M&A isn’t Always the Answer

Help your clients attain liquidity and legacy goals with an ESOP.

You Know the Risks

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Middle market sales, mergers, and private equity transactions don't always work out.  The due diligence can be exhaustive and risky, as competitors can gain access to confidential information.  Close rates are low, and the capital gains tax burden is generally high.  And while business owners want liquidity, some can’t stomach the thought of selling their business, either due to the loss of autonomy or the fear of post-transaction layoffs.

ESOP – A Liquidity Alternative

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Employee stock ownership plans (ESOPs) offer privately-held 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 owners’ capital and carries a host of other advantages.

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Tax Incentives

Selling shareholders can defer capital gains taxes on the proceeds, while their companies can deduct the sale value to reduce taxable income and potentially eliminate income taxes altogether.

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Continuity

Post-transaction, a company’s board continues operating the business, while selling shareholders often maintain meaningful roles.

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Workforce Benefits

Employees gain a unique retirement benefit in the form of stock allocations.

We Can Help

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Leading attorneys trust CSG Partners to analyze, structure, finance, and close complex ESOP transactions for their clients.  Our focus on education, and our commitment to honoring advisor-client relationships, has led to hundreds of completed transactions, and numerous industry awards.

Take a Free CLE Course

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Learn the legal concepts and strategy behind ESOPs, earn pre-approved CLE credits, and save $89 on this free LawLine.com course.  The webinar covers the practical benefits of an ESOP while highlighting the fiduciary and special tax rules applicable to these transactions.

 

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CSG does not offer and does not purport to offer tax, investment, regulatory, accounting or legal advice, and this information should not and cannot be relied upon as such. Securities, mezzanine debt and equity are offered by Synergy Capital I LLC, a wholly owned subsidiary of CSG Partners. Synergy Capital I LLC is a member of FINRA and SIPC.

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