The ESOP

The ESOP Opens Many Succession Windows.

Merger/Acquisition

If you want to expand through merger or acquisition, you have a solid friend in ESOP. We show you how to finance any of the following scenarios through debt. Keep in mind — the ESOP can reduce the overall price and cost of financing any transaction by as much as 52%.

Company Expansion

You want to generate capital for new plant and equipment? Properly structured as a sophisticated tool of corporate finance, the ESOP would be less expensive than conventional debt financing. Taxes would be lower, yielding higher cash flow, in excess of cash needed to repay debt.

Management Buyout

You want to raise capital by selling a product line, subsidiary or operation. Your management team and ESOP Trust might represent ideal buyers. After all, they already know the business. An ESOP buyout would result in lower taxes and much higher cash flow.

Public vs Private

Regulations, expense and the other complications of being publicly held are untenable. Your management team might consider an ESOP buyout to privatize the company. This strategy creates the highest yield for you. It cuts financing cost. Consider further — the cost to implement ESOP is tax deductible, unlike a brokerage cost taken out of seller proceeds.

Hostile Takeover Risk

The ESOP discourages takeovers. Place a large block of shares with the ESOP Trustee and your Board likely would favor your management over a hostile party. Note: there is no pass-through voting to employees except in rare situations. Takeover is more difficult when management can leverage company assets in this way. And the current Board or one with defined independent board members control corporate governance.