plan, they’re creating an exit strategy for themselves from the business they’ve spent the past three decades building.

We’re growing ...Read More..

ESOPs for Banks and Thrifts

The Menke Group — Tue, 17 May 2011 05:50:18 +0000

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ESOPs for Architectural & Engineering Firms

The Menke Group — Tue, 17 May 2011 05:43:10 +0000

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2011 Cost-of-Living Adjustments

The Menke Group — Fri, 13 May 2011 05:49:43 +0000

The following is a list of affected sections of the Code and the 2010 limitations of interest to the ESOP community

Code Section Description 2010 Limitations 2011 Limitations 401(a)(17) Limit on the amount of annual compensation taken into account $245,000 $245,000 402(g)(1) Limitation on the exclusion for elective deferrals described in Section 402(g)(3) of the Code $16,500 $16,500 404(l) Limitation on the amount of annual compensation taken into account $245,000 $245,000 409(o)(1)(C)(ii) Dollar amount for determining the maximum account balance ...Read More..

S Corporation Rules Involving Section 409(p)

The Menke Group — Fri, 13 May 2011 04:58:37 +0000

Section 409(P) of the Code, which was enacted as part of the Economic Growth and Tax Relief reconciliation Act of 2001, sets forth anti-abuse rules for ESOPs that are maintained by S corporations. The following is to summarize the restrictions of Section 409(P), as follows:

Basic Rule: No assets of an ESOP may be allocated (directly or indirectly) for the benefit of any Disqualified Person if, at any time during the plan year, Disqualified Persons, in the aggregate, own 50% ...Read More..

Exit Strategies

The Menke Group — Fri, 13 May 2011 11:54:11 +0000

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..

22 ESOP Myths And Misconceptions

The Menke Group — Fri, 13 May 2011 11:49:34 +0000

Click here to download the full article in pdf format

ESOPs were first authorized by federal legislation in 1974. Since that date, there have been more than 25 separate pieces of legislation that have further defined what an ESOP is and what an ESOP is permitted to do. Despite this fact, there are more misconceptions about ESOPs than about any of the other similar financial tools that exist in the marketplace.

The following describes ...Read More..

ESOPs: Uses, Advantages, and Illustrative Case Histories

The Menke Group — Fri, 13 May 2011 11:45:54 +0000

USES OF AN ESOP

A Readily Available Market for Controlling Shareholders

Frequently, controlling shareholders desire to sell a part of their shares in order to diversity their holdings, or to provide liquidity for investment or estate planning purposes. Usually, however, there is no market for the sale of a minority interest in a closely-held company.

The adoption of an ESOP solves this problem by providing a readily available market for the purchase of shares from controlling shareholders. Moreover, the ...Read More..

ESOPS vs. Profit Sharing Plans

The Menke Group — Fri, 13 May 2011 04:41:58 +0000

WHAT IS AN ESOP?

The best way to explain an ESOP is to compare it to a profit sharing plan. ESOPs can do all the things a profit sharing plan can do. However, ESOPs can do a great many things that profit sharing plans cannot do. Profit sharing plans are regarded primarily as employee benefit plans. The ESOP is primarily regarded as a “tool of corporate finance,” according to IRS rulings and regulations.

Accordingly, ESOPs are permitted under profit sharing ...Read More..

ESOP: A New Tax Savings Tool for Owners of S Corporations

The Menke Group — Fri, 13 May 2011 04:32:42 +0000

“A new dawn greets ESOP companies!”

“The Holy Grail of business opportunities beckons: ESOP companies can now operate tax free!”

Not since 1984, when the §1042 tax-free rollover was enacted, has the ESOP community bubbled with such enthusiasm.

Under the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, (“EGTRRA”), the ESOP’s share of S corporation earnings will not be subject to federal corporate taxation or to taxation as “unrelated business income tax,” unless the ESOP runs ...Read More..

ESOPS and Employee Productivity

The Menke Group — Fri, 13 May 2011 11:04:47 +0000

USING ESOPS TO IMPROVE EMPLOYEE PRODUCTIVITY

You’ve read about them—companies that seem to have found the key to success in an unstable

business environment:

“Sales Jump 312% as Employees Learn Rules of the Game” at Springfield Remanufacturing Corporation in Missouri. Management Accounting.
Inc. magazine awards its Entrepreneur of the Year award to all 240 owner-employees of the Connecticut firm Reflexite, Inc. Out of 2,700 private companies evaluated, 4 of the 5 finalists had ...Read More..

The ESOP Association 2009 Year-End Legislative Update

The Menke Group — Fri, 13 May 2011 02:42:31 +0000

S. 1612 – The ESOP Promotion and Improvement Act of 2009:

On August 6, 2009, Senator Blanche L. Lincoln (D-AR) introduced S. 1612, the ESOP Promotion and Improvement Act of 2009. The legislation has four sections, including an entirely new proposal to remove a 35 year bias against ESOP companies by the Small Business Administration.

One, S. 1612 would repeal the punitive 10% penalty tax on S corporations distributions from current earnings, also referred to as dividends, placed on the ...Read More..

ESOPs as Retirement Benefits: An Analysis of DOL Data

The Menke Group — Fri, 13 May 2011 02:21:06 +0000

Fall 2010

Written by Loren Rogers

In a project funded by the Employee Ownership Foundation, the NCEO did an extensive analysis of ESOP companies using data from the US Department of Labor. Unlike prior research, the study carefully compiled data from multiple plans within a single company and used multiple years of data for each plan. It concluded that ESOP companies are more likely to offer a second defined contribution (DC) plan than non-ESOP companies are to offer any DC ...Read More..

The ESOP Association and the Employee Ownership Foundation Release Results of the 2010 ESOP Company Survey

The Menke Group — Fri, 13 May 2011 09:06:50 +0000

August 11, 2010

The ESOP Association and the Employee Ownership Foundation released today the results of a survey conducted among the Association’s 1,400 corporate members in the first quarter of 2010 which confirms positive benchmarks for ESOP (employee stock ownership plan) companies. The company survey is conducted every five years and was last completed in 2005. Prior to 2005, the survey was completed in 2000. The eye-opening statistics of the 2010 survey are the increase in age of the ESOP ...Read More..

Ross Group Inc. Rewards Employees With Stock Ownership Plan

The Menke Group — Fri, 13 May 2011 01:55:44 +0000

Ross Group Inc of Dayton, Ohio announced that the company has formed an Employee Stock Ownership Plan (ESOP) and has joined the growing list of companies whose employees are stockholders. “When the transaction is completed,” said Mr. Mark Ross, President and CEO, “the employees of Ross Group Inc will own just under 25 percent of the Company.”

Mr. Ross said, “We had an immediate need for one of our shareholders to exit, but beyond that, the ownership team wanted to ...Read More..

Clif Bar Announces ESOP Program

The Menke Group — Fri, 13 May 2011 01:53:11 +0000

Wednesday, June 30, 2010

Clif Bar & Company announced the selling of family owned common stock to its employees through an employee stock ownership plan (ESOP). Employees through the ESOP own 20% of the company, while husband and wife owners Gary Erickson and Kit Crawford retain the remaining 80%.

No change in management structure will take place, with Erickson and Crawford remaining majority owners and co-CEOs of the company.

“All along we wanted to create a company where we would ...Read More..

PRESS RELEASE – Technomics, Inc. Benefits Employees with Stock Ownership Plan

The Menke Group — Fri, 13 May 2011 01:50:58 +0000

FOR IMMEDIATE RELEASE

Technomics, Inc. Benefits Employees with Stock Ownership Plan

Arlington, VA – January 26, 2010 Rick Collins, President and CEO of Technomics, proudly informed employees on January 26, 2010 that the Company formed an Employee Stock Ownership Plan (ESOP) and, in doing so, has joined the growing list of companies whose employees are stakeholders. “The Plan has several objectives,” Mr. Collins indicated. “First, to provide ownership of the company to those that build the company; second, to provide ...Read More..

RESILIENCE AND RETIREMENT SECURITY: Performance of S-ESOP Firms in the Recession

The Menke Group — Fri, 13 May 2011 01:37:16 +0000

Written by Phillip Swagel and Robert Carroll

Executive Summary

A study of a cross-section of Subchapter S firms with an Employee Stock Ownership Plan shows that S-ESOP companies performed better in 2008 compared to non-S-ESOP firms along a number of dimensions, including job creation, revenue growth, and providing for workers’ retirement security. The S-ESOPs paid their workers higher wages on average than other firms in the same industries, contributed more to their workers’ retirement security, and—crucially in a year of recession—hired workers when ...Read More..

ESOP: Employee Ownership of Companies on the Rise

The Menke Group — Fri, 13 May 2011 01:26:53 +0000

The ESOP – Employee Stock Ownership Plan – is, slowly, on the rise. These worker-owned businesses are more productive and could benefit the American economy.

Shoppers eye goods at the bakery of King Arthur Flour Co. in Norwich, Vt. The employee-owned firm was able to expand from its niche to deliver a broad product line.

Norwich, Vt.

A decade ago, John Schock of Pasadena, Md., reached his mid-50s and a crossroads. He could ...Read More..

ESOPs on the Rise Among Small Businesses

The Menke Group — Fri, 13 May 2011 01:21:53 +0000

Small companies are rushing to reward workers with employee stock ownership plans as low valuations make awarding shares more attractive

By Karen E. Klein

Bob Moore gathered three employee shifts together last month for pizza parties to celebrate his 81st birthday. But Moore, the founder and president of Bob’s Red Mill Natural Foods in Portland, Ore., also had a surprise announcement: He was giving his 200 employees the company he founded in 1978.

“I thought some of them were going ...Read More..

New Study Documents ESOP Account Balances

The Menke Group — Fri, 13 May 2011 01:16:35 +0000

The NCEO has just completed an analysis of Form 5500 retirement plan filings filed by ESOP companies. The Form 5500 data are prone to considerable reporting and transcription error and should be used with caution, but many of the results described below are in accord with prior research, with our experience, and with best estimates from practitioners in the field. Among the companies studied, the average value of plan assets per participant is approximately $46,000. This compares to the average ...Read More..

An Open Letter to Business Owners

The Menke Group — Fri, 13 May 2011 06:16:17 +0000

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..

Why Should You Consider an ESOP?

The Menke Group — Thu, 12 May 2011 23:09:38 +0000

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..

The Origin and History of the ESOP and Its Future Role as a Business Succession Tool

The Menke Group — Thu, 12 May 2011 23:02:42 +0000

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..

Tax Alert for Business Owners

The Menke Group — Thu, 12 May 2011 18:23:20 +0000

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..

New Law on S-ESOP Prohibited Allocations

The Menke Group — Wed, 11 May 2011 17:50:25 +0000

MEMORANDUM

From: Legal Department Date: January 2008

Subject: Prohibited Allocations in S Corp ESOPs

Section 409(p) of the Code, which was enacted as part of the Economic Growth and Tax Relief Reconciliation Act of 2001, sets forth anti-abuse rules for ESOPs that are maintained by S corporations. The following is to summarize the restrictions of Section 409(p), as follows:

Basic Rule: No assets of an ESOP may be allocated (directly or indirectly) for the benefit of any Disqualified Person if, at ...Read More..