Employee Stock Ownership Plan Compliance/Transaction Matters
Morgan Lewis offers clients one of the nation's largest dedicated ESOP teams, composed of attorneys with backgrounds in the various legal disciplines ESOP and other types of liquidity transactions call into play. Members of our ESOP Team advise clients regarding federal taxation, employee benefits, corporate law, banking law, and financing matters.
We serve clients in the following industries:
We have counseled public and private corporations, family-owned businesses, ESOP fiduciaries, lenders, management groups, and private equity firms on the use of ESOPs in hundreds of transactions, including:
- Mergers and acquisitions
- Shareholder liquidity transactions
- Leveraged buyouts
- Management buyouts funded with equity held in other qualified retirement plans
- Corporate stock repurchases
- Ownership succession transactions
- Private equity transactions
- Succession and exit planning
- Hostile takeover bids
- Third-party sales
- Fiduciary insurance coverage review and recovery
We have also counseled existing ESOP companies with respect to ESOP recapitalizations, ESOPs as a corporate acquisition tool, and sales of ESOP companies to strategic and financial buyers. We provide advice to strategic business partners in the areas of senior lending, mezzanine finance, private equity, institutional trustees, and independent fiduciary.
Morgan Lewis is a member of The ESOP Association, the National Center for Employee Ownership (NCEO), the Employee Owned S Corporations of America (ESCA), the Association of Corporate Growth (ACG), and the Family Firm Institute (FFI). Members of our ESOP Team actively participate in the activities of these organizations, serving in leadership positions and participating in their educational and lobbying efforts.
Our ESOP-Related Services
For clients who wish to implement ESOPs, we:
- Counsel on the structure of the transaction
- Assemble and manage the transaction team
- Assist with securing the financing (senior lenders, private equity investors, mezzanine lenders, 144A financing, and other sources)
- Counsel on plan feasibility and design
- Prepare the plan, trust agreement, and ESOP transaction documents
- Review and negotiate bank and mezzanine loan agreements and related security documents
- Review and negotiate equity investment agreements and related documents
- Prepare legal opinions for lenders and other parties to the transaction
- Prepare and file ruling requests with the IRS, the Department of Labor (DOL), and the Securities and Exchange Commission (SEC)
- Counsel on "best practices" in corporate governance
For clients who have ESOPs in place, we:
- Manage ongoing compliance with applicable regulatory requirements
- Assist with securing financing for both capital needs and/or acquisition strategies
- Provide valuable counsel with respect to ESOP corporate, tax, and benefits matters in the context of an offer of purchase
- Counsel on ESOP corporate, tax, and benefit matters in the context of recapitalizations of the ESOP company
In addition to representing companies that sponsor ESOPs, we also represent ESOP trustees and lenders to ESOPs. We advise trustees regarding their responsibilities under ERISA and their trust agreements. In addition, we:
- Counsel on compliance with legal requirements
- Conduct due-diligence investigations of the business and legal affairs of corporations the stock of which trustees are negotiating to purchase
- Assist trustees in the review of valuation reports and of "adequate consideration" and fairness opinions from financial advisors
- Counsel regarding the conduct of "pass-through" votes on major corporate transactions
- Assist in connection with the monitoring of corporate governance of ESOP companies
- Counsel regarding how to respond to IRS, DOL, SEC, and NASD audits and investigations
- Provide counseling and representation in litigation
- Review plans and other documents to assure that they are legally prepared and implemented
On behalf of lenders, we:
- Counsel on structuring loan instruments (including senior, mezzanine, and subordinated loan documents)
- Counsel on compliance with legal requirements
- Draft loan documents and related security agreements
- Conduct due diligence investigations of the business and legal affairs of the borrower
- Review all transaction-related documents to ensure that they are legally prepared and implemented
The Morgan Lewis ESOP Team has the experience and resources to reach beyond traditional thinking and apply innovative ideas and methods that deliver success for clients. As a valuable business partner, we pursue your interests, create solutions that meet your business goals, and connect you with strategic partners in the ESOP community (ESOP lenders, valuation firms, and trustees). Over the years, we have worked with our clients to develop innovative uses for ESOPs, including the use of ESOPs in private-equity transactions, going-private transactions, and other complex corporate financial transactions.
We know the laws, the procedures of governmental agencies, and the legislation pending before Congress that can affect your interests. We even work to change the laws when necessary. Most importantly, we get to know your business and strive to understand your goals and challenges in order to gain a perspective that makes creative and long-lasting solutions possible.
We have devoted our careers to mastering the body of laws and regulations that affect our ESOP clients. In the process, we have become leaders in the ESOP community, taking on important roles in the national ESOP lobbying and educational associations, regularly lecturing at ESOP seminars, and writing leading articles and books on the subject of ESOPs.
We offer you a wide array of options and solutions to address your needs. Whether you are looking for completion of an ESOP transaction (purchase or sale), resolution of a dispute, representation at trial, or solutions to regulatory problems, Morgan Lewis works with passion, integrity, and vigor to promptly deliver creative ideas and solutions that lead to success.
In addition to our work in connection with the design and implementation of ESOPs, where necessary we also counsel ESOP companies and ESOP trustees in the defense of governmental investigations and litigation. We regularly supervise responses to audits and investigations of ESOPs conducted by the DOL and by the IRS. We also regularly defend ESOP companies and ESOP trustees in litigation, including “stock drop” litigation and “plan fees” litigation, and we have been lead counsel in several landmark ESOP cases. In addition, the co-chair of our ESOP Team, David Ackerman, has served as an expert witness in several recent major ESOP cases. Our experience in ESOP litigation enables us not only to effectively defend claims brought against ESOP companies and ESOP trustees, but also to counsel them effectively regarding how to avoid litigation.
ESOP Team Leaders
The Morgan Lewis ESOP Team is headed by two of the most well-known ESOP attorneys in the country: David Ackerman and John Kober. David and John each have more than 20 years of experience working on ESOP transactions. They have long been leaders in the ESOP community and have held numerous leadership positions in The ESOP Association, the NCEO, and ESCA. In addition, they speak frequently on the subject of ESOPs at national conferences of the leading ESOP organizations, and they have written comprehensive articles on ESOPs, including the leading treatise on the legal responsibilities of ESOP fiduciaries.
Other Morgan Lewis partners involved in the leadership of the Morgan Lewis ESOP Team are Dan Hogans, Brian Hector, Scott Adamson, and Betsy Perdue. Like David and John, they all are actively involved in the affairs of The ESOP Association and the NCEO. Each of them serves on one of the national advisory committees of The ESOP Association, and they all lecture and write regularly on the subject of ESOPs.