A recent uptick in formations of employee stock ownership plans, known as ESOPs, has put the spotlight on the combined employee benefit and small business management succession tool that has been in existence since 1956. Were seeing tons of activity, says Keith Butcher, a founder of Butcher Joseph Hayes, a Clayton, Mo.-based investment banking firm.
A variety of factors the low cost of debt, rising capital gains tax rates, emerging social capitalism may be contributing to the bump, Butcher suspects. For the past decade, the number of active ESOPs in existence has held steady at around 7,000, but the number may now be rising, he says. Some benefit advisers small business clients might be candidates for establishing an ESOP, but their motivation and business circumstances must align for the idea to make sense.
