ESOPs for Liquidity and Succession in Engineering Firms
Publication: Leadership and Management in Engineering
Volume 4, Issue 3
Abstract
Several prominent engineering firms have used Employee Stock Ownership Plans (ESOPs) to facilitate shareholder liquidity and management succession. This article explains what an ESOP is and how ESOPs work. ESOPs are tax-qualified retirement plans, designed to invest primarily in employer stock. However, they are also commonly used as a succession planning method, which has been particularly useful for civil engineering firms whose key assets are their employees. In essence, an ESOP creates a friendly market for a closely held business and is a tax-favored alternative to selling a company, as ESOPs are able to be funded with pre-tax dollars. The article concludes with a case study valuable for all engineering executives, describing how a Philadelphia-based engineering firm effectively used an ESOP to transfer ownership of the firm to its key managers.
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Copyright © 2004 American Society of Civil Engineers.
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Published online: Jul 1, 2004
Published in print: Jul 2004
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