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| February 14, 2025Loading content…
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Tej Gonza links US ESOP plan terminations to capital-structure rules. From 2016 to 2021, about 250 new private ESOP firms formed each year while about 281 plans ended each year, a net loss of 181 firms. Bankruptcies run near 0.2 percent a year, so sales and repurchase pressure explain more of the decline. A rollover, value-based individual capital accounts, and a collective capital account would tie buybacks to cash flow and keep new workers in the ownership.
ESOP advisors, trustees, and owners of mature ESOPs can use the termination counts and the three capital-structure changes, rollover, value-based accounts, and a collective account, to redesign repurchase rules before a sale or a liquidity squeeze ends the plan.
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