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Ownership Options

Basic ESOP Information

Liquidity. There are about 7,000 ESOPs in the US. As an alternative ownership model, an ESOP can preserve legacy and create perpetually sustainable businesses. It provides shareholders of privately-held businesses a tax-efficient liquidity vehicle, while also enabling the employees to earn a share of the business that they helped to build. Employees do not need to approve an ESOP sale or invest in it. If you are a closely-held or a family-run business, you or your family can still run the business after establishing an ESOP.

Owner and Stakeholder Benefits:

  • Creates liquidity and a transition plan for shareholders, enabling them to defer their capital gains taxes from the sale, often permanently;
  • The current credit environment is active and competitive, providing the necessary financing;
  • More private and less adversarial than selling to an outside third-party;
  • Provides continuity of the existing corporate culture;
  • Thousands of companies are now 100% ESOP-owned S Corporations; since ESOP trusts are tax-exempt, these organizations operate essentially tax-free;
  • Maturing ESOPs can become a tax-advantaged vehicle to acquire other businesses.

Employee Benefits:

  • Employees on average make 5% to 15% more annually by receiving stock in their ESOP accounts;
  • Employees on average have 3 times the retirement assets verses non-ESOP benefit plans;
  • Employees become beneficial owners without investing any of their own capital;
  • Employees build equity value annually in their ESOP accounts;
  • ESOPs preserve and create jobs, and fewer are outsourced.

The Ambrose ESOP Advisory Approach

One-Stop. We offer an ESOP-focused bundled services platform. Our team will help you explore an ESOP as a transaction option, structure, execute and finance a transaction, as well as manage the post-transaction administration and maintenance for the ESOP. We can handle the entire sell-side of a transaction;*

  • Investment Banking: Valuation analysis, transaction structuring and modeling, creating the transaction plan, leading the transaction execution, debt placement;
  • Transactional Support: Transaction design, due diligence, transaction negotiations, build-out an e-data room, selection of buy-side fiduciary;
  • Legal Counsel: AmbroseAdvisors’s™ affiliate member, Holzman Horner PLLC, provides independent legal representation of shareholders and companies seeking counseling on ESOP-related matters and transactions involving ESOPs;*
  • Annual Reporting and Ongoing Support: Coordination, consulting, record-keeping, third-party administration (TPA), accounting & tax reporting assistance;
  • Special Needs: Favorable determination letter application submissions, other IRS & DOL representation, and voluntary correction submissions.

*All legal services are provided through Holzman Horner PLLC, an affiliate member of AmbroseAdvisors™.