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ESOP

Practices

ESOP Services

Our Employee Benefits & Executive Compensation, Corporate Transactions & Securities, Commercial & Public Finance, and Business Litigation practice groups have significant experience in providing ESOP‑related advice to employers, selling shareholders, trustees and lenders. We represent plan sponsors, selling shareholders, fiduciaries and lenders in complex ESOP formation and sale transactions and have extensive experience in the preparation, design, implementation and day-to-day operations of ESOPs and ESOP-owned corporations. Members of our firm have been retained as defense counsel in connection with ESOP regulatory activity and litigation over the years and are knowledgeable advisers should such a situation arise.

We constantly monitor trends and changes in the law to keep our clients updated on the latest developments that may affect their organizations. We are particularly active in the ESOP community, with our attorneys serving as leaders in the ESOP Subcommittee of the Employee Benefits Committee of the American Bar Association’s Tax Section, the Legislative and Regulatory Committee of the ESOP Association and the Ohio Employee Ownership Center. In addition, our attorneys are members of the Employee Owned S-Corporations of America and the National Center for Employee Ownership and frequently present to various chapters of the ESOP Association, at meetings of the NCEO and at many other employee benefits and human resources conferences.

Leaders in the Field

Our Employee Benefits & Executive Compensation practice is recognized among the best nationally by The Legal 500. Chambers USA: America’s Leading Lawyers for Business ranks our group as a Tier 1 practice in Ohio. Individual lawyers in our practice are selected annually to the Ohio Super Lawyers and Ohio Super Lawyers Rising Stars lists and profiled in The American Lawyer’s “Big Deals” section, as well as in local business publications. Our work with ESOP-owned companies has been specifically lauded within the publications that recognize the excellence of our attorneys.

Our Corporate Transactions & Securities and Commercial & Public Finance practices are nationally recognized by Chambers USA and listed in the top tier firm nationally by Best Lawyers® Best Law Firms. Individual attorneys are consistently recognized by Best Lawyers and Super Lawyers, among other accolades. Our Business Litigation practice is also nationally recognized by Chambers USA and has been named among the top firms in the country in four areas of litigation in BTI Litigation Outlook: Changes, Trends and Opportunities for Law Firms. Individual lawyers in this practice have been selected for inclusion in Benchmark Litigation, the only publication on the market to focus exclusively on litigation in the United States.

Comprehensive ESOP Services

We advise all parties involved in establishing a new ESOP – the company sponsoring the plan, the shareholders selling their stock, the trustee representing the employees’ interests and the lending institutions that provide liquidity for ESOP transactions.

Leaders

Our unique capabilities in representing companies that are transitioning to ESOP ownership begin with assisting in evaluating the feasibility of the company adopting an ESOP. We then advise on the corporate preparations that are necessary to facilitate a sale of the company to an ESOP, including facilitating corporate reorganization, evaluating vendor and client contracts, and reviewing any related party agreements, such as real property leases. Next, we assist the company in negotiating the terms of the sale of company stock to the ESOP and help prepare the necessary documentation to facilitate that transaction. This includes the adoption of the ESOP and its related trust, the preparation of the sales transaction documents and the negotiation of the terms of any financing agreements that provide the seller with liquidity upon the sale of the company. After the transaction, our multidisciplinary team is uniquely positioned to advise on the compliance matters involved in maintaining the ESOP and running the company with an eye toward employee ownership and sustainability. We also represent plan sponsors in divestures of stock or substantially all of the assets of the company sponsoring the ESOP.

We have advised a broad range of plan sponsors, including:

  • The largest franchisee of a national automobile service company
  • A food manufacturer for private label meats
  • An electric company with both union and non-union employee bases
  • A heating, ventilation and air conditioning company with both union and non-union employees
  • A temporary staffing company

We can assist selling shareholders with the various aspects of selling their equity in the company, including providing personal tax guidance, which may encompass family wealth planning, including distribution of equity or transaction proceeds to children, and/or the creation of estate planning trusts or family limited operating companies. In representing the selling shareholder, our goal is to protect their interests from the risks associated with regulatory oversight of the related party ESOP transaction.

Representative shareholder clients include:

  • The shareholder of an industrial food manufacturer
  • The shareholder of an integrated craft company

We have significant experience in representing ESOP trustees, including institutional trustees (e.g., banks and trust companies) and individuals serving as ESOP trustees. We represent trustees in negotiating and documenting their fiduciary processes in connection with transactions in which the ESOP buys shares of the company’s stock; in connection with corporate events that require trustee oversight following the ESOP’s acquisition of the company’s stock; and in divestures of the company’s stock or substantially all of the assets of the company sponsoring the ESOP. We also represent trustees in regulatory investigations and litigation involving the trustee’s discharge of its fiduciary duties.

Trustee clients we’ve advised include:

  • A multinational bank’s institutional trust company in various acquisition and divesture transactions
  • A community bank’s institutional trust company in various acquisition and divesture transactions
  • A state chartered trust company in various acquisition and divesture transactions and in regulatory review of party-in-interest transactions
  • An individual serving as ESOP trustee and independent fiduciary in connection with various acquisition and divesture transactions, regulatory review of party-in-interest transactions, and litigation involving the trustee’s fiduciary obligations in connection with ESOP operation and administration
  • Internal employees serving as trustees and named fiduciaries of an ESOP in connection with plan administration

We have a long history of assisting banks and other lending institutions in connection with lending to companies that are taking on leverage to facilitate a sale of the

company’s stock to an ESOP. We combine the know-how of our Commercial & Public Finance group with the experience of those in our Employee Benefits group who focus on ESOPs to provide a cost-effective solution for the bank and the borrower. In addition, the depth of both practices allows us to effectively assist in real estate-based and syndicated lending transactions undertaken to facilitate an ESOP transaction.

Representative lending institution clients include:

  • A multi-state bank in connection with lending into various ESOP transactions
  • A regional bank in connection with facilitating a term loan for a company that was utilized to fund the sale of the borrower’s stock to an ESOP