If you were ever curious about starting an Employee Stock Ownership Plan (better known as an ESOP) the N.J. Economic Development Authority and Rutgers University can provide the information you need – and perhaps some financing to help, too.
The Rutgers Institute for the Study of Employee Ownership and Profit Sharing is supporting the New Jersey Economic Development Authority’s new ESOP Assistance Program; it was announced Monday.
Rutgers will educate business owners about the benefits of ESOPs, and, for the first time ever, the EDA will provide financial assistance to qualifying business owners who want to create one.
An ESOP enables a business owner to sell the company to their employees through a trust, rather than selling to outside buyers. This carries tax incentives and preserves the company culture they have worked a lifetime to establish. The employees pay nothing. They receive shares in the company over time, building long-term wealth. And since they now have a stake in the success of the company, they are motivated to work harder and stay longer.
Companies often use this initiative when they do not have family heirs to take over the company.
Bill Castellano, associate director of the Rutgers Institute for the study of employee ownership and profit sharing, said this could be a transformational moment for New Jersey business owners.
“Our research shows that an ESOP can improve performance and productivity, save jobs, and help employees to build wealth,” he said. “The problem is that many business owners don’t know it’s an option, or they don’t have the money to hire a consultant to explore it. That’s where this new program will help.”
