ESOPs may be used for which of the following?
A) As an alternative to divestiture
B) To consummate management buyouts
C) As an anti-takeover defense
D) A, B, and C
E) A and B only

Question

Quizplus · Accepted Answer

ESOPs (Employee Stock Ownership Plans) can be used as an alternative to divestiture, allowing owners to sell part or all of a company to employees and transfer ownership within the company. They can also be used to consummate management buyouts, providing a financing mechanism that allows employees to buy out the owners of a company. Finally, ESOPs can be used as an anti-takeover defense, as the ESOP trust will hold a significant number of shares and may be less likely to sell to an unsolicited bidder. Therefore, options A, B, and C are all valid uses for ESOPs.

ESOPs May Be Used for Which of the Following