Yes, by law, you must be paid fair market value for your company stock. The price is determined through a formal valuation conducted by a qualified, independent appraiser. This process ensures a fair transaction for both you as the seller and for the employees.

Your employees do not need to use their own money to purchase the company. In most cases, the company itself secures financing (often from a bank) to loan funds to a new trust which then buys your shares. The company repays this loan over time with its future earnings, making the contributions tax-deductible.

Some forms of employee ownership offer significant tax advantages for both the selling owner and the company. As the seller, you can often defer or even eliminate capital gains tax on the sale, while the company receives tax deductions for its contributions to the plan. Some forms of employee ownership offer exemption from federal and state taxes.

Your existing management team can remain in place to run daily operations, so there is no disruption to leadership. An ESOP fosters an "ownership culture" that educates and motivates employees to think like owners in their specific roles, boosting productivity and engagement. The goal is to align everyone's interests, not necessarily to turn every employee into a senior executive.