Growing Employee Ownership: An Interview with Ann Kim, Financial Advisor, The ESOP Group at Morgan Stanley

Ann Kim recently spoke with the Illinois Center for Employee Ownership about her passion for supporting and growing employee ownership. Ann is a former CPA and ERISA attorney (non-practicing) whose 30-year career spans tax advisory and legal counsel to Employee Stock Ownership Plan (ESOP) companies, trustees, and shareholders. Most recently, she spent the past decade as Chief Administrator Officer and General Counsel of a large ESOP company. She has now returned to her passion for ESOP advisory as a financial advisor at Morgan Stanley in Chicago, working with shareholders seeking to sell their privately held business and employee owned companies on their ongoing ESOP needs. Additionally, she oversees current and terminating ESOPs with Morgan Stanley’s suite of services. Her advice ranges from tax strategies, owner and employee education, and repurchase obligation, among other key topics.

During your career, what motivated you to build a portfolio of different career experiences in employee ownership?

Ann Kim: I enjoy both the tax and fiduciary aspects of ESOPs.? I firmly believe that sharing ownership can potentially create wealth opportunities for employees. I also firmly believe that the best external advisors have in-house experience to better understand the Board, management, and employee perspectives. I have enjoyed and learned from each position.? Although my in-house position was invaluable, I am most impactful on the advisory side because it allows me to add value to multiple companies and employee owners where I help solve specific ESOP-related challenges for company executives allowing them to focus on successfully running their business. The future of employee ownership excites me greatly.

What are some of the biggest challenges your clients are facing when considering employee ownership conversions?

Ann Kim: Selling your company, even part of it, is a difficult and significant decision for business owners.? Once an owner has decided to plan for business succession, they should understand the competing alternatives so they can make fully informed decisions. Business owners need to find skilled professionals, such as The ESOP Group at Morgan Stanley, who can help them sift through these complexities and advise them on the pros and cons of each sale method before deciding to convert to employee ownership.

Other challenges include educating employees on the ESOP and ownership concept.? Working at an ESOP company gave me unique insight to these challenges.

What role do you believe State Centers play in helping to reduce these barriers and grow employee ownership?

Ann Kim: State Centers can provide balanced and unbiased education. They can also connect prospective companies to executives of existing employee-owned companies, offering peer support to other selling shareholders. They can explain the hurdles and best practices better than many service providers.

What is the most important advice you provide for owners considering an employee ownership transition?

Ann Kim: I always aim to understand my clients’ goals and how employee ownership and other benefit programs align with these goals. Providing thorough education on how employee ownership works is crucial. I believe a business owner may need multiple forms of education to fully comprehend whether employee ownership meets their needs. It’s about ensuring they make fully informed decisions.

Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors do not provide tax or legal advice. Individuals should seek advice based on their particular circumstances from an independent tax or legal advisor.

The strategies and/or investments discussed in this material may not be appropriate for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

Morgan Stanley Smith Barney LLC. Member SIPC.? 3696540 7/24

The ESOP Group at Morgan Stanley is a proud sponsor of the Illinois Center for Employee Ownership. ?