Journey to an ESOP & Beyond
EP7 - ESOPs for contractors - discussion with Michael Strahan of KPS Bonds out of San Diego CA.
Mar 8, 2021
Michael Strahan, a bonding expert, discusses ESOP transactions for contractors. Topics include structuring ESOP deals for bonding, government certifications, and personal indemnity. Insights on transitioning to an ESOP, managing debt, communication with surety companies, and importance of pre-qualifications in bonding.
34:31
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Quick takeaways
- ESOPs provide contractors with a tax strategy, continuity plan, and employee rewards for successful transition.
- Proper planning, communication, and negotiations with bonding companies are crucial for addressing working capital and debt concerns effectively.
Deep dives
ESOP as a Strong Exit Strategy
ESOPs are considered a strong exit strategy for contractors when the proper management team and structure are in place. They offer benefits such as a tax strategy, continuity plan, and employee rewards. Initially, owners may need to personally guarantee the debt until they are completely bought out, but eventually, personal indemnity can be released as the ESOP-owned company becomes financially stable.
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