An Employee Benefit and Shareholder Liquidity Strategy
An employee stock ownership plan (ESOP) enables privately-held companies to sell equity, at an independent valuation, to an employee trust. These are not stock options plans. Instead, an ESOP is an ERISA-authorized retirement plan that invests directly in employer securities.
And for a quick study on the basics of leveraged ESOPs, download our concise guide.
Equity is sold by the plan sponsor to an employee trust in a financed transaction. Selling shareholders are paid FMV and can defer/potentially eliminate taxes on those gains. The company receives income tax deductions equivalent to the leveraged ESOP sale amount.
How a Leveraged ESOP Works
Who Benefits from Employee Ownership?
Selling shareholders gain liquidity and asset diversification
Can defer capital gains taxes on sale proceeds
Maintain upside potential and an important role in the company
Receive tax benefits that enhance corporate cash flow
Employee-owned S corporations can become income tax-free entities
Create a novel employee benefit plan to retain and attract talent
Full-time employees earn ownership interest and gain a unique retirement benefit
Can reap the benefits of company performance
Employee owners secure workplace stability and peace of mind
Employee Ownership 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 selling to an employee stock ownership plan, or how to prepare for a transaction, or operating as an employee-owned company, you've come to the right place. You'll find answers below and even more on our ESOP Resources page.