IT Firms Getting Into ESOPs

Jan 12, 2017 | Timothy L. Stewart

Arlington, Virginia-based Phacil Inc. announced that it had set up and transferred ownership to employees through an ESOP in late 2016. The CFO of the Company, Mehdi Cerqaoui, stated that:

“It was somewhat of a natural progression for Phacil given our history, legacy and culture.”

According to the article describing the transaction, the owners of the Company were no longer actively involved in the business, but were interested in continuing to allow the leaders to run the company and have continuity for their employees. Of course, using an ESOP fulfills those goals perfectly, as described by COO Mark Cabrey:

“The same people are running it, there’s no new money coming in, there’s no new ownership, there’s no private equity firm telling you what to do – that fits well, obviously for us being the people running it, but also it sat well with the owners exiting.”

The article notes that ESOPs have not historically been very common in IT firms, but notes that another IT company, JTG Inc., also went the ESOP route.

We continue to see ESOPs proliferate many different industries, mostly through word of mouth. That is, because succession planning strategies are discussed within and among owners in certain industries, you often see a “snowball effect” of ESOPs in certain industries (e.g., craft brewing).

About The Author

Image of Timothy L. Stewart

Tim is President & Managing Partner of DeWitt. He is also a partner in the Greater Milwaukee office specializing in Employee Stock Ownership Plans (ESOPs) and Employee Benefits. He can be reached at 262-754-2869.

View Author Info


One of the best features about our website articles and blog entries is that they are timely—you get up-to-date information on the law as it exists at the time. The downside is that the law changes, but our older entries don't. That means we can't guarantee you are getting the most current law when reading through past entries. Please don't take these articles and blog entries and rely on them as legal advice. Give us a call instead, for specific and pointed advice for your particular situation. Note that contacting us does not create an attorney-client relationship, unless you are accepted as a client of the firm.