DATE RELEASED: 04/11/19

A new bill was introduced in California on February 22, 2019, by Senator Scott Wilk (R). The bill, SB-553, would provide an incentive for some California businesses to adopt employee stock ownership plans, better known as ESOPs. Two major problems facing the United States today are the vast number of Americans with little to no retirement savings and the many owners of small- to medium-sized businesses with no succession plan in place for when they retire. The widespread adoption of an ESOP...

DATE RELEASED: 04/09/19

Like every state in the U.S., Massachusetts is worried about what will happen when the baby boomer owners of thousands of small to midsize businesses reach retirement age, in what is being called the "silver tsunami." Fewer and fewer small business owner now expect to pass their enterprise onto their children and many older entrepreneurs, concerned about the possibility of having to shutter their businesses and lose their years of investment, have turned to selling to large conglomerates or...

DATE RELEASED: 04/03/19

The IRS has published an Issue Snapshot discussing methods for preventing an Internal Revenue Code (IRC) Section 409(p) violation for S corporation employee stock ownership plans (ESOPs).

The IRS explains that the rules under IRC Section 409(p) are designed to prevent a group of "disqualified persons" (DPs) from collectively owning 50% or more of an S corporation's stock (i.e., the definition of a "nonallocation year"). Since there are no prescribed correction methods to address...

DATE RELEASED: 04/02/19

We're both planning to attend the annual conference of the National Center for Employee Ownership in Pittsburgh next week. The prospect got us thinking about employee stock ownership plans, or ESOPs, which are even now one of the most misunderstood and underutilized devices in an entrepreneur's toolkit.

Let's review the bidding. At some point you will want to retire from the company you founded. If you don't have a son or daughter ready to take over, you will probably want to sell the...

DATE RELEASED: 04/01/19

The owners of Bowers + Kubota Consulting, Inc. sought to dispose of their interest in their company by forming an ESOP. They appointed attorney, Saakvitne as trustee of the ESOP and obtained a valuation of the company before negotiating the sale of their shares to the ESOP. The Department of Labor sued the owners, company, and trustee for breaches of fiduciary duty and prohibited transactions in Hawaii federal district court. The DOL alleged that the appraisal of company shares used to fund...

DATE RELEASED: 03/31/19

The namesake founder and owner will be retired, but the Richard L. Bowen + Associates architecture and engineering firm will keep the name as employees conclude their purchase through an employee stock ownership plan.

"There's a brand there. Why would we want to change it?" said Allan Renzi, the prominent firm's new president.

The transfer of the last 60% of the Cleveland firm's ownership is scheduled to close on Monday, April 1.

The ESOP has been long in the works as...

DATE RELEASED: 03/27/19

Two, long-standing family-run enterprises unite for greater opportunities and to offer customers more end-to-end supply chain solutions.

Burris Logistics, provider of end-to-end supply chain solutions, announced today that it has acquired Trinity Logistics.

"We are pleased to welcome the team members, agents, customers and carriers of Trinity Logistics to the Burris family," shared Donnie Burris, President/CEO of Burris Logistics. "As a $3 billion-dollar...

DATE RELEASED: 03/26/19

Entertainment Partners, a major payroll and software company, on Tuesday announced that it has agreed to be acquired by TPG Capital, a private equity firm that is also a majority owner of talent agency CAA. EP's current management team will continue in their roles, the company said in a statement.

The acquisition of the employee-owned EP, whose clients include several major studios and many production companies, comes amid a wave of consolidation and investment in the entertainment...

DATE RELEASED: 03/26/19

Food City Holdings Inc., doing business as Food City and Save-A-Lot food stores, has completed a transaction to become 100% employee-owned through its employee stock ownership plan.

Founded in 1985, the Lewiston company is owned and managed by father-and-son team Stanley and Zak Sclar. It employs 320 people in nine stores, including seven Food City stores in Maine, Vermont and Massachusetts, and two Save-A-Lots in Maine.  Food City has...

DATE RELEASED: 03/20/19

Senators introduced a bipartisan bill that would encourage employee stock ownership as a means of retirement savings for workers. U.S. Senators Pat Roberts (R-Kan.) and Ben Cardin (D-Md.) introduced Senate Bill 177 which would, in part, expand the creation of S Corporation ESOPs. Introduced on January 18, 2019, the new bill has the support of 24 Democrat and Republican sponsors.

The Promotion and Expansion of Private Employee Ownership Act (S.177) is identical to the prior Senate bill...

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