Risks

• Lack of management depth: If the company does not have a good secondary team that can be groomed and replace the departing owners, the company's performance may decline. It is important to assess the talent pool and its ability to step into the owner's shoes.  In most cases, since the owners will finance part or the entire transaction themselves, it will provide enough time to mentor and elevate the talent to replace them when the time comes. 
• Inability in the future to buy back the shares allocated for departing employees: This is a risk mostly in cases where the age profile of the workforce is older.  A repurchase obligation study is normally conducted to determine the risk and the obligation associated with such situations.  For the most part, it is rarely an issue in the early years of an ESOP acquisition.

Opportunities

• Because of its tax advantages, ESOPs represent a very attractive alternative to a traditional sale.
• It is an effective tool to retain and attract good talent.
• If offers the owner or owners who build a business a way to ensure its legacy.
• It provides hard-working employees who also helped build the business with additional retirement benefits.