The ESOP Alternative


BEI members appreciate the value of a extensive exit planning toolkit. When their clients prioritize tax-efficiency and legacy preservation, employee ownership may be the best strategy.

See how ESOPs compare to other transaction options.


M&A Isn't Always the Answer

Business owners are often concerned about damaging their legacies, abandoning employees, or sacrificing potential multi-generational assets. Even if they ultimately settle for a third-party or private equity transaction, they'll likely incur a heavy capital gains tax burden. 

 

Employee Ownership is a Meaningful Alternative

Employee stock ownership plans help shareholders unlock equity value, while providing meaningful incentives to their companies and employees. Leveraged ESOPs enable closely-held companies to sell equity, at a fair market value, to an employee trust.

This is not a stock option program. Instead, an ESOP is an ERISA-authorized, defined contribution plan.

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Tax-Efficient Diversification

By reinvesting their sale proceeds in a qualified replacement property, selling shareholders can defer and potentially eliminate capital gains taxes (1042 rollover).

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Continuity & Potential Upside

Post-transaction, a company’s board operates the business. Selling shareholders often maintain salaries and meaningful roles in the business and may continue to hold stock.

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Estate Planning Opportunities

Sellers can make gifts of retained interest to family and prepare for estate tax burdens at a time when a company’s value is depressed by leverage.

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Legacy Preservation

ESOPs enable companies to remain independent, stay put in local communities, honor long-tenured employees, and maintain enduring cultures.

 
 

Exclusive ESOP Resources for CExPs

Join CSG's David Blauzvern as he shares the nuances and benefits of ESOP strategies. This webinar was originally presented to BEI members.

Best Fits and Use Cases

A growing number of exit planning advisors are embracing employee stock ownership plans. But when it comes to building a solid succession or exit plan, popularity is no substitute for a good fit. 

Learn how certain private and family-owned companies are better positioned to maximize ESOP benefits and minimize the potential costs and downsides of a typical transaction. 

Taking Chips off the Table

Partial leveraged ESOPs (30-49% sales) enable selling shareholders to unlock net worth while retaining equity in their companies. Third-party deal financing, often without personal guarantees, is readily available.

Post-transaction, business owners maintain leadership roles, while their companies remain independent and the free to entertain various transaction options.

 
 
 
 
 
 

Why do BEI Members Trust CSG?

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Experience

Our multi-disciplinary team's primary focus is ESOPs, and our transaction volume is unmatched in the industry. That translates to extensive institutional knowledge and a deep understanding of the variability of employee stock ownership plans.

Analytics-Focused

We leverage proprietary modeling and research tools – refined and developed throughout our 20+ year history – to deliver data-driven ESOP recommendations and solutions.

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Financial Reach

Our dedicated capital markets team has access to the same financing sources as private equity firms and top investment banks. In the last five years alone, 30+ bank lenders and funds have financed CSG-led ESOP transactions.

350+

ESOP Transactions

40K+

Employee Owners

$25Bn+

in Enterprise Value

50+

National Awards

FIND MORE RESOURCES

Our full ESOP library includes webinars, podcasts, and articles by our experts.

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