What Is an ESOP Advisory Service?
An ESOP advisory service helps business owners navigate the complexities of selling their company to employees through an Employee Stock Ownership Plan (ESOP). These services include structuring the ESOP transaction, securing financing, optimizing tax benefits, and ensuring compliance with regulatory requirements. ESOP advisors work closely with business owners to develop a tailored plan that aligns with their financial goals, succession plans, and company culture.
Why Are ESOP Consultants & Advisory Services Important?
ESOPs are complex financial transactions that require strategic planning, regulatory compliance, and financial structuring to maximize benefits. ESOP advisory services provide expertise in:
- Valuation & Deal Structuring: Ensuring the business is fairly valued and the transaction benefits both the owner and employees.
- Tax Optimization: Helping owners defer capital gains taxes and making the company tax-exempt if 100% ESOP-owned.
- Financing the ESOP: Arranging debt and equity financing to fund the transaction.
- Regulatory Compliance: Navigating Department of Labor (DOL) and IRS requirements.
- Ongoing ESOP Management: Providing guidance on governance, employee engagement, and long-term financial strategies.
By hiring an ESOP advisory consultant, business owners avoid costly mistakes and unlock the full financial potential of an ESOP sale.
We structure the ESOP,
get financing, and invest
If you are not looking to be acquired, we advise company owners on an ESOP structure. You might be considering selling your firm to management or passing the firm to your family. You just might be looking for alternative options.
MBO is a launching pad for privately owned firms that are contemplating various exit strategies. To accomplish a successful exit, we focus on selling your firm to your employees via a leveraged ESOP. Head to head, at the same valuation, you will earn more money selling to your employees via an ESOP because of the tax benefits.
MBO can provide mezzanine debt to assist you in your leveraged ESOP.
What is an ESOP?
Structuring Your Deal
Besides being great for employees, a properly structured ESOP offers an owner significant tax advantages. (See our 1 minute video on ESOP Basics)
The goal is for your company to pay little or no taxes on an ongoing basis, and for you, as the owner, to cash out of your company (partially or wholly) and defer your taxes on the sale. If structured properly, you can defer capital gains until your death, at which point the capital gains disappear for your heirs (In accounting terms, this is called a Step Up in basis).
MBO works with its partners to provide you with experienced, intelligent solutions – from valuation to arranging financing to Closing. We work with top investment banks, brilliant CPA’s and experienced tax attorneys that will work to maximize your returns.
Arranging Financing
For capital raising, we use our partner network to do the following:
- Determining the amount and type of capital to be raised
- Preparing confidential memorandums for the lenders
- Establish tax advantaged financing terms Contacting our extensive network of private capital sources
- Negotiating the final size and terms of the financing
MBO’s partners have raised billions of dollars for clients. We will get your ESOP financed.
MBO will also invest in your firm.
MBO Will Invest in Your Firm
- Owners seeking to do a 100% ESOP sale
- Owners seeking to do a minority sale to the ESOP
- Working with family-held businesses to “pass the torch”
- Backing managers seeking to create a Management Buyout (MBO)
- Buying out shareholders who are seeking an exit
- Fundless sponsors looking to do acquisitions
- Allows owners to get liquidity
- The ESOP structure allows the owners to defer taxes on the sale (take home cash is more than a straight Private Equity deal)
- Huge tax savings for the company
- Increased cash flow for the company
- You maintain upside in the business through an investment using subordinated debt and warrants
Fill out this form, or feel free to call or email us below
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
Frequently Asked Questions About ESOP Advisory Services
1. What does an ESOP advisor do?
An ESOP advisor guides business owners through the entire ESOP transaction process, including valuation, financing, structuring, regulatory compliance, and post-transaction management. Their goal is to maximize the financial and tax benefits of an ESOP sale while ensuring a smooth ownership transition.
2. What are the key responsibilities of an ESOP advisor?
- Valuation & Feasibility Analysis – Determining if an ESOP is financially viable.
- Structuring the ESOP – Designing the transaction for maximum tax efficiency.
- Securing Financing – Arranging funding for the ESOP purchase.
- Regulatory Compliance – Ensuring adherence to DOL and IRS requirements.
- Employee Engagement & ESOP Education – Helping employees understand their ownership stake.
- Ongoing ESOP Management – Providing long-term advisory services to maintain ESOP success.
3. What are the risks of not hiring an ESOP advisor?
Without professional ESOP consulting, business owners risk:
- Improper ESOP valuation, leading to financial loss.
- Regulatory non-compliance, resulting in IRS/DOL penalties.
- Missed tax savings opportunities, reducing take-home earnings.
- Financing challenges, leading to liquidity issues.
- Employee confusion, decreasing morale and engagement.
4. What qualifications should I look for in an ESOP advisor?
- Extensive ESOP experience with a track record of successful transactions.
- Financial & Tax Expertise in Section 1042, 280E, and tax deferrals.
- Strong Network of lenders, CPAs, tax attorneys, and valuation experts.
- Regulatory Knowledge of DOL, IRS, and ERISA compliance.
5. When should I hire an ESOP consultant for my business?
It’s best to start ESOP advisory services 12-24 months before selling to ensure optimal structuring, financing, and employee preparation.
6. Do ESOP advisors provide succession planning consultation?
Yes, ESOP advisors help design succession strategies that balance liquidity, tax efficiency, and long-term business stability.