Oxburgh Row Financial Blog

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Employee Stock Ownership Plans can be a important part of an effective exit strategy. Are you familiar with all of the benefits of forming an ESOP?

The story of Schweitzer Engineering provides an example of some of the incredible benefits that can be derived from setting up an ESOP.

Ed Schweitzer, who founded a manufacturing firm that produces high-tech equipment for the electrical power industry, chose to convert the equity in his business into an ESOP. You probably know that Employee Stock Purchase Plans offer some significant tax benefits. But did you know that these tax benefits also can help ESOP-owned companies to heavily invest in R&D, expansion and acquisitions? That’s exactly what Schweitzer’s firm was able to do.

Another benefit of forming an ESOP: Higher levels of employee engagement. As it turns out, transitioning to an ESOP fostered the freedom to “run the business the way our moms would want us to,” said Schweitzer.