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Ownership Transition: Planning for Pitfalls

by Noel Maitland, Asst. Editor; Civil Engineering, New York, NY,


Serial Information: Civil Engineering—ASCE, 1991, Vol. 61, Issue 1, Pg. 72-73


Document Type: Feature article

Abstract:

The transition of a company's ownership can be a crisis caused by the retirement or sudden death of a company's owners, or an event planned for well in advance. One way to manage the transition is to broaden ownership, helping the company to keep its most talented people and transfer control gradually. Besides keeping the rudder attached to the ship and preventing outsiders from instituting unpopular or unprofessional policies, keeping the ownership of a company among its own keeps the company's image together: clients will still be dealing with people they know. Ownership privileges help keep good people with a company. This is especially important to engineering firms, whose most talented engineers may move into management or go to other companies if ownership is limited to management. An employee stock ownership plan (ESOP) is an increasingly popular way to bring about gradual transfers of company ownership and increase the involvement of its people. Apart from certain minimum requirements, an ESOP makes ownership open to all employees, who receive retirement benefits as a deferred benefit when the firm or their shares are sold. Benefits to the firm include significant tax advantages and employees' having more stake in the company's success.

Subject Headings: Employees | Taxation | Ships | Owners | Engineering firms | Client relationships

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