CSG in the News - Winter 2024

Accounting Today, The Business Journals, and Medical Economics Logos

February 23, 2024 CSG Partners Staff

Professional service firms have always been prime employee ownership candidates, but a number of high-profile transactions drove increased coverage of leveraged ESOPs in early 2024. A trio of national publications – Accounting Today, The Business Journals, and Medical Economics – turned to CSG's experts to explain the trends and describe the benefits of employee stock ownership plans.


Accounting Today Interviews Lawrence Kaplan

ESOPs: a Transition Tool for the Future

In the recent past, accounting firms might have sold to private equity, but they're beginning to understand there are other options.

Kaplan says, "The use by BDO of an ESOP has sparked interest in the procedure. BDO sold a minority interest to employees through an ESOP, which led to a tremendous amount of interest. Many that sold to private equity said that if they had understood it better, an ESOP would have been the better route to go..."

"It's a way for older partners looking for the firm to buy them out to do so in a tax-advantaged way," he continued. "They don't pay tax and they get liquidity at the same time that younger partners get liquidity through participation in the ESOP. Firms are struggling today because they can't get accountants to process their work, and they're looking for ways to attract and retain qualified people who will stay with the firm. At some point, the cost of leaving the firm is not worth it.

Kaplan's full interview is available on Accounting Today.


The Business Journals Interviews Larry Kaplan

Business Owners Looking to Exit Have an Overlooked Option - Their Own Employees

For business owners who are wary of selling to a private-equity firm or are concerned about the long-term legacy they'll leave behind, ESOPs represent an often-underutilized choice, said Larry Kaplan, founder and managing partner at CSG Partners, which helps create leveraged ESOPs.

"They built these companies for nothing. They put their blood, sweat and tears into these businesses. They want to do something that's good for them but good for everybody," Kaplan said. "In many instances when private equity buys a company in a leveraged buyout, there can be massive disruption to the company..."

Ultimately, Kaplan said ESOPs give business owners who want to cash out a chance to better enjoy retirement while keeping the company in the hands of the professionals who helped grow it — whether that company is a manufacturer, a law firm or a medical practice.

“I think I would rather have the future of medicine in the hands of doctors,” Kaplan said.

Kaplan's full interview is available on The Business Journals.


Medical Economics Interviews Michael Bannon

How an ESOP can Help Your Practice Remain Independent

Many practices don’t see a path forward when it comes to maintaining their independence and end up selling to a larger organization. One often-overlooked option that some practices may be able to harness can provide the equity needed to stay competitive: an employee stock ownership plan...

"From a physician’s perspective, it's a liquidity and diversification plan," notes Bannon. "A physician-owner can sell their stock to an ESOP at fair market value... to receive cash proceeds and diversify their personal net worth."

"An ESOP pays the equivalent of what a private equity firm or financial buyer will pay for a medical practice or MSO. There is an option through the ESOP to preserve the legacy of the practice that you have built up over time, and ensure that the next generation of physician leaders can retain equity upside or equity growth going forward as you continue to expand..."

"It's also an extremely powerful recruiting and retention tool... Once those staff members start to see the power of equity ownership, for sharing in equity ownership over time, it is a huge incentive to stay with the practice, and build up their careers within the practice, which yields dividends for the physician leaders, to the equity owners, and to the practice overall over a long period of time."

Bannon's full interview is available on Medical Economics.

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