Using an ESOP to Liquidate a Portion of the Value of a Family Business  - CLEO Skip to main content


At age 62 and 60, respectively, Bill and Joan were convinced that it was time to retire and pursue their lifelong ambitions to travel while they still had the vigor to do so. Bill Junior had made it clear that he hoped to run the business one day – something the parents hoped to see. But what about Suzie and John? ‘And what about us,’ thought Bill and Joan. ‘We certainly want to be financially comfortable.’ The challenge, in short, was devising a plan that would assure attractive futures for themselves and their loved ones.

Technically, an ESOP is a retirement plan and serves the purpose of accumulating retirement savings for the company’s employees. In practice, however, there is more to it. While it’s true that these programs have accumulated significant retirement savings for the covered employees, the biggest reason for the popularity of ESOPs is that they can act as a cash buyer of private company stock, thus creating a source of liquidity for the company’s owners.