The ESOP Alternative

EPI members appreciate the value of an extensive exit planning toolkit. The right strategic recommendation in the right situation can mean everything for their practice. That's why it's important to understand the pros and cons of employee stock ownership plans.

See how ESOPs compare to other transaction options.

M&A Isn't Always the Answer

Whether business owners are concerned about damaging their legacies, abandoning trusted employees, or giving up on potential multi-generational assets, their fears are valid and, at times, stifling.

Even if they ultimately settle for a traditional third-party or private equity transaction, the capital gains tax burden can often be painful.

Employee Ownership is a Meaningful Alternative

Employee stock ownership plans help shareholders unlock equity value while providing meaningful incentives to their companies and employees.

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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.

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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.

Legacy Preservation

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

ESOP "Best Fits"

So, when is it worth exploring a leveraged ESOP with your client? Our David Blauzvern, shares baseline metrics and standard scenarios that commonly yield successful employee ownership transactions and drive sustainable business transitions.

Interested in learning more?

Schedule a free call with David. He'd be happy to answer your employee ownership questions, including ESOP feasibility, the transaction process, and plan management.