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financing for employee stock ownership plans

What is your succession plan?

For many businesses looking to develop a succession plan, an employee stock ownership plan (ESOP) may be the ideal solution. An ESOP allows a business to provide a secure plan that is in line with the business owner’s long-term goals and has the potential to generate tax advantages.

If your business is being sold to your employees, you may need to borrow to finance a portion of the transaction. Our team will work with you to determine the best solution for your situation and help you navigate the unique accounting, transaction structure, and regulations that come with selling an ESOP.

Creating a lasting partnership well beyond the transaction

Implementing an ESOP sale can be a complex process resulting in significant changes to the cash flow and balance sheet of your business. We’re confident we can help guide your business in ways other banks can’t because our team of professionals is knowledgeable in this space and has experience in a variety of industries. They understand the nuances of ESOPs. Our commitment to working closely with you throughout the entire process will help ensure a smooth and sustainable transition from the initial transaction until long after the last share is released.

Meet the team

Alan Carlyle, Managing Director ESOP Finance Group

With more than 20 years of ESOP lending experience at large banks, Alan has covered hundreds of transactions across many industries. He is an active member in the ESOP Association and National Center for Employee Ownership. Alan also brings experience in several other lending areas rounding out his knowledge of complex lending solutions for companies large and small.

Call Alan: 313.333.0928

Sean Kelleher, Managing Director ESOP Finance Group

Sean focuses on advising company owners and bankers on the benefits of ESOP and understanding the complex issues surrounding these transactions. He has 25+ years’ experience working with complicated financing transactions and problem solving and has led multiple teams in various specialties for national and regional banks.

Call Sean: 312.788.6785

We want to help

Getting financing isn’t an overnight decision. There are lots of options to consider and each comes with unique questions.

But don’t worry, we’ve seen it all and can help you through it.

Our lending options include leveraged cash flow lending to asset-based lending, including:         

  • Term loans
  • Revolving lines of credit

We’re ready to work with you to finance a solution that will work to drive your business’s continued success.

Drop us a line by submitting the form and we’ll be in touch soon.

 








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Frequently asked questions

An employee stock ownership plan, or ESOP, is an attractive employee benefit plan and corporate financing tool, which allows employees to become beneficial owners of the stock in the business. The structure of an ESOP can range from simple to complex. Typically, a business borrows money from lenders or investors, and then loans the ESOP trust funds for the purpose of acquiring shares. This type of plan can also provide the business with various tax benefits.

Learn more from The ESOP Association.

The advantages and benefits of an ESOP are varied depending on whether you are the employee/participant, an existing shareholder, or the employer.

  • Employee benefits

An ESOP can provide an employee with significant retirement assets if the employee is employed by the company for a long period of time and the employer stock has appreciated over the years. Since the stock is allocated to each employee’s account based on a contribution by the business, the employee bears no cost for this benefit.

  • Shareholder benefits

An ESOP can provide ready, current market for the stock of outside stakeholders providing liquidity not otherwise available. This feature can be used by participants, beneficiaries, major shareholders, or estates of deceased shareholders. This leveraging provides a way for a selling shareholder to receive cash.

  • Employer benefits

An ESOP is mandated by law to invest contributions in employer stock and is the only qualified employee benefit plan which is permitted to borrow funds on employer credit in order to acquire employer stock. This provides flexibility for a business using an ESOP as a corporate finance tool. Another major benefit is the positive impact that results when employees have an equity ownership in the company.

All loans subject to credit review and approval.

Structure, Rates, and Terms are dependent upon the credit profile of the borrower and unique to each transaction.

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