While all kinds of businesses become employee stock ownership plan (ESOP) companies, there is a large percentage of engineering firms that have chosen the ESOP structure. Why so?
Like many privately held companies, engineering firms struggle with an optimal long-term succession plan. The founders of most engineering firms worked hard and took risks early on to build their successful businesses. Many owners also appreciate the hard work that their employees have contributed over the years. While many owners would like to sell the business to their employees, most employees do not have the wealth built up to buy the business directly. Implementing an ESOP offers indirect employee ownership while allowing the founders a flexible mechanism to ease out of the business over time.