ETA Insider Podcast ETA Alternatives: Employee Stock Ownership Plans (ESOP)
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Dec 2, 2018 Mary Josephs, founder and CEO of Verit Advisors, dives into the world of employee stock ownership plans (ESOPs). She reveals how ESOPs serve as an innovative corporate finance alternative, offering unique tax benefits. Mary debunks common myths surrounding valuation and control issues, and shares advice for entrepreneurs on using ESOPs to initiate seller conversations. She emphasizes legacy preservation and community impact, while also discussing pitfalls when acquiring ESOP-owned companies. Overall, she champions ESOPs as a viable financing strategy.
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ESOPs As A Tax-Advantaged Finance Option
- ESOPs are a corporate finance alternative that bring distinct tax benefits for sellers and companies.
- Sellers can defer capital gains and companies may avoid federal income taxes under ESOP structures.
Compare ESOPs With Other Exit Paths
- Do evaluate ESOPs alongside M&A, recap, and private equity when exploring exit options.
- Consider ESOPs when you want to retain leadership and gain tax advantages rather than sell outright.
ESOPs Can Preserve Value And Control
- ESOPs can pay fair market value and often act like financial buyers valuing future growth.
- ESOPs are typically benign co-shareholders that allow founders to retain operating control.