The form of the transaction, whether a stock or asset purchase, is the first issue to consider in determining the ESOP’s involvement in the impending transaction, as well as what type of liability the buyer may be assuming relative to the ESOP. (Photo: Fotolia)

One of the management team members let out a gasp.  Two others shook their heads in disbelief and angst.  The senior leader on their team had just informed them that the company they had been strategically targeting over the last several months was employee-owned, or at least partially employee-owned, through an Employee Stock Ownership Plan (ESOP).

Several people on the team had heard stories of the ESOP at Enron, as well as ESOPs that have been the subject of contentious government investigations.  But the real cause for their concern was fear of the unknown:  how to proceed with the acquisition, what will involvement by the ESOP look like, and what are the real concerns and how should they be addressed.

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