Trucking Company
Engineering Firm – Partners look to cash out, reward their employees, and continue to run the company
Goals of Ownership:
- Four partners own a medium sized NYC engineering design firm. They have 65 employees. Nobody is ready to retire, but they want to take money out of the company and partially exit
- They want to participate in the upside of the company
- Reward their employees and continue managing the firm
Prior Action:
- They cannot sell to private equity
- They don’t want to sell to a competitor
Solution:
- Partners sell 100% of the firm to an ESOP with opportunity to buy back a small percentage of the firm in the future
- Management continues to operate the firm.
- Partners don’t have to pay tax on the sale of the company (tax deferred indefinitely).
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The ESOP borrows money, using the Company’s balance sheet, and pays partners.
- No personal guarantees for this loan
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The partners take back seller notes from the company
- Partners receive warrants to buy back a percentage of the equity in the future
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The company becomes a completely tax free enterprise
- Debt can be paid back twice as fast
- Employees are more personally invested in the company as beneficiaries of the ESOP trust, gain a huge retirement benefit and therefore work harder (as demonstrated in these Harvard studies)
- Watch this quick video for Engineering Firm ESOP Benefits HERE
Other Case Studies
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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