It’s also important to be aware of the liabilities you take on when you set up an ESOP. First, there’s the money that the ESOP usually has to borrow to cash out the founders. It gets the stock only as the loan is repaid. That debt can represent a significant burden for the company, sometimes more than it can bear. The second set of liabilities is potentially even more dangerous, mainly because it’s often overlooked. When contemplating an ESOP, people tend to forget that, if it works as intended, the shares held by all those employee-owners could be worth a lot of money in the future—and
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