Managing Director, Wealth Management, Financial Advisor, Corporate Client Group Director
Phone:
(312) 419-3554(312) 419-3554
The ESOP Group at Morgan Stanley
Direct:
(833) 822-1042(833) 822-1042
Our Mission Statement
Helping Business Owners Access Their Wealth, Maintain Their Legacy, and Reward Their Employees Through Employee Stock Ownership Plans and Other Exit Strategies.
Our Approach
Owners of privately held businesses who have dedicated their lives to growing their companies, often have not taken a deep introspective look at their succession planning objectives. For business owners, these objectives combined with the goals for the company, employees, and family are critical to an overall strategic plan to enhance the value of the company as they prepare to exit the business.
As Financial Advisors, we work closely with business owners (in tandem with their Private Wealth Advisor) to ensure that their business succession objectives align with the best liquidity alternative, to maximize value for the shareholder and diversify their wealth.
ESOP transactions are often an excellent alternative for business owners and provide significant benefits to the employees, the company and to the business owners. An ESOP is a qualified retirement benefit plan that allows employees to own shares of their company's stock that are converted to cash when they retire. The overall impact of employee ownership is designed to benefit employees who remain with the company and contribute the most to the company’s future success.
We help business owners assess their individual needs and goals to determine if an ESOP is the right choice for them. We also provide guidance and support throughout the ESOP process.
As Financial Advisors, we work closely with business owners (in tandem with their Private Wealth Advisor) to ensure that their business succession objectives align with the best liquidity alternative, to maximize value for the shareholder and diversify their wealth.
ESOP transactions are often an excellent alternative for business owners and provide significant benefits to the employees, the company and to the business owners. An ESOP is a qualified retirement benefit plan that allows employees to own shares of their company's stock that are converted to cash when they retire. The overall impact of employee ownership is designed to benefit employees who remain with the company and contribute the most to the company’s future success.
We help business owners assess their individual needs and goals to determine if an ESOP is the right choice for them. We also provide guidance and support throughout the ESOP process.
Check the background of Our Firm and Investment Professionals on FINRA's BrokerCheck.*
What is an ESOP?
An Employee Stock Ownership Plan is a qualified defined contribution employee benefit plan, much like a traditional profit-sharing plan. However, an ESOP is unique among qualified benefit plans in its ability to borrow money. In that way, an ESOP can be used as a corporate finance technique that provides liquidity to business owners.
Through an ESOP, business owners can achieve partial or total liquidity and diversification, usually in a tax-advantaged manner. At the same time, the ESOP can benefit employees by making them stockholders in their company. In fact, an ESOP is the only mechanism that offers a meaningful benefit to employees, while providing private business owners with a market for their stock and companies with a means of borrowing money in a tax- advantaged fashion.
Business owners look to ESOPs as an attractive liquidity alternative, one they can use to take some or all of their "chips" off the table, providing liquidity to the owner in a tax-advantaged manner. The strategy permits them to diversify their wealth, yet allows them to remain involved in their business if they so desire. As baby boomer business owners age, they are redefining retirement, often with an interest in remaining at least partially involved in their business. For this new generation of "semiretirees," ESOPs may be one solution.
For more detailed information on ESOPs, please see our team brochure.
Through an ESOP, business owners can achieve partial or total liquidity and diversification, usually in a tax-advantaged manner. At the same time, the ESOP can benefit employees by making them stockholders in their company. In fact, an ESOP is the only mechanism that offers a meaningful benefit to employees, while providing private business owners with a market for their stock and companies with a means of borrowing money in a tax- advantaged fashion.
Business owners look to ESOPs as an attractive liquidity alternative, one they can use to take some or all of their "chips" off the table, providing liquidity to the owner in a tax-advantaged manner. The strategy permits them to diversify their wealth, yet allows them to remain involved in their business if they so desire. As baby boomer business owners age, they are redefining retirement, often with an interest in remaining at least partially involved in their business. For this new generation of "semiretirees," ESOPs may be one solution.
For more detailed information on ESOPs, please see our team brochure.
ESOP Brochure
ESOP BrochureHOW AN ESOP WORKS
To establish an ESOP, the company first borrows money to finance the purchase of stock from the current shareholder or shareholders, and the company lends these funds to the ESOP. A trust is created to purchase the stock of the company on behalf of the ESOP plan.
From its operating profits, the company then makes annual cash contributions to the trust. These contributions are potentially fully tax-deductible. As the trust uses this cash to pay down the ESOP loan, shares of stock are released and allocated to individual employee accounts based on compensation, and then vested on the basis of years of service.
Employees are typically vested in the stock within three to six years of receipt, but they may not actually sell the stock until they leave the company. At that time, the plan may provide that the company can buy back their shares at fair market value, as determined by an independent business valuation firm appointed by the ESOP trustee.
OUR FIVE - STEP PROCESS:
We implement a disciplined five step approach to help business owners and their advisors through the sale process:
Step 1: Discover
Speak with the client and gain an understanding of their business as well as their strategic goals and objectives.
Step 2: Educate
Educate the client on their sale options, and determine which sale method best meets their strategic objectives.
Step 3: Interview
Arrange interviews for the client with different attorneys and structure firms. Select and hire the deal team.
Step 4: Sell
Quarterback between the seller and deal parties throughout the transaction and complete the sale.
Step 5: Invest
You invest the transaction proceeds.
OUR CLIENTS
ESOPs have existed for a long time. The concept was developed in the 1950s, and the legislation that first implemented tax advantages for ESOPs was passed in 1974. From only a handful in the 1970s, their numbers have grown to nearly 6,400 plans in existence today.
The National Center for Employee Ownership (NCEO) estimates that ESOPs have 14 million plan participants and control more than $1.4 trillion in plan assets. ESOP legislation continues to provide incentives and advantages to both sponsoring companies and employees, adding to the attractiveness of this liquidity option.
Because of the broad appeal of these plans, ESOP candidates vary considerably. Most ESOPs (approximately 97%) are established for privately held companies.
Any company—whether a manufacturing, distribution or service business—that can borrow enough money to fund the ESOP is a viable candidate. However, high-end service businesses with educated workforces—such as architecture, engineering or consulting firms—tend to be better represented in the current universe of ESOPs.
KEY CHARACTERISTICS TO CONSIDER:
Corporate Structure
The company must be a C corporation, or be willing to convert to a C corporation, in order to maximize tax benefits for the seller.
Financial Stability
The company must have sufficient capacity (collateral or cash flow) to support funded debt.
Management Team
A successor management team should be in place.
Ownership Structure
Owners must be open to the concept of broad-based ownership.
Business Experience
The company should have been in business for several years and have enough employees to make the plan worthwhile.
Financial Projections
The company should be able to reasonably predict future revenue and cash flows.
Is an ESOP Right for You?
As appealing as the benefits of an ESOP can be, there are some important issues that business owners should take into consideration:
ESOPs may not be used in partnership structures or in most professional corporations.
Although ESOPs can be used in S corporations, there are certain restrictions and lower contribution limits for S corporations than for C corporations.
The ESOP is both a corporate finance and retirement savings vehicle. If not handled properly, these dual roles might create a conflict of interest under ERISA. For smaller companies, where an ESOP’s fiduciaries might also serve as officers or directors, these conflicts might be difficult to resolve without independent legal, investment and financial counsel.
The company may be required to repurchase vested shares of departing employees. The funding of this repurchase must be managed carefully.
The equity value of existing owners is diluted any time a company assumes debt to finance a transaction without reducing the number of shares outstanding. This must be considered against the tax and other benefits an ESOP can provide.
ESOPs may not be appropriate for smaller companies because of their costs to establish and administer.
Disclosures
These possible ESOP drawbacks should be carefully considered against the plan’s potential tax and other benefits.
Neither Morgan Stanley nor its affiliates or employees provide tax, accounting or legal advice. You should consult your tax and accounting advisors on matters involving taxation, accounting and/or tax planning, and your attorneys with respect to legal matters. More specifically, neither Morgan Stanley nor its affiliates or employees provide any tax advice, tax guidance, or legal or tax opinions regarding the qualification of a particular security under Section 1042 of the Internal Revenue Code, nor do they prepare any forms necessary to successfully elect Section 1042 treatment. In every case, the client must consult and confirm with his/her tax and legal advisors whether a particular course of action meets the requirements of Section 1042, including whether a particular security is qualified replacement property and a particular purchase strategy meets the applicable time limits.
Although Morgan Stanley offers both passive and active reinvestment strategies, its role is much more limited in the passive strategy. This is not a commitment to lend money. All loans are subject to required credit approval.
Neither Morgan Stanley nor its affiliates or employees provide tax, accounting or legal advice. You should consult your tax and accounting advisors on matters involving taxation, accounting and/or tax planning, and your attorneys with respect to legal matters. More specifically, neither Morgan Stanley nor its affiliates or employees provide any tax advice, tax guidance, or legal or tax opinions regarding the qualification of a particular security under Section 1042 of the Internal Revenue Code, nor do they prepare any forms necessary to successfully elect Section 1042 treatment. In every case, the client must consult and confirm with his/her tax and legal advisors whether a particular course of action meets the requirements of Section 1042, including whether a particular security is qualified replacement property and a particular purchase strategy meets the applicable time limits.
Although Morgan Stanley offers both passive and active reinvestment strategies, its role is much more limited in the passive strategy. This is not a commitment to lend money. All loans are subject to required credit approval.
Location
233 South Wacker Drive
STE 8600
Chicago, IL 60606
US
Direct:
(833) 822-1042(833) 822-1042
1080 Jordan Creek Parkway
STE 400N
Wes Des Moines, IA 50266
US
Direct:
(515) 283-7008(515) 283-7008
8383 Preston Center Plaza Suite 400
Dallas, TX 75225
US
Direct:
(972) 849-0897(972) 849-0897
Meet The ESOP Group
Phone:
(515) 283-7008(515) 283-7008
Phone:
(312) 419-3484(312) 419-3484
Phone:
(972) 849-0897(972) 849-0897
Devon McLochlin
Wealth Management Associate
Phone:
(312) 419-3308(312) 419-3308
About William O'Brien
Bill is a Co-head of The ESOP Group at Morgan Stanley, where he has been focusing on ESOPs and capital markets since 1989. He has over 30 years of experience in helping business owners and corporations, including several in the Fortune 100, in areas such as:
• Corporate liquidity transactions
• Business succession planning
• Retirement plan design
• Employee financial education
Bill is particularly experienced in assisting business owners who have completed or are contemplating an ESOP. He has a deep understanding of the complexities of Internal Revenue Code Section 1042, equity risk management, and tax-advantaged strategies. He has successfully completed over 500 ESOP transactions.
• Corporate liquidity transactions
• Business succession planning
• Retirement plan design
• Employee financial education
Bill is particularly experienced in assisting business owners who have completed or are contemplating an ESOP. He has a deep understanding of the complexities of Internal Revenue Code Section 1042, equity risk management, and tax-advantaged strategies. He has successfully completed over 500 ESOP transactions.
Securities Agent: DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MI, MN, MO, MT, NC, ND, NE, NH, NJ, NM, NV, NY, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WY, DE, MS, AK, AL, AR, AZ, CA, CO, CT; BM/Supervisor; General Securities Representative; Investment Advisor Representative; Managed Futures
NMLS#: 1278976
NMLS#: 1278976
About Bryan Boesen
Bryan is a Financial Advisor with Morgan Stanley, where he has been providing consulting services to institutional and private clients since 1999. He has extensive experience working with nonprofits, developing sound investment strategies, and creating income streams by leveraging the resources available at Morgan Stanley. Bryan also assists affluent individuals and families with wealth planning to help secure their legacy.
For many years, Bryan has worked exclusively with privately owned, mid-sized companies, nonprofits, and affluent individuals and families. This experience has given him a deep understanding of the dynamics of closely held and family-owned businesses. His retirement services resources provide counsel and objectivity to help implement a plan designed to be the most effective for the company.
Specifically, Bryan's capabilities include helping businesses implement employee stock ownership plans (ESOPs), understanding the complexities of Internal Revenue Code Section 1042, and leveraging equity risk management and tax advantaged strategies.
For many years, Bryan has worked exclusively with privately owned, mid-sized companies, nonprofits, and affluent individuals and families. This experience has given him a deep understanding of the dynamics of closely held and family-owned businesses. His retirement services resources provide counsel and objectivity to help implement a plan designed to be the most effective for the company.
Specifically, Bryan's capabilities include helping businesses implement employee stock ownership plans (ESOPs), understanding the complexities of Internal Revenue Code Section 1042, and leveraging equity risk management and tax advantaged strategies.
Securities Agent: MT, NV, NM, VT, ID, DC, NH, MN, NY, OH, NJ, IL, OK, OR, SC, TX, UT, TN, WA, WI, KS, KY, MA, WY, IN, MI, ME, NC, MS, ND, WV, HI, AZ, CO, VA, CT, SD, AR, GA, RI, PA, FL, NE, MO, MD, LA, IA, DE, CA, AL, AK; BM/Supervisor; General Securities Representative; Investment Advisor Representative; Transactional Futures/Commodities; Managed Futures
NMLS#: 1278811
NMLS#: 1278811
About Ann Kim
Ann brings extensive expertise in succession planning advisory, shaped by a varied career. She started her career in tax as a CPA, then went on to law school and worked her way up to co-head of the ESOP practice at a prominent national law firm. After spending the bulk of her life as an ERISA attorney, a position was created for her to join her largest employee-owned client. She spent 9 years as General Counsel, Head of Human Resources, and Board Advisor. As a Partner in The ESOP Group at Morgan Stanley, she uses her blend of tax, legal and human resources experience to advise companies, business owners and their trusted advisors on succession strategies.
Securities Agent: MA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NE, NH, NJ, NM, NV, NY, OH, OK, OR, PA, PR, RI, SC, SD, TN, TX, UT, VA, VI, VT, WA, WI, WV, WY, AK, AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA; General Securities Representative; Investment Advisor Representative
NMLS#: 2528597
NMLS#: 2528597
About Jim Massey
Prior to joining Morgan Stanley, Jim held leadership positions with top
middle-market Investment Banking firms as Founder, Director, and
Head of the Houlihan, Lokey, Howard & Zukin Dallas office and led the
Duff & Phelps Southwest regional office as Managing Director and City
Leader.
Over the last 35 years, his historical engagement deliverables have
facilitated business mergers and acquisitions, corporate
recapitalizations and sell-side transactions involving ESOP structures
middle-market Investment Banking firms as Founder, Director, and
Head of the Houlihan, Lokey, Howard & Zukin Dallas office and led the
Duff & Phelps Southwest regional office as Managing Director and City
Leader.
Over the last 35 years, his historical engagement deliverables have
facilitated business mergers and acquisitions, corporate
recapitalizations and sell-side transactions involving ESOP structures
Securities Agent: NY, AZ, CA, CO, WI, OH, CT, OK, WV, DC, DE, OR, FL, GA, HI, PA, WY, IA, PR, ID, IL, RI, IN, KS, KY, SC, LA, MA, SD, MD, ME, TN, MI, MN, TX, MO, UT, MS, MT, VA, NC, ND, VI, NE, VT, NH, NJ, NM, WA, AK, AL, NV, AR; General Securities Representative; Investment Advisor Representative
NMLS#: 2463341
NMLS#: 2463341
About Devon McLochlin
Devon is an associate at Morgan Stanley, where he supports the team in guiding clients and advisors through Employee Stock Ownership Plan (ESOP) transactions. Most notably, Devon excels in assisting business owners execute tax-deferred sales to an ESOP through IRC Section 1042 and optimizing after tax value. Prior to Morgan Stanley, he played a key role at a tech startup, contributing to its growth and eventual acquisition. A graduate of Indiana University, Devon continues to spend time as a panelist for students of the Investment Management Workshop at the Kelley School of Business. He is currently FINRA Series 7 and 66 registered.
In his spare time, he enjoys golf, tennis, and fishing.
In his spare time, he enjoys golf, tennis, and fishing.
Contact William O'Brien
Contact Bryan Boesen
Contact Ann Kim
Contact Jim Massey
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Ready to start a conversation? Contact The ESOP Group today.
Check the background of our Firm and Investment Professionals on FINRA's BrokerCheck*.
The information, products and services described here are intended only for individuals residing in states where this Financial Advisor is properly registered as described in this site.
Morgan Stanley reserves the right, to the extent permitted under applicable law, to retain and monitor all electronic communications. Morgan Stanley will not accept purchase or sale orders via any Internet site, social media site and/or its messaging systems. Morgan Stanley does not endorse and is not responsible and assumes no liability for content, products or services posted by third-parties on any Internet site, social media site and/or its messaging systems. All electronic communications are subject to terms available at the following link:
https://www.morganstanley.com/disclaimers/mswm-email.html. Any profiles and associated content are for U.S. residents only.
The securities/instruments, services, investments and investment strategies discussed in this material may not be appropriate for all investors. The appropriateness of a particular investment, investment strategy or service will depend on an investor's individual circumstances and objectives. Morgan Stanley Smith Barney LLC recommends that investors independently evaluate particular investments, strategies and services, and encourages investors to seek the advice of a Financial Advisor or Private Wealth Advisor. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it.
Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. Individuals should consult their tax advisor for matters involving taxation and tax planning and their attorney for legal matters.
Morgan Stanley Smith Barney LLC (“Morgan Stanley”) is not implying an affiliation, sponsorship, endorsement with/of the third party or that any monitoring is being done by Morgan Stanley of any information contained within the website. Morgan Stanley is not responsible for the information contained on the third-party website or the use of or inability to use such site. Nor do we guarantee their accuracy or completeness.
The views, opinions or advice contained within third party websites or materials are solely those of the author, who is not a Morgan Stanley employee, and do not necessarily reflect those of Morgan Stanley Smith Barney LLC, or its affiliates. The strategies and/or investments referenced may not be appropriate for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.
*References to length of service at Morgan Stanley include years at Morgan Stanley and predecessor firms.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S, which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
The use of the CDFA designation does not permit the rendering of legal advice by Morgan Stanley or its Financial Advisors which may only be done by a licensed attorney. The CDFA designation is not intended to imply that either Morgan Stanley or its Financial Advisors are acting as experts in this field.
Awards Disclosures
The information, products and services described here are intended only for individuals residing in states where this Financial Advisor is properly registered as described in this site.
Morgan Stanley reserves the right, to the extent permitted under applicable law, to retain and monitor all electronic communications. Morgan Stanley will not accept purchase or sale orders via any Internet site, social media site and/or its messaging systems. Morgan Stanley does not endorse and is not responsible and assumes no liability for content, products or services posted by third-parties on any Internet site, social media site and/or its messaging systems. All electronic communications are subject to terms available at the following link:
https://www.morganstanley.com/disclaimers/mswm-email.html. Any profiles and associated content are for U.S. residents only.
The securities/instruments, services, investments and investment strategies discussed in this material may not be appropriate for all investors. The appropriateness of a particular investment, investment strategy or service will depend on an investor's individual circumstances and objectives. Morgan Stanley Smith Barney LLC recommends that investors independently evaluate particular investments, strategies and services, and encourages investors to seek the advice of a Financial Advisor or Private Wealth Advisor. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it.
Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. Individuals should consult their tax advisor for matters involving taxation and tax planning and their attorney for legal matters.
Morgan Stanley Smith Barney LLC (“Morgan Stanley”) is not implying an affiliation, sponsorship, endorsement with/of the third party or that any monitoring is being done by Morgan Stanley of any information contained within the website. Morgan Stanley is not responsible for the information contained on the third-party website or the use of or inability to use such site. Nor do we guarantee their accuracy or completeness.
The views, opinions or advice contained within third party websites or materials are solely those of the author, who is not a Morgan Stanley employee, and do not necessarily reflect those of Morgan Stanley Smith Barney LLC, or its affiliates. The strategies and/or investments referenced may not be appropriate for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.
*References to length of service at Morgan Stanley include years at Morgan Stanley and predecessor firms.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S, which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
The use of the CDFA designation does not permit the rendering of legal advice by Morgan Stanley or its Financial Advisors which may only be done by a licensed attorney. The CDFA designation is not intended to imply that either Morgan Stanley or its Financial Advisors are acting as experts in this field.
Awards Disclosures
CRC 6491812 (04/2024)
