Question

An owner of a midsize organization wants to retire. The owner would like to fund his retirement without having to sell the company to outsiders. What would be a viable alternative to selling the organization to outside investors?

A. Establish a 401(k) retirement plan for all employees.
B. Convince relatives of the owner to take over the organization.
C. Establish an employee stock option plan (ESOP).
D. There are no other alternatives to selling the organization.

Answer 1

A viable alternative for an owner looking to retire without selling their company is to establish an employee stock option plan (ESOP), which allows employees to buy company stock and gives the owner retirement funds.

Step-by-step explanation:

For an owner of a midsize organization who wants to fund retirement without selling the company to outsiders, a viable alternative would be to establish an employee stock option plan (ESOP). This would allow employees to purchase stock in the company, creating a market for the shares that provides the owner with funds for retirement. Unlike establishing a 401(k) retirement plan, which is a savings mechanism for employees, or convincing relatives to take over, which may not be feasible or desirable, an ESOP gives employees a stake in the company's success and aligns their interests with that of the business. Employee ownership through an ESOP can also provide a sense of continuity for the company and preserve its independent status.