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Flexibility |
A transaction can be structured to meet the goals of the sponsoring company, its shareholders and management. | |
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Minimum After-Tax Sales Proceeds |
Properly structured, selling shareholders do not pay capital gains tax on sales proceeds. | |
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Seller Diversification |
Existing shareholders can receive an all-cash partial liquidity event to diversify holdings while still participating in future appreciation of the company’s stock. | |
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Ownership Transition Plan |
Establish long-term liquidity strategy that allows the remaining shareholders to elect to defer taxes on capital gains from subsequent transactions. | |
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Maintenance of Future Upside |
In a partial transaction, shareholders can retain a meaningful participation in future increases in equity value. | |
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Wealth Performance Equation |
Employees accrue significant wealth that is in line with company performance, which aligns the interests of management and employees. | |
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Enhanced Cash Flow |
Tax savings due to ESOP contributions improve company cash flow; 100 percent ESOP-owned S corporations have “supercharged” tax savings. | |
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Continuity of Governance and Management |
The ESOP trustee is elected by the Board, and absent fraudulent or negligent activity that it must respond to, does not actively participate in day-to-day management of the business. |