December 14, 2023
By: Howard Brod Brownstein, Robert A. Willner and Brandon Ralph
When planning the sale of a business, or as part of their estate planning, business owners often utilize an employee stock ownership plan (ESOP) as a tax efficient alternative to a sale to a third-party buyer. While an ESOP transaction can be a complicated process, the benefits can be compelling. The sale to the ESOP will be for fair market value, as determined by an independent valuation company, while providing significant tax benefits to the seller, the company and its employees. A succession of ownership will maintain the stability of the company’s organization, since the employees will become the owners of their employer.
One key factor in executing an ESOP transaction is lining up financing for the ESOP to provide the cash needed to consummate the sale, which is the main focus of this article.
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