Commercial Contractor


  • Commercial plumbing and mechanical contractor for large medical centers, tech facilities, manufacturing plants, and professional sports stadiums
  • C Corporation with approximately 750 union and non-union employees
  • 3 shareholders, several family members involved in the business
  • Company value $110,000,000


  • Tax-free liquidity event for owners
  • Exit strategy within 5 years
  • Employee retention & motivation
  • Method of rewarding non-union employees
  • Corporate tax deduction


  • Establish an ESOP, excluding union employees
  • All shareholders will sell 100% of their stock to the ESOP
  • In exchange for selling their stock sellers will receive cash and notes
  • Shareholders elect IRC 1042 to avoid/defer capital gains tax on stock sale
  • Following year of stock sale Company will elect S Corp status
  • Company will borrow $30,000,00 in senior debt

Benefit to Client

  • Owners received $30,000,000 cash at closing
  • Sellers carried the balance with 15 year notes (life of loan interest approx. $43,000,000)
  • Shareholders received warrants to divide between seller note holders
  • At the end of the seller note period the projected value of warrants is estimated to be $54,000,000
  • Sellers avoid over $40,000,000 in capital gains tax
  • As a 100% S Corp ESOP, 100% of future profit will not be taxed from that point forward
  • Over the next 15 years the corporate tax savings are estimated to be over $164,000,000