The only thing about an ESOP that can make things difficult is the valuation of the ownership percentage. I have seen this also in many privately held corporations. A family member or employee with equity wants to leave. They want to be paid for their stock. Equity in private companies is worthless unless you have controlling interest.
It may make the employee feel rewarded and feel ownership and give them bragging rights. But at some point when someone is unhappy or wanting to move on, they seem to think they can just cash in. It normally does not happen. Most privately held companies will not want to buy stock from an employee or family member, they would rather spend that money on payroll, bonuses and investment in the company, assuming there is an excess of cash. I bought out one former employee for $100. They were PISSED and insulted at the offer. So then I said, “OK, we had a nice year and your tax liability will be $10K, so happy to share that tax burden with you”. They took the offer. From: Mark Radabaugh Sent: Sunday, August 23, 2020 10:58 AM To: AnimalFarm Microwave Users Group Subject: Re: [AFMUG] Buying and selling ISP’s One of the most interesting thing about an ESOP that I didn’t realize is that the control of the company does not need to be under the control of the employees. The employees can hold 100% of the stock and still have zero control of the company. Employees don’t directly own the stock, a trust holds the stock, and the trustee votes it as directed by the board. You can set the control of the board up any way you want. Mark On Aug 23, 2020, at 12:48 PM, Mike Meluskey <[email protected]> wrote: Everyone should listen to Chuck re: all subjects of this entire thread. The replace bologna with Spam thread….not so much. On 23 Aug 2020, at 12:35, Chuck McCown wrote: I will never give employees ownership again. Has a couple really bad experiences with that. Sent from my iPhone On Aug 23, 2020, at 6:09 AM, Mark Radabaugh <[email protected]> wrote: Or do the compromise between you and Matt - the ESOP where the employees end up owning it. You get nearly the same money out and they eventually get the same deal - if they can keep it going and build it. It’s harder because you have to figure out how to both get it to cash out and build at the same time. Mark On Aug 23, 2020, at 7:59 AM, Lewis Bergman <[email protected]> wrote: This isn't the feel good kumbaya that might be popular, but I'll say this on the subject of division of profits: I started my WISP by myself. All of you who started with your own checkbook and sweat know what that took. My family sacrificed as I worked massive hours. I did everything from accounting to server builds maintenance to installs and tech support. All while I was making about 1/3 of minimum wage while I did it. We lived off my wife's school teacher salary. I did that for a pretty short time as we had some early success and after a couple of years I started hiring people. By the time I sold I did what I wanted when I wanted. The people I hired I paid better than average hourly wages for the job and gave bonuses paying them for their work as they did it. I never asked any of them to sacrifice like I did nor did they offer. I took all the risk. If we failed I was the one in financial ruin. They could all walk away inconvenienced but fairly unscathed while I was personally liable for all company credit cards, vendor payments, carrier contracts, etc. And of course you can tell where this is going. Myself and the other shareholders kept every dime and I sleep fine at night. I worked to help get all the best employees jobs. Sure some were angry because they somehow felt they deserved something. Those were also the same employees I could have and probably should have already gotten rid of as they were problem children. Risk and reward. I took the risk, I get the reward. You want rewards? Take the risk. I did give a few people bonuses, help setup two in related businesses without loans (funneled business their way) but it was not any kind of % or really all that significant.I did that because they had been good people first, hard workers second, and last but not least, made my life easier when we were doing our thing. I am a capitlist and make no apologies for it. On Sun, Aug 23, 2020 at 6:16 AM Matt Hoppes <[email protected]> wrote: Now that I think about it - I wonder if my plan of C would be a way to reduce income taxes too on the amount received? Either by funneling the money through the company and paying the employees or having the buying company write a check to each of the key employees. I’m not sure which would yield better results for everyone. The way I look at it though - I don’t have hard partners. That often leads to problems. But everyone who sticks with the company and especially if they make a career out of it should be compensated nicely - both each year out of proceeds they helped make as well as out of a major sale if it ever happens. If anyone here has ever worked for a company where the owner sold and got 2 million and you had worked there for 10 years building it up —— well, how did you feel? Slap in the face. -- AF mailing list [email protected] http://af.afmug.com/mailman/listinfo/af_af.afmug.com -- Lewis Bergman 325-439-0533 Cell -- AF mailing list [email protected] http://af.afmug.com/mailman/listinfo/af_af.afmug.com -- AF mailing list [email protected] http://af.afmug.com/mailman/listinfo/af_af.afmug.com -- AF mailing list [email protected] http://af.afmug.com/mailman/listinfo/af_af.afmug.com -- AF mailing list [email protected] http://af.afmug.com/mailman/listinfo/af_af.afmug.com -------------------------------------------------------------------------------- -- AF mailing list [email protected] http://af.afmug.com/mailman/listinfo/af_af.afmug.com
-- AF mailing list [email protected] http://af.afmug.com/mailman/listinfo/af_af.afmug.com
