Vedder Price attorneys have structured, implemented and executed many of the largest and most complex transactions involving employee stock ownership plans (ESOPs). Our clients have utilized ESOPs to accomplish the following business goals:

• Create shareholder liquidity on a tax-advantaged basis
• Fulfill broad-based employee ownership
• Facilitate roll-up transactions or spinouts of subsidiaries, divisions, portfolio companies or other businesses
• Implement private equity investments in, or of, ESOP companies

Our attorneys regularly represent employers, institutional trustees and independent fiduciaries, selling shareholders, senior and mezzanine lenders, and private equity firms in a broad range of ESOP transactions. In addition to our ESOP transaction work, our attorneys frequently represent ESOP companies in ongoing compliance and regulatory matters, and our trial attorneys have successfully represented ESOP fiduciaries in notable cases.

Areas of Focus

• Shareholder liquidity transactions
• Sale transactions
• 100 percent employee ownership structures
• Roll-up transactions
• Sales of subsidiaries, divisions and portfolio companies
• Carve-out transactions
• Plan-to-plan transfers
• ESOP-to-ESOP acquisitions
• Private equity transactions
• Ownership succession and estate planning
• Minority co-investment transactions
• Capital investment in ESOP companies
• Structured equity transactions
• Recapitalizations
• Compliance with special rules for ESOPs and S corporations
• Equity compensation structures for ESOP companies
• ESOPs as shareholders of public companies
• Integration of ESOPs with 401(k) plans (KSOPs)
• Ongoing ESOP plan qualification advice
• ESOP litigation
• DOL investigations
• IRS audits and tax controversy

Coordinated Transaction Guidance

ESOP transactions and related matters typically touch many areas of the law, including corporate law and corporate governance, mergers and acquisitions, tax, banking, securities, employee benefits, ERISA, executive compensation, insurance and estate planning. We coordinate guidance and resources from across our various legal practice areas to provide a broad-based multidisciplinary approach to ESOP transactions and other matters.

ESOP Finance

Vedder Price represents lenders and borrowers in all aspects of ESOP-related finance transactions, including the following:

• Due diligence
• Loan structuring, including senior, mezzanine and subordinated loans
• Intercreditor agreements
• Related security agreements
• Ancillary loan documents
• Compliance with ESOP-specific legal requirements

Well versed in the unique issues involved in negotiating and documenting ESOP loans, we also have a deep understanding of the tax incentives and other benefits associated with this type of financing. Our broad ESOP lending experience ranges from the most basic working-capital revolving loans to highly complex syndicated lending and private equity transactions.

ESOP Litigation

We represent our ESOP clients while keeping their business goals in mind, which includes counseling them on ways to avoid litigation in the first place; however, Vedder Price lawyers have represented clients in notable ESOP-related litigation. Furthermore, we represent clients in DOL and IRS audits and investigations of ESOP companies and transactions.