Information for Business Owners
There are many reasons business owners sell their stock to an ESOP. ESOPs provide business owners and companies extraordinary, highly-flexible opportunities with substantial tax advantages. For example, unlike other ownership transition options such as an M&A or private equity sale, owners have complete discretion to either exit the business entirely or remain tied to the business as a member of executive management or the Board of Directors. Further, the business owner may choose to sell all or a portion of their stock (leveraged ESOP) or simply contribute stock (non-leveraged ESOP). By their nature, ESOP transactions are controllable and customized to accomplish the goals of the owners.
ESOPs provide powerful tax advantages for all parties: the business owner, the company and its employees. ESOP-owned companies may be tax-exempt entities in certain circumstances. For existing C-corporations, owners may defer or eliminate capital gain taxes. We work alongside the owners’ and company’s tax and legal advisors to ensure the most efficient structure.
ESOPs Accomplish Many Common Goals of Business Owners
- Free-up significant net worth tied up in the business.
- Secures fair market value for equity.
- Reduce or eliminate the company’s taxable income.
- Mitigate or even eliminate the capital gains tax burden.
- Lead and participate in the company’s future growth.
- Can be a controlled and gradual exit.
- Incentives for the management team and employees.
- Creates mechanism to attract and retain top talent and grow the business.
- Creates an opportunity to reduce estate and gift taxes.
- Opportunity to benefit charitable causes.
- Company maintains independence and privacy, perpetuating owner legacy and protecting employee jobs.
- Owner affords employees incredible wealth-building opportunity.
For more information, please request a consultation based on your specific needs.