Axiom has made a reputation in the industry for its successful implementations of Employee Stock Ownership Plans (ESOPs). Our vast experience structuring, valuing, and implementing ESOPs has made Axiom a one-stop shop for any company interested in creating a legacy transition within a company.
Business owners who are in need of liquidity but are opposed to selling their business to either a strategic or financial buyer (for reasons including, preserving a business “legacy” or loyalty to existing employees and management) have the option of creating an Employee Stock Ownership Plan. ESOPs allow for the transfer of ownership to the existing employees while creating a liquidity event for the business owner.
An ESOP is also a great way to create a liquidity event for an owner whose business either does not have a readily available buyer or whose true equity value is undervalued by potential investors and buyers.
Some benefits of an ESOP include:
- The sale of a company that is perhaps undervalued by other private investors.
- Preserves a business owners’ “legacy” and protects jobs by transferring ownership of the Company to existing employees, versus selling to a strategic or financial buyer who may move the company or eliminate aspects of the business.
- Corporate pre-tax earnings can be used to buy shares from owner.
- Stock and cash contributions are tax-deductible.
- Contributions used to repay any loans the ESOP borrows to buy the company shares are tax-deductible.
- The transaction can be completed all at once or gradually in installments over time.