Goals of Company Owner:
- Three partners in a vertically integrated MSO looking to take some chips off the table.
- Their goals were to reward employees, reduce their tax burden to zero, and more than double their cash flow.
- They were especially focused on employees.
Prior Action:
- Explored selling, but no buyers had cash.
- Sought growth capital, but interest rates as high as 25% were prohibitive.
Solution:
- Sold 100% of the company to an ESOP, making the business 100% income tax-free.
- One partner used QSBS stock to avoid capital gains tax, while the others utilized QRP for tax deferral.
- The ESOP improved cash flow, allowing rapid debt repayment and more than doubling the available cash.
- Owners stayed on with warrants for future repurchase and continues to manage the company.
- Employees gained ownership stakes, driving retention and increasing motivation.
Contact Us
We’re easy to reach and always happy to help
We invite you to call us with any questions you have or email us by filling out the form below. No question is too big or too small – whether you have a question about MBO Ventures or a question about ESOPs.
dgleeman@mboventures.com
Partner Phone: (646) 734-2035
40 Fulton Street, 17th floor
New York, NY 10038