Employee Stock Ownership Plan (ESOPs) Valuations
The legal demands of creating an ESOP require experienced advisors. ESOPs can be a tool for business owners who would like to maximize benefits for shareholders and employees. When undergoing the ESOP process, it is important to have a credible business valuation firm, since filings face intense review from the Internal Revenue Service and the Department of Labor.
ESOPs Provide Benefits
- Selling to an ESOP can be tax-deferred.
- The company selling shares also receives significant tax advantages in a leveraged ESOP transaction. Both the principal and interest payments on loans used to finance a leveraged ESOP are tax deductible to the company.
- ESOPs allow continuity in the management of the business. Selling to an outside investor can involve restructuring, recapitalization, or the installation of a new management team. After an ESOP transaction, management typically remains the same.
- Sharing ownership with employees can increase morale and productivity, making the company more competitive and profitable.
SP&H’s Team of Experts Plays a Key Role
- We establish the value for the ESOP initial transaction.
- Working with the ESOP advisory team, we help determine whether an ESOP is right for your company.
- Authoritative communication of value to your employees.
- Superior diligence, documented support, and clear reporting.