There is only a certain level of outside debt that a company can sustain. In some ESOP deals, the owner chooses to take back a small amount of seller notes (IOU’s to the ESOP). A seller note is advantageous to the company and to the owner because in lieu of a high interest rate, the seller receives warrants to purchase stock in the company at a future date. This helps the company because it does not have to pay a high interest rate, and it gives owners upside in the future of the company.
If the owner wants more cash at closing, MBO will invest money.
No third party buyer needed. The employees are the third party buyer. Watch the 1 minute video below
Contact Us
Contact us if you have any questions.
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.