Employee Stock Ownership Plans (ESOP) have been around for over 25 years, and many well known, national companies have them, but many misconceptions still exist, such as: (1) Employees will directly own the company’s stock [FALSE], or (2) Employees will directly ratify everything from executive compensation to capital spending plans [FALSE], or (3) Employees will have complete access to all of the company’s trade secrets and financial data [FALSE].
Selling to an ESOP trust can have many advantages for the Seller, including: (1) ESOP sales are stock sales, and qualify for lower CAPITAL GAINS tax rates, (2) Sellers may reinvest 100% of the proceeds TAX DEFERRED, (3) Sellers may sell from 30% up to 100% of their shares, and still retain 100% operating control of the company, and (4) Sellers may receive a substantially higher price from an ESOP, depending upon the specifics in each case.
The Bradway Group has experience working with ESOP financial advisors, bankers, attorneys, appraisers, etc., and can help you decide if any ESOP is right for your company. To learn more about ESOPs and qualify for a complimentary, preliminary feasibility study, contact me, or any of the M&A professionals at www.bradwaygroup.com.
By: Mike Ertel, Transworld M&A Advisors