U.S. / TAX ESOP Triggers

C or S Corporation at time of sale

Minimum number of employees

EBITDA of $1.5M+

Been in business several years and can reasonably anticipate cash flows

Minimal amount of debt on books

C or S Corporation at time of sale Businesses can choose to move forward as an S or C Corporation to become an ESOP-owned company. Even if you aren't a C or S Corporation today, we can help you convert to the most favorable tax structure.

Strong management team Any buyer, whether an ESOP or not, would expect a strong management team. If the seller/s are stepping aside, a strong bench is even more important.

Minimum number of employees ESOPs are designed to benefit all employees, not just a few. Depending on the final tax structure, the company may be subject to concentration rules regarding owning S Corporation stock.

EBITDA of $1.5M+ A company should be of a certain size for the costs of a transaction to make sense. Senior financing may be raised to fund part of the sale and banks will mostly be interested in lending into transactions of size.

Been in business several years and can reasonably anticipate cash flows Future cash flows are integral to the value of the company that will result from a negotiation with the trustee. Similarly, any financing source will look at the pattern of predictable cash flows.

Minimal amount of debt on books A leveraged ESOP pays down the transaction debt in various forms from company cash flows. High levels of pre-transaction debt may impact the valuation as well as the ability to find senior debt for cash at the closing table.

Payroll, equity, and tax data Multiple forms of employee equity and incentive compensation, from options to shares to cash Global tax rates and rules for 160+ countries, 50 U.S. states, global provinces, and local jurisdictions Semi-annual updates to reflect new legislation