Exploring the Benefits of ESOPs

Discover the advantages of Employee Ownership as an alternative to a corporate or equity buy-out! Find out why more and more brewers, who want to retire or need cash from their brand equity, are turning to ESOPs to reward the loyalty of their dedicated workforce. Learn how Employee Ownership can benefit both employer and employee in the volatile and ever changing market.

For brewery owners, the many faces of employee ownership offer numerous options if they decide to put up their business for sale. From corporate acquirers to equity buyers, and from Employee Stock Ownership Plans (ESOPs) to rewarding loyal workers, the faces of employee ownership can prove to be complex. For beer producers looking to take advantage of the many options for sale, here are the different employee ownership models one may consider.

1) Corporate Acquirer or Equity Buyer

One of the most common ways to sell a brewery and/or beer business is through a corporate acquirer or equity buyer. This type of sale involves a willing buyer and seller to come to an agreement on the purchase price and terms regarding the sale of the business. In these types of transactions, the seller will typically receive cash upon the sale of their business and the buyer will assume control of the company. This type of sale is often beneficial for sellers as it is a relatively straightforward process and can typically provide quick liquidity.

2) Employee Stock Ownership Plan (ESOP)

An ESOP is a form of employee ownership that takes place when an employee receives shares of a company as a benefit. With an ESOP, the employee has the opportunity to become a partial owner of the brewery. By creating an ESOP, the brewery owner can use part of the proceeds of the sale to establish a trust fund to buy out their ownership interest.

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ESOPs provide a number of benefits to the brewery owner. First, they can spread out the capital gains tax over several years. Second, they can help protect the brewery owner’s legacy. By having a portion of the proceeds of the sale go towards ESOPs, the owner can ensure that their workers will continue to benefit from their business after the sale is complete. Lastly, ESOPs provide employees with a vehicle to earn a share of the company’s profits, potentially increasing employee engagement and satisfaction.

3) Rewarding a Loyal Workforce

For some brewery owners, the idea of selling their brewery can be daunting. They may be motivated to sell due to retirement, financial needs, or simply the desire to pursue other opportunities. However, for some owners, selling the brewery does not have to mean ending their company’s legacy. Instead, some owners may choose to reward a loyal workforce through a stock appreciation right (SAR) or other equity-based incentive program.

With a SAR, the seller can reward their employees with a share of the proceeds of the sale by granting them rights to a portion of the proceeds contingent upon their continued employment with the company. This type of program allows the brewery owners to provide their employees with a tangible benefit while also providing them with an incentive to remain loyal to the company.

When it comes to selling a brewery, owners have several options. From a corporate acquirer or equity buy-out to an ESOP or rewarding their team with cash from a sale, brewery owners have the opportunity to create the best outcome for themselves, their business, and their employees. Each option brings with it a unique set of benefits, and the right decision for the brewery and its owners ultimately comes down to the specifics of their situation.

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