Maturing ESOP
Occasionally ESOP Companies are acquired, often resulting in the termination of the ESOP. The ESOP enters a winding-down process of the Trust, its assets, and the distribution of those assets to all the participants. When an ESOP is terminated, great care must be taken to ensure that the provisions of the Plan are updated in connection with the transaction and the related Plan termination. Understanding all the critical elements of the transaction and the impact on the ESOP (which could include participant pass-through voting, the dissolution of the Company and any unique plan asset distribution rules), requires an experienced advisor for the Company who sponsors the ESOP.
Engaging Menke as the Company’s ESOP termination advisor will mean that our team will work closely with the Company and its advisors as well as the ESOP’s Trustee and their advisors in all phases of the ESOP termination process.
Overall Plan Termination Consulting and Coordination
One of Menke’s senior advisors will provide to the extent needed the following services:
- Coordination with the Company and its advisors regarding engagement of an Independent Trustee.
- Working with the Company and its counsel regarding the review and analysis of the ESOP’s role and participation in the sale/termination transaction.
- Coordination with the ESOP Trustee and ESOP Valuation Advisor regarding valuation updates, Fairness Opinions and Adequate Consideration Opinions.
- Coordination with the ESOP recordkeeper, Company and Trustee regarding distribution procedures
Termination Recordkeeping Service
Once the ESOP termination provisions have been established, Menke’s recordkeeping team provides the following services:
- Review of prior recordkeeping, completion of currently required recordkeeping and completing interim allocations to reflect the ESOP termination provisions.
- Collection and collation of all information required for preparation and filing by counsel of IRS Form 5310, Application for Determination on Terminating Plan.
- Preparing, distributing and processing of distribution election forms for Participants as directed by ESOP Plan Administrator and Trustee.
- Preparation of interim and annual Participant statements and Trustee distribution directives, until ESOP Trust is fully distributed.
- Assisting in locating “lost” participants or beneficiaries.
- Preparation of checks and related Forms 1099 or preparation for ESOP Trustee of related electronic file.
- Participant communication services and responding to Participant inquiries
Sell-side Investment Banking Advisory
Menke can also assist the company in the sale of the business from an investment banking viewpoint (run the sale process & help negotiate price and terms). See https://www.menke.com/ma-advisory-services/
If you need to wind down your ESOP, Contact your Menke Advisor today to discuss our comprehensive ESOP termination services.
