It is vital that the resolution of one critical issue not complicate another. There are several significant issues which must be addressed in building and perpetuating a solid, mid-market company. One central issue involves creating financial independence for those in the position of making that critical decision as to whether to sell or to perpetuate. These individuals have labored over a period of years and often have all of their eggs in one basket, making it difficult for them to take an objective viewpoint. Therefore, it is vital to help the founder create an independent estate.
Many people initiate ESOPs by thinking that they are succession plans.
They are not. In fact they can work just the opposite. An ESOP used without a succession plan will eventually kill the company. And if management is uninspiring, employees often leave the company to its self destruction. Therefore, it is crucial to first evaluate the management team by an independent assessment to be able to inform the CEO that such a team is capable of success.