Employee Stock Ownership Plans

esop-ideal-solution

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.

BTA-ESOPClientBrochure-Oct

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

93% agreed that an ESOP was a good business decision that has helped the company.

-Employee Ownership Foundation 23rd Annual Economic Performance Survey

76% indicated the ESOP positively affected the overall productivity of the employee owners.

-Employee Ownership Foundation 23rd Annual Economic Performance Survey

Advantages of an ESOP

For the seller...

  • The selling shareholder may indefinitely defer/eliminate all capital gains on the sale proceeds
  • The seller enjoys an immediate buyer of some or all of the seller’s stock at fair market value
  • The seller can retain personal salary, perks, benefits and control without interference of outside interest until ready to hand over the reigns
  • The seller retains personal and corporate legacy in the town in which he cares about and contributed to

For the corporation...

  • The company receives a dollar for dollar income tax deduction on the entire stock sale price
  • An ESOP company can be 100% federal and state income tax exempt
  • ESOP companies outperform their peers with increased productivity and higher return on investment

For the employees...

  • The employees enjoy enhanced retirement benefits of company stock with no out of pocket costs
  • An ESOPs orderly internal transfer of the company creates a more stable and reliable community employer than the intentions of an outside buyer
  • The company remains an important contributor to the community’s social and economic fabric

OUR EXPERIENCE
YOUR SUCCESS

+
YEARS OF COMBINED TEAM EXPERIENCE

EXPERIENCE WORKING WITH

+
EMPLOYEES
+
STOCKHOLDERS
$
MARKET VALUES OVER
PROVIDING SERVICE IN ALL
STATES

Frequently Asked Questions

Where Are ESOPs Located

The Midwestern U.S. is home to the greatest number of ESOPs, followed by the South. Credit NCEO

esop-map

What Kinds of Companies Have ESOPS?

Industries of ESOP Sponsors
Credit NCEO

Manufacturing

Professional / Scientific / Technical Services

Finance / Insurance / Real Estate

Construction

Wholesale Trade

Retail Trade

Agriculture / Mining / Utilities

Management

Services

Health Care

Waste Management

Transportation

Information / Technology

Other

22%

18%

17%

11%

9%

6%

3%

3%

2%

2%

2%

2%

1.7%

0.6%

Videos

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.

An Introduction to Employee Stock Ownership Plans (ESOPs)

Tax Benefits of an ESOP

Finer Points of an ESOP

Employee Stock Ownership Plans

Podcasts


Post-Election Tax and Regulatory Hot Topics

LOOKING TO ESTABLISH YOUR ESOP?

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