Succession-planning | RKL LLP
Posted on: December 18th, 2017

RKL’s Barrett Earns Certified Exit Planning Advisor Credential

Paula K. Barrett, CPA/ABV, CVA, CGMA, Partner in RKL's Business Consulting Services GroupPRESS RELEASE

WYOMISSING, PA (December 18, 2017) – RKL LLP today announced that Paula K. Barrett, CPA/ABV, CVA, CGMA, achieved an advanced level of professional certification in business exit planning and value acceleration. Barrett, a Partner in RKL’s Business Consulting Services Group, recently earned the Certified Exit Planning Advisor (CEPA) credential from the Exit Planning Institute.

Established in 2007, the CEPA program is the most widely endorsed exit planning designation in the world. To earn the CEPA credential, Barrett completed a comprehensive curriculum of individual study, hands-on instruction and a proctored examination, specifically designed for business advisors to privately held companies.

One of the region’s most skilled and highly credentialed business consultants and valuation experts, Barrett has three decades of experience assisting closely held companies and their owners with exit strategy formulation, ownership interest transfers, business valuations and succession plan development.

Barrett holds the Chartered Global Management Accountant designation and an Accreditation in Business Valuation from the American Institute of Certified Public Accountants. She also belongs to the National Association of Certified Valuation Analysts. She resides in Maidencreek Township, Pennsylvania with her husband.


Posted on: May 16th, 2017

ESOP 101: What is an ESOP and Is It Right for Your Business Succession Plan?

ESOPs 101: What is an ESOP and Is It Right for Your Business Succession Plan?There are more than 6,700 employee stock ownership plans (ESOPs) across the country, which cover 14 million participants and hold assets of more than $1.3 trillion, according to the U.S. Department of Labor’s most recently available data.

Despite these statistics, however, many family owned or privately held business owners have no direct experience with an ESOP and only a basic understanding of how one could benefit their companies. Given this limited awareness of ESOPs, we rounded up some of the most common questions about the structure, details and advantages of this business transition and employee benefit tool.

What is an ESOP?

An Employee Stock Ownership Plan, or ESOP, is a qualified defined contribution employee benefit plan authorized under the Employee Retirement Income Security Act (ERISA).

An ESOP is similar to a profit-sharing plan, but a key difference is that the ESOP invests primarily in the stock of the sponsoring employer. It can be a beneficial transition strategy to help exiting owners achieve their retirement goals and give back to loyal employees.

What kind of company is right for an ESOP?

ESOPs are used across a variety of industries and business types, but there are some overarching characteristics of companies that implement them. While there is no minimum size or annual revenue requirement to set up an ESOP, companies with approximately 20 or more employees and annual revenues of at least $10 million generally fare best with this model.

The key to ESOP success is spreading out the formation and annual administration costs over a broad employee base. Reasonably consistent profitability, the ability to leverage the business with debt and a strong management team are other important factors.

What are the tax advantages of an ESOP exit strategy?

An Employee Stock Ownership Plan can provide a ready market for the shares of an exiting owner of a privately held company. While limited by adequate consideration rules (the ESOP can pay no more than fair market value), ESOPs have tax advantages that benefit the selling shareholder and the corporation.

For instance, the owner of a C Corporation can defer capital gains taxes on the sale indefinitely provided that they elect and meet the provisions of section 1042 of the Internal Revenue Code. While S Corporations do not have this benefit, they can essentially operate income tax free if the ESOP owns 100 percent of the stock. Consult your tax advisor for guidance related to your particular tax situation.

How much stock can an ESOP own?

An ESOP may own a portion or all of the stock in a company. Partial ownership by an ESOP is a great option for family owned businesses that wish to retain family control but also want to reward and build additional incentives for an employee base considered to be part of the family.

Do the employees actually own the company?

No, the ESOP is structured as a trust, which has governance requirements. The employees are beneficiaries of that trust. A trustee administers the plan and makes the majority of shareholder decisions; however, major corporate actions have pass-through voting rights to participants.

Are there other benefits of using an ESOP?

Beyond the financial advantages an ESOP offers, there are also cultural and motivational benefits. Forming an ESOP allows the company’s ownership to reward or invest in its employees. Giving employees an ownership stake ties them directly to the company’s overall performance, which is often a motivating factor to improve their personal job performance.

Employee Stock Ownership Plans also provide stability to the other stakeholders of a company by limiting the transition disruption to customers, suppliers and the community in which the business is located.

For more information on ESOPs or to decipher if it is the right tool for your family owned or privately held business, contact me at or 610.376.1595.

Ryan P. Hurst, ASA, Manager in RKL's Business Consulting Services GroupContributed by Ryan P. Hurst, ASA, Manager in RKL’s Business Consulting Services Group. Ryan serves the valuation, investment banking and consulting needs of clients in a wide variety of industries. His expertise includes performing valuations for gifting, estate planning and administration, employee stock ownership plans (ESOPs), buying or selling a business, buy/sell agreements, fair value accounting and GAAP reporting, litigation support for shareholder disputes and strategic alternatives analyses.




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Posted on: October 19th, 2015

Why You Can’t Afford to Ignore Estate Planning

Financial Advisor Talking to Senior CoupleMention estate planning to the average individual and you will likely hear one of these common refrains:

  • “I’m too young to think about this.”
  • “I don’t have enough assets to worry about a will.”
  • “I took care of my will decades ago so I’m all set.”

Statistics from the National Association of Estate Planners and Councils bear out this disinterest, showing that 56 percent of Americans do not have an up-to-date estate plan. Without such a plan in place, families and individuals can experience a variety of hardships – from financial to emotional to legal. The good news, however, is that with some advancing planning, the risk of these hardships can be diminished significantly.

National Estate Planning Week was designed to draw attention to the need for this important aspect of financial planning, and encourage Americans to start developing their estate plans. While no one enjoys thinking ahead to the end of life, estate planning allows you to develop a strategy to maintain your financial security throughout your lifetime as well as ensure the intended transfer of your property and assets at death. Knowing you have established a plan to create and maintain your financial legacy and provide for your surviving loved ones can offer tremendous peace of mind.

In the past, the main focus of estate planning was federal transfer taxes, which applied to estates with assets of $1 million or more. Exemption amounts for 2016 increased to $5.45 million per person and $10.9 million combined. In recent years, federal legislation made portability permanent, which changed the landscape for estate planning since many families fall well under the combined estate threshold.

As a result, the estate planning process now places a greater emphasis on nontax considerations, like:

Instead of thinking of estate planning as a chore to be put off to another day, take the time now to visit with a trusted financial advisor or tax professional who can help you take stock of your financial situation and start making decisions about what kind of financial legacy you want to leave.

RKL has a group of professionals who specialize in estate planning for individuals and their families. Contact one of our local offices today to start the conversation.

Scott Myers, RKL Tax ManagerContributed by G. Scott Myers, CPA, CSEP, a Manager in RKL’s Tax Services Group. Scott’s area of emphasis is providing individual and fiduciary tax services for high net worth individuals and their families.  He also serves many closely-held businesses in a wide variety of industries providing advisory services and compliance solutions.



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Posted on: August 11th, 2015

Thinking Ahead: Three Tips to Ensure Smooth Succession Planning [VIDEO]

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Run-time: 03:29 Considering your exit strategy? A successful outcome depends on having a clear picture of your company’s value, your financial position and your ownership options.

You worked hard to build your business and make it a success, but what if it’s time to consider the next chapter? Familiarizing yourself with the succession planning process can help you turn the page smoothly. There are three main things to keep in mind when considering if it’s time to transition your business to its next phase 

  1. Determine your personal financial situation. Before moving forward with succession plans, it is imperative to have a clear understanding of your personal financial situation. This is an often overlooked step, but the importance cannot be overstated. Many entrepreneurs think they know their personal financial net worth, and feel as if they have adequate resources to maintain their desired quality of life into the future. However, it is highly recommended that these assumptions be validated by a personal financial planner. A professional review can spare you the devastation of moving through the succession planning process only to discover a shortfall in the proceeds needed for future living expenses.
  1. Consider business and ownership goals. Do you want your business to continue? If so, how do you see it evolving? Who do you see taking the reins from you? It’s important to think through these questions and make sure you express your goals and wishes to those affected. If there is a second or third generation family member you want to transition ownership to, or if there is a management team you think would be interested in purchasing the company, you have to ensure they have the interest and the financial wherewithal to acquire an ownership stake.
  1. Determine what your business is worth. Just like your personal financial situation, you may think you know what your company is worth, but it is critical to get a professional valuation that produces a reasonable estimate of the business’ value. Once you have this value, you can hold it up against your personal financial needs you will have already determined. If the numbers align, it is a sign that the succession process can begin. However, if they don’t match up the way you’d like, it’s a chance to examine and implement strategies to build value in your business.

Implementing these tips will provide you with the necessary information to conduct a smooth transition for your business. The succession planning process requires a wide range of expertise, and RKL is equipped to guide and assist you every step of the way. Our consulting team draws upon tax professionals, business valuation professionals and investment advisors to help you transition, sell or recapitalize your business. Whatever you need to meet your goals, we can help. Contact us today to learn more.

Paula K. Barrett, CPA/ABV, CVA, CGMAContributed by Paula K. Barrett, CPA/ABV, CVA, CGMA, partner and leader of RKL’s Business Consulting Services Group. Paula specializes in business valuation and litigation support services, assisting clients in the acquisition or sale of closely-held businesses and general business planning services. She also has experience in tax-exempt bond financing services, including bond verifications and arbitrage rebate computations.


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