As published in the National Center for Employee Ownership Employee Ownership Update, the U.S. House of Representatives passed a bill to block both the Securities and Exchange Commission and the Department of Labor from implementing new fiduciary rules for stockbrokers and other investment advisors. The SEC rules are being developed under the Dodd-Frank Act and are designed to ensure that brokers and certain other financial advisors are acting in their clients' interests, not their own. The DOL rules are not pursuant to any legislation but would require financial advisors to retirement plans to adhere to a much stricter set of fiduciary standards. The bill directs the SEC to conduct an additional study before issuing regulations and blocks the DOL from issuing its regulations until the SEC does.
The U.S. Department of Labor released data on retirement plans with 100 or more participants that shows ESOPs generally provided a greater aggregate rate of return than 401(k) plans. The average rate of return over the 15-year period from 1996 to 2010 was 6.9% for ESOPs, versus 5.8% for 401(k) plans. Both leveraged and non-leveraged ESOPs outperformed 401(k) plans, though leveraged plans had a higher average return . The report also found that:
Read MoreIn a New York Times Op-Ed piece, University of Maryland professor and policital scientist Gar Alperovitz discusses employee ownership in the context of the baby boom wave of privately-held businesses that will change hands in the next 16 years. Using the ESOP to secure a company's legacy, as well as utilize decades-old tax support, can make for a successful transition plan for the right companies. Click here to read this Op-Ed piece.
Read MoreGar Alperovitz, political economy professor at the University of Maryland and a founder of the Democracy Collaborative, provides some insights into the minds of Baby Boomer owners that are considering a transition of their businesses using an ESOP. This New York Times Op-Ed piece provides a balanced view of why more owners consider this strategy.
Read MoreSummit, NJ: Pilot Hill Advisors LLC announced today that the Employee Stock Ownership Plan of Pharmachem Laboratories has sold half of its shares. The proceeds from the sale will be professionally managed by an independent investment adviser retained by the ESOP trustee. Funded entirely by Pharmachem, this benefit represents a multiple of annual pay for the ESOP participants, on average. The company elected to reduce the ESOP’s ownership as part of a long-term ownership transition plan and to provide diversification inside the ESOP Trust. The ESOP will retain its remaining interest in Pharmachem stock for the foreseeable future.
Read MoreThe Financial Accounting Standards Board (FASB) announced that it would "indefinitely defer certain disclosures about investments held by a nonpublic employee benefit plan in its plan sponsor's own nonpublic equity securities." FASB had originally proposed disclosures that would have required a description of the specific valuation methods used and the specific rates applied. The impact of this ruling would have been to make public otherwise private valuation information for non-public ESOP companies.
Read MoreDivestopedia contributor, Scott Yoder, recently interviewed Jim Higgins, co-founder of Pilot Hill Advisors, regarding "Everything You Ever Wanted to Know About ESOP." The program offers insights in to the fact and fiction of ESOP transactions and offers expert observations on valuation, structuring, financing, feasibility and transaction analysis. Click here to open the interview and watch a recording or read the transcript.
Read MoreSummit, NJ: Pilot Hill Advisors LLC announced today that the shareholders of Cambridge, MA based Charles River Analytics, Inc. (www.cra.com) sold their outstanding stock to the company's newly-formed Employee Stock Ownership Plan (ESOP). Terms of the transaction were not disclosed. Pilot Hill Advisors LLC structured and negotiated the transaction on behalf of Charles River Analytics, Inc.
Read MoreSenators Ben Cardin (D-MD) and Pat Roberts (R-KS) recently introduced Bill 742, the "Promotion and Expansion of Private Employee Ownership Act."
Read MoreSummit, NJ: Pilot Hill Advisors LLC announced today that The Brewer Company (www.thebrewerco.com) has sold a majority interest to its newly-formed Employee Stock Ownership Plan (ESOP). Terms of the transaction were not disclosed. Pilot Hill Advisors initiated, structured, arranged financing and negotiated the transaction on behalf of The Brewer Company.
Read MoreThe American Taxpayer Relief Act, signed in to law on 1/2/2013, made changes in the recognition period for built-in gains taxes for C corporations converting to S status.
Read MoreAssemblyman Upendra Chivulula (NJ Disctric 17), the deputy speaker of the New Jersey State Assembly, introduced a bill to exclude from taxation any gains on the sale of at least 30% of a company to an ESOP or eligible worker cooperative (as defined by Section 1042 of the Internal Revenue Code).
Read MoreRIDGEFIELD, Conn., Jan. 2, 2013 (GLOBE NEWSWIRE) -- The Chefs' Warehouse, Inc. (Nasdaq:CHEF), a premier distributor of specialty food products in the United States, today announced that it has acquired substantially all the assets of Queensgate Foodservice, located in Cincinnati, OH.Founded in 1999, Queensgate is a distributor stocking more than 8,000 items, including a full line of produce, fresh meats and poultry, dairy, dry grocery, and frozen foods. They currently serve some of the finest restaurants, caterers, hotels, country clubs, and other operators in Ohio, Kentucky, and Indiana.
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