From a friend who recently acquired an ESOP business: "Not sure I would recommend it."
"It took us 6 months to closing from we signed the LOI.""Many third parties who aren't typically involved in sales processes, such as internal counsel, administrators, and trustees. They are effectively losing a client when the transaction occurs, so there's an incentive to move slow and maximize iterations. The due diligence is a minefield on the legal and HR sides."
"On the flipside, you can obtain a good valuation, because most buyers just don't want to deal with ESOPs. You can also fix the deficiencies in the ESOP structure, which usually rewards longevity over contribution. By realigning incentives, you can start rewarding top-performers (instead of company veterans) and eliminate sleepiness."
