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What’s the first step to determine if an ESOP is right for you and your Company?
The first step in determining if an ESOP is right for you and your company is to complete a feasibility process with the assistance of the ECSI team. The feasibility process starts with a thorough review of your goals and objectives. After establishing your goals and objectives and reviewing your Company’s financial statements, we offer two levels of feasibility analysis:
1. A Preliminary Analyses which includes:
- A current estimated market value of your company
- Modeling and structuring a basic transaction based on your goals and objectives
- Evaluating the impact of the ESOP transaction on the company’s current financial statements and cash flow
- Assessing your financing options
2. A Feasibility Study
Our Feasibility Study is a more rigorous and expanded version of our Preliminary Assessment. The Feasibility Study will consider:
- Projections of the net income and cash flow of your company into the future both with and without an ESOP
- Projections of covered payroll of participating employees
- Thorough analysis of both the pre-transaction and post-transaction value of your business
- Forecast employee accumulations in the ESOP and in your other benefit plans
- Forecast the net wealth effect of the transaction on the seller and all other shareholders
- Analyze the effect of the transaction on corporate governance issues
- Prepare a employee communications plan
- Forecast the repurchase obligation created by the installation of the plan
If the analysis concludes that an ESOP is feasible for your Company, the ECSI team will prepare a project management plan to establish a timeline and budget that meets your needs.
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