Sell all or a portion of your company
to a ready & willing buyer at full Fair Market Value
while retaining control, salary & benefits
plus indefinitely defer all capital gains taxes
while leaving behind a completely income tax-exempt entity.
EMPLOYEE STOCK OWNERSHIP PLAN
A qualified, defined contribution employee retirement plan designed to invest primarily in employer stock of a sponsoring company. ESOPs provide an opportunity for business owners or shareholders to successfully plan an immediate or gradual tax advantaged exit strategy, while also engineering the continued success of the business.
SITUATIONS TO CONSIDER AN ESOP
- Owner retirement, investment divestiture, or immediate cash
- Buy-out of active or inactive partners or investors
- Divorces or Estate Sales
- Management buy outs or takeovers
- Owner diversification of stock concentration
- Refinance of existing debt to allow for the deduction of both principal and interest costs
- Reduce company debt load and increase corporate cash flow
- Owners desiring to keep company locally intact with existing employees
GENERAL ESOP CANDIDATE PROFILE
- ESOPs are very flexible which makes it difficult to provide strict guidelines; however, the following criteria has proven to be effective:
- Business owner who desires partial or full liquidity
- 20 or more full time permanent employees
- Business value of $5,000,000 or more, or net income of approximately $1,000,000 or more
- 5 year history of profitable operations
- Strong second line management a plus
What Kinds of Companies Have ESOPS?
Industries of ESOP Sponsors
Professional / Scientific / Technical Services
Finance / Insurance / Real Estate
Agriculture / Mining / Utilities
Information / Technology
All Things Financial ESOP Transition Part 1
Dan provides an overview of the history, intent and government position on Employee Stock Ownership Plans (ESOPs) as well as a profile of the typical ESOP candidate. Additionally, a summary of the four major tax advantages and the advantages to the seller, employees, company and community will be addressed.
All Things Financial ESOP Transition Part 2
Dan explains step by step how an ESOP works, how employees get company shares and how they cash in. Also, a more detailed look at the four significant tax advantages available to the sellers and/or the company will be discussed.
All Things Financial ESOP Transition Part 3
Dan provides a brief summary of the previous two ESOP sessions then dives into the important areas of corporate control, employee involvement, stock sale valuation, ESOP Trustee role, sale terms, board makeup and government oversight and regulations.
All Things Financial ESOP Transition Part 4
The final session discusses how the ESOP transaction is paid for through tax savings as well as the roles of senior bank financing and seller financing. The conversation also explores the current interest rate environment as well as significant seller incentives for bearing seller debt for the difference between bank financing and the sale price.