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Home > Resources > ESOP > ESOP Succession Planning: Aren’t ESOPs Expensive?

ESOP Succession Planning: Aren’t ESOPs Expensive?

March 13, 2019 by Kevin Long

For those considering ESOP succession planning, Kevin Long compares the cost of an ESOP with a conventional third-party sale, and  how selling to an ESOP can actually cost much less.

Transcript:

As ESOP attorneys, we hear this question all the time. Aren’t ESOPs expensive? Aren’t they complicated?

Well, that’s actually the wrong question to ask. The right question to ask is this: How do the costs and details of an ESOP transaction compare to a transaction where you sell your company to a private equity group or a strategic buyer?

Because that’s essentially what’s happening with an ESOP.

You aren’t doing an ESOP. The ESOP is a buyer for all or part of your company. And in almost every circumstance, you’re going to find that the cost of an ESOP transaction can be much less than a third-party transaction.

Here’s why.

In a third party transaction you’ll have at least two lawyers, accountants, investment bankers and brokers, and the extensive due diligence and negotiations they’ll be involved in.

In an ESOP transaction, you have a friendly buyer that knows your company. 

Of course you’ll have lawyers, consultants, and an appraiser for the due diligence, transaction design, and perhaps financing. But you won’t have the cost of an investment banker or broker taking the company to market and taking a percentage of the transaction.

To figure out what you do need for your particular transition and what you don’t, we use a transparent pricing guide to ensure you’re spending only the right fees and costs in the right order. 

That’s the way to efficiently and cost effectively complete an ESOP transaction.

Speaking of benefits, this is Kevin Long. If you need specific guidance on this topic, let’s start a conversation.

This podcast is for general informational purposes only. It does not create an attorney-client relationship between Employee Benefits Law Group and the listener or reader and does not constitute legal advice for a specific situation. 

More About ESOP Succession Planning

An ESOP can be a powerful succession planning tool for your business. This article describes five ways an ESOP can fit, or even drive, your succession planning.

Learn More…

Filed Under: ESOP Tagged With: ESOP, ESOP Attorney, ESOP Lawyer, Podcast

About Kevin Long

Kevin has personally worked on every one of our 400 ESOP cases. Designing new ESOPs or assuring sustainability for existing ESOPs, he guides companies to achieve goals with their benefit plans in a tax-advantaged manner while incentivizing their employees to greater productivity.
Learn More About Kevin

EDITOR’S NOTE: We did the best we could to make sure the information and advice in this article were current as of the date of posting to the web site. Because the laws and the government’s rules are changing all the time, you should check with us if you are unsure whether this material is still current. Of course, none of our articles are meant to serve as specific legal advice to you. If you would like that, please call us at (916) 357-5660.

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