ESOP Workbook. Robert A. Frisch. The Ultimate Instrument in Succession Planning. Second Edition. John Wiley & Sons, Inc.

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1 ESOP Workbook The Ultimate Instrument in Succession Planning Second Edition Robert A. Frisch John Wiley & Sons, Inc.

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3 ESOP Workbook

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5 ESOP Workbook The Ultimate Instrument in Succession Planning Second Edition Robert A. Frisch John Wiley & Sons, Inc.

6 Copyright 2002 by John Wiley & Sons, Inc. All rights reserved. Published by John Wiley & Sons, Inc. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate percopy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) , fax (978) Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY , (212) , fax (212) , PERMREQ@WILEY.COM. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. This title is also available in print as ISBN X. Some content that appears in the print version of this book may not be available in this electronic edition. For more information about Wiley products, visit our web site at

7 About the Author Robert A. Frisch is Chairman/CEO of The ESOT Group, Inc., headquartered nationally in Woodland Hills, California. The firm, incorporated in 1975, specializes in the implementation and continued management of Employee Stock Ownership Plans (ESOPs) and has implemented hundreds of ESOPs throughout the country. Frisch was a founder of a multistate financial corporation that was acquired by a conglomerate. He became vice president of a major Wall Street firm in charge of total financial planning for all their offices nationally. Frisch consults extensively with owners of closely held companies on perpetuating the family business and with public and private companies on management buyouts. The ESOT Group, Inc., known as the premier one-stop ESOP company, implements ESOPs and other equity-based compensation plans on a tailor-made turnkey basis. The company s services include strategic planning, feasibility studies, ESOP plan design, obtaining IRS letters of determination, financing, repurchase liability studies, communicating the ownership culture to employees, and plan administration. The firm maintains a free 24-hour ESOP information hot line, (800) 422-ESOP (3767). Frisch is author of seven definitive books on ESOPs and is a frequent lecturer to trade groups of CEOs, CPAs, and financial planning groups on ESOPs. He is considered one of the major figures in the ESOP movement. v

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9 Preface The author has written six earlier books plus his current one, ESOP: The Ultimate Instrument in Succession Planning, John Wiley & Sons, Inc., publisher (ISBN: ), but, although those books give a comprehensive treatment of the subject of Employee Stock Ownership Plans (ESOPs), none has ever provided a practical step-by-step guide that forces the reader through the paces of thought that must be considered in order to come to a proper conclusion in providing for the orderly transition of one s business. This situation is rectified in this new publication, ESOP Workbook: The Ultimate Instrument in Succession Planning. The method of forcing, or putting one through the paces, comes into play because selections must be made and blanks must be completed. In this way, the reader will know that he or she has thought about virtually all of the alternatives surrounding selection of the many methods of succession planning. If the solution involves an ESOP, then the reader will be able to assist his or her advisor in the design process, thereby enabling the advisor to have a better understanding of the client s wishes. The ESOP Workbook is designed to make the succession planning experience a pleasurable one, although it involves one of the most difficult of all business decisions. The good news is that The ESOP Workbook is likely to be used on only one occasion, and the decision that the book motivates will be the final one because the subject will be so thoroughly explored. vii

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