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.
ESOP: A Liquidity Alternative
Employee stock ownership plans offer private companies and family businesses a tax-efficient, liquidity opportunity. A company’s stock is sold to an employee trust at a fair market valuation. The transaction is funded through commercial and/or seller financing (often without personal guarantees) and paid-off with pre-tax corporate cash flow. This frees shareholders’ capital and carries a host of other advantages.
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).
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.
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.
Enhanced Corporate Cash Flow
Leveraged ESOP transactions yield income tax deductions equivalent to the sale price, and 100% employee-owned companies can operate income tax-free in perpetuity.
Workforce Incentives
Employees gain a unique retirement benefit in the form of stock allocations. Studies show that employee-owned companies statistically outperform their peers.
Legacy Preservation
ESOPs enable companies to remain independent, stay put in local communities, honor long-tenured employees, and maintain enduring cultures.
ESOP Case Study
See how employee ownership strategies can help stakeholders attain their unique goals. Join Larry Kaplan, CSG’s Founder and Managing Partner, for a walk-through of the leveraged ESOP feasibility, structuring, and financing process in this brief video.
Based on real client interaction, this case study highlights the key considerations and strategies behind a successful employee stock ownership plan transaction.
More Employee Ownership Insights from our Team
For additional employee ownership tips and insights, check out our most popular educational materials, prepared by our ESOP experts.
Why do Leading Advisors and Relationship Managers Trust CSG?
We've guided companies nationwide – from feasibility studies to financing and completed transactions – though the employee ownership process.
Our focus on education, and our commitment to honoring advisor-client relationships, has led to hundreds of ESOP formations and numerous awards from leading organizations.

Talk to our Advisors
Whether you need a full ESOP walk-through or a couple of questions answered, our team is available and ready to assist.