Why Your ESOP Needs to Consider Acquisitions: Not the Usual ABCs of How to Do Acquisitions

ESOPs can amass significant amounts of cash, particularly 100% S-Corp ESOPs. A great deal of attention has been given to the “hows” of acquisition by ESOP companies: defining acquisition targets and building pipeline, due diligence, transaction structuring, integration, and communication and culture. Less attention has been given to the why's or motivations for doing acquisitions and the fiduciary imperative of considering acquisitions, particularly for companiess that are amassing significant amounts of cash which, even when invested professionally, can often create a drag on return on assets and growth of share price. Worse, investments can cause a significant disconnect in the messaging of employee ownership when investment returns run counter to operating company performance. This panel brings together the former CEO of an acquisitive ESOP, legal counsel with decades of structuring acquisitions, and a seasoned M&A investor who is looking to create more ESOPs, to discuss the imperative for considering acquisitions.

NCEO Publication: Acquisition Strategies for ESOP Companies, 3rd Ed.
NCEO Resource: Being Acquired by an ESOP Company Toolkit
NCEO Peer Network: ESOP Finance Working Group