What's an ESOP?

Employee Ownership:  An M&A Alternative

America's closely-held businesses create prosperity and bolster communities. But even the most enduring companies eventually reach an M&A crossroads.

Private and family-owned firms often have a range of options. While sales and private equity deals create liquidity, these transactions can eliminate jobs, diminish legacies, and yield hefty tax burdens.

What if you could monetize your equity, and maintain a meaningful role with your company, while securing the future of your business and its employees? It's possible with an employee stock ownership plan.

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TAX-ADVANTAGED LIQUIDITY

Shareholders can defer or eliminate capital gains taxes on their sale proceeds, while their companies gain meaningful tax deductions and can become income tax-free entities, in perpetuity

ESOP Tax Advantages In-Depth

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FLEXIBILITY & DIVERSIFICATION

Partial ESOP sales are common, as are follow-up transactions. That allows shareholders to de-risk with potential upside and enables companies to engage in future ESOP or M&A transactions.

HOW ESOPs UNLOCK NET WORTH

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ENGAGED EMPLOYEE-OWNERS

Full-time staff earn stock over time, giving them skin in the game and stability. Research has shown that employee-owned companies outperform their non-ESOP peers.

WHY EMPLOYEE OWNERSHIP MATTERS

How a Leveraged ESOP Works


An employee stock ownership plan enables privately-held companies to sell equity, at an independent valuation, to an employee trust. These are not stock option plans. Instead, an ESOP is an ERISA-authorized retirement plan that invests directly in employer securities.


Learn More About ESOP Mechanics

Employee Ownership Benefits, Pros & Cons 


Leveraged ESOP strategies carry notable advantages compared to private equity and third-party transactions. Transactions are customizable, industry agnostic, and can be utilized by partnerships, as well as C and S corporations.

But it's important to understand the full range of costs, benefits, corporate implications, common use cases.

If you own or advise a private company, and you're considering a transaction, it's also wise to compare employee ownership plans against other M&A options.

For a comprehensive overview, download our reference guide.

 

More ESOP Questions? We Can Help.


 When CSG Partners was founded in 2000, we made education a priority. That remains central to everything we do. So, if you have questions about forming an ESOP, executing a transaction, or operating an employee-owned company, you've come to the right place. Book time with our team today.