When considering employee stock ownership plans, be wary of services to set up ESOPs with advisor 'success fees.' (Photo: Getty)

Employee stock ownership plans (ESOP) have been popular ownership transition mechanisms for small-to medium-sized private companies for many years for all manner of reasons.

An ESOP can be used to help a business owner sell all or part of their firm to cash out, it can facilitate management succession and/or it can allow employees to share the profits of their labor.

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