How Does an ESOP Work?
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Who is the buyer?
A trust representing at least 10 employees.
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Who sets the price?
The price is negotiated with an institutional trustee, based on an independent valuation.
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How is it funded?
Commercial and/or seller financing, paid-off with pre-tax corporate cashflow.
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Who gets shares?
Full-time employees are allocated shares proportional to their annual compensation.
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How is stock earned?
A portion of all shares is allocated annually; the shares vest within 3-6 years.
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How do employees cash out?
Vested stock is sold back to the company, at a current valuation, when employees depart.
Who can Benefit from an Employee Ownership?

BUSINESS OWNERS
Selling shareholders gain liquidity & asset diversification
Can defer capital gains taxes on proceeds
Maintain upside & a meaningful role

COMPANIES
Plan sponsors receive tax deductions on sale amount
Can become income tax-free entities
Get a tool to retain & attract talent

EMPLOYEES
Employees secure a unique retirement benefit (company stock)
Earn real stake in their company
Gain workplace stability & peace of mind
Want to Learn More?
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Since 2000, CSG Partners' nationally-recognized, investment banking team has helped private companies capitalize on the benefits of ESOPs.
Join our founder, Larry Kaplan, for a compressive introduction to ESOPs. You'll learn more about key ESOP benefits, tax efficiencies, structures, valuations, financing, and typical "good fits."
LEARN MORE
For additional articles, webinars, and podcasts from our advisors visit our ESOP resources library.
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TALK TO US
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