Is an ESOP the Ideal Way to Exit your Business?
Employee Stock Ownership Plans (ESOPs) allow owners to sell their businesses to the perfect buyers: their staff!
The best part is, the employees can become the new owners without needing to fund the purchase themselves. Government incentives allow both sides to come out as winners.
Take our free Scorecard to see if your business is a good fit for an ESOP.
ESOP Benefits
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A Ready Buyer
Finding the right buyer for your business can be a struggle. With ESOPs, you are able to sell to those most invested in your company. Its staff!
Staff Retention & Legacy
ESOPs are great for retaining staff as it puts more money into their pockets. It also keeps the company and its legacy intact as no outside third party takes control.
Tax Benefits & Incentives
One of the reasons that ESOPs can be so strong for both owners and staff is that Federal and State Incentives can allow the company to operate tax-free.
Minimum Recommended ESOP Requirements
1.
A US Business
ESOPs are only applicable to US businesses. The right business structure is also important to maximize the benefits, but that restructuring is part of the process, not a prerequisite.
2.
$2.5+ million EBITDA
The ESOP strategy requires a certain amount of administrative costs. While there is no formal minimum amount a company needs to make to qualify, we don't recommend it for business making less than this threshold.
3.
20 Employees
ESOPs are programs whereby ownership of a business is passed to a trust that works on behalf of the employees. We recommend that a business should have at least 20 employees before pursuing this route.