The owner wants to lead the company into it’s new future
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The owner can sell a minority portion of the firm to the employees, take some cash off the table, diversify into other asset classes and have upside potential from future growth of the company. To fund the sale, the company will get a non-recourse loan from a bank.</p
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The owner might wish to sell a majority or 100% portion of their firm to the employees. If the owner wants, he or she can still keep their job and continue to lead the company. See Video
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To fund the sale, the company will get a non-recourse loan from a bank,
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Depending on the amount of equity sold to the ESOP, the owner will most likely take back seller notes (an IOU from the owner to the ESOP).
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The owner may also allow MBO to invest in the deal.
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What happens after the ESOP
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Many owners wish to sell 30% – 49% of their company in the first step of a transaction, and then sell another piece of the company 4 or 5 years down the road
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Engineering Illustration.
Look at how 4 partners in a mid-size engineering firm sold 100% of their firm to their employees while continuing to manage and lead the firm. They deferred their taxes on the sale of the company. The company runs tax free.
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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.