Employee Stock Ownership Plans, or ESOPs, are benefit plans that give the employees of a company ownership stock in the business. For some business owners, and for some businesses, it can be a great option. However, there certainly are disadvantages of ESOPs and we’ll highlight some potential pitfalls that small business owners may run into if they choose the ESOP route.  Don’t get us wrong, we love ESOPs. Their result can be excellent for employee morale and retention and the tax benefits can be astounding! However, for many lower middle-market companies, there are often much better options for selling your business. Unless your company is in the bracket of 40+ employees, has a strong management team, and produces relatively consistent financial results, we would advise you to proceed with caution as the disadvantages of ESOPs may outweigh the advantages. Potential Disadvantages of ESOPs Low Business Valuation Generally speaking, an ESOP isn’t going to get you, as the seller, the highest price on the business. When utilizing an ESOP as an exit strategy, the price that an ESOP can offer per share is limited to the fair market value of those shares. This price is generally lower than the company would […]