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Whether you're considering a business transition or you're simply interested in learning more about employee ownership, we can assist. Our advisors have helped hundreds of companies – including Vistage members – build ESOP-led succession, exit, and liquidity strategies.

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Supporting the Vistage Community

Members and chairs often come to us with limited knowledge of ESOPs. That's par for the course. Employee ownership strategies are nuanced and less common than other business transition and liquidity strategies. That's where we come in.

CSG Partners has helped hundreds of closely-held companies nationwide unlock the unique benefits of ESOPs. And since 2019, we've been a proud Vistage supporter.

Whether you're an employee ownership novice or actively considering a transaction, we're here to help. Read ahead for easy-to-follow resources and presentations developed in conjunction with Vistage Networks.

Unlock Net Worth

Creates a tax-advantaged, liquidity event and diversification opportunity for selling shareholders.

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Free Cash Flow

Yields lucrative tax-breaks for the business; 100% employee-owned companies can operate income tax-free.

Reward Employees

Full-time staff gain stock over time, which can provide stability and a chance to share in corporate growth.

Sustain Legacies

Selling shareholders can maintain a meaningful role with their company and potential upside.

Solving the Partner Succession Challenge with ESOPs

Multi-partner ownership structures often create succession-planning challenges. Private companies ranging from family-owned businesses to widely held professional services firms generally face trade-offs related to liquidity, taxation, and autonomy when considering transaction options.

CSG's Doron Saraf discusses how employee stock ownership plans offer an alternative to buy-sell agreements and third-party sales. Explore how an ESOP strategy can provide fair-market liquidity to retiring partners through commercially financed transactions while allowing a firm to maintain its independence.

ESOP Best Fits & Use-Cases

Employee stock ownership plans are meaningful M&A and private equity alternatives, but not every company is a fit—or ready—for an ESOP‑led succession or exit. So, when does a leveraged ESOP make sense?

CSG's Andrew Nikolai walks through common ESOP use cases and the metrics behind successful transactions. Learn how closely held companies can maximize plan benefits and build tailor-made business transition strategies

ESOP Fundamentals

ESOPs are powerful business transition and liquidity tools, yet many business leaders and advisors only encounter these strategies in brief media references or at the fringes of a transaction. This session is designed to close that gap.

CSG's David Blauzvern covers how plans work, core benefits, and the pros/cons to help potential stakeholders gain a practical understanding of employee ownership strategies.

EMPLOYEE OWNERSHIP BASICS

Are there different types of employee stock ownership plans?

Yes. The two most common types are contributory and leveraged ESOPs. Contributory plan sponsors periodically issue new shares to an employee trust. Cash can also be contributed to a trust so that it may purchase company stock. In a leveraged plan, an employee trust borrows money to purchase an equity stake from a company sponsor.

Are partial sales permitted?

Yes. Also known as minority ESOP transactions, these strategies enable targeted shareholder exits and partial liquidity events. Sponsor companies maintain the freedom to explore various transaction options, while individual shareholders can retain non-ESOP equity. Additional shares can be sold to a company's employee stock ownership trust at a later date.

What laws govern ESOPs?

The Employee Retirement Income Security Act of 1974 (ERISA) codified the modern ESOP, set plan standards, and gave the Department of Labor oversight jurisdiction. Subsequent, bipartisan legislation has both clarified regulations and expanded the set of tax incentives available to ESOP stakeholders.

LEARN THE HISTORY OF ESOPs

How do employee stock ownership trusts buy company stock?

An employee trust acquires shares on behalf of ESOP participants. A trustee negotiates the purchase price based on an independent valuation. Employees do not pay out-of-pocket for stock. Instead, the sponsor company secures financing and repays those loans on the trust's behalf.

How are employee-owned shares allocated?

Eligible employees receive share allocations proportional to their annual W-2 wages. In a leveraged ESOP, stock is usually parceled out over multiple years. Similar to 401(k) plans, there’s generally a three-to-six-year vesting period for allocated stock. The details are determined before the plan is formed and outlined in the ESOP plan document.

When and how can employee owners sell shares?

Generally, when an ESOP participant retires or leaves a sponsoring company, all their shares are sold back to the plan sponsor. Shares are priced at a current valuation, and the sale is orchestrated by the employee stock ownership trust. Plan participants can roll their proceeds into another qualified retirement plan.

UNDERSTAND HOW ESOPs FUNCTION

ESOPs AS M&A ALTERNATIVES

How do ESOP sales differ from other transactions?

ESOPs offer privately-held companies continued independence, unique tax advantages, and employee benefits. Post-transaction oversight of an employee-owned business rests with the firm’s board of directors, and selling shareholders often maintain meaningful roles.

Are certain companies better suited for leveraged ESOPs?

Leveraged ESOPs are industry-agnostic, but private companies with taxable income and at least 10 employees are generally better candidates. Common use cases include family business ownership transitions, management buyouts, partner exits, and partial liquidity events for owners who want to stay with their companies.

How do selling shareholders receive cash at close?

Many third-party lenders, including major banks and funds, help finance leveraged ESOPs. These loans are secured by plan sponsors on behalf of their employee trusts. Senior debt, without personal guarantees, is commonly used to provide up-front cash to sellers. Seller notes are also a standard ESOP financing component.

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