Buying and Selling an ESOP Company

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Buying and Selling an ESOP Company"

Transcription

1 Buying and Selling an ESOP Company 2015 ACG Charlotte Deal Crawl Affinity Seminar September 22, 2015 Alberto Toribio del Pilar ButcherJoseph & Co. 101 S. Hanley Rd., Suite 1450 St. Louis, MO P: (314) Daniel (Danny) Johnson, Jr. Moore & Van Allen 100 North Tryon Street, Suite 4700 CharloPe, NC P: (704) Bill Hayes Mosaic Capital Partners 101 South Tryon Street, Suite 2620 CharloPe, NC P: (704) cp.com

2 Representative List of ESOP Owned Clients and Portfolio Companies 2

3 Why ESOP Companies Look to Sell Evaluating the Ownership Structure Changing Risk Profile Market Conditions Unsolicited Offers Changes in Liquidity Needs Repurchase Obligation Issues Debt Service Needs Employee ownership should be evaluated like any other ownership structure. An ESOP is not always a perpetual investor, and as such, requires ESOPowned companies to evaluate their ownership structure in light of the business strategic objectives for growth. Non-ESOP Shareholders Wish to Exit 3

4 Parties Involved in the Sale of an ESOP Company Buyer Company ESOP Management/Board of Directors/Partners Board of Directors/ Shareholders Trustee Legal Advisor Management Legal Advisor Financial Advisor Legal Advisor Financial Advisor Financing Source Financial Advisor Tax Advisor 4

5 Issues for an Acquirer of an ESOP-Owned Company Acquirer needs to be educated as to the peculiarities of ESOP transactions There is a difference between what is customary in non-esop M&A transactions and what is allowable under ERISA and customary in ESOP M&A transactions Acquirer will have to conduct more extensive due diligence and rely on that due diligence as recourse usually limited to an escrow Valuation/fiduciary/administrative issues relating to the ESOP will also have to be negotiated What happens with the money in the ESOP from the transaction proceeds? 5

6 Optimal ESOP Company Sale Process The ESOP Company s Board of Directors develops policies and procedures for sale process, and hires Advisors Senior management receives offer, confirms offer is Bona Fide ESOP Trustee and its Advisors (and in some cases ESOP Participants) analyze the offer Board of Directors reviews offer, recommends approval or disapproval Buyer due diligence, negotiation and documentation of transaction Buyer, company and ESOP Trustee address post-closing issues 6

7 Issues for ESOP Trustees In Evaluating the Offer In evaluating an offer to sell the Company, the ESOP Trustee should consider the following questions: Does the offer equate to or exceed fair market value? (This is Absolute Fairness) Would the ESOP receive its fair share in the transaction relative to other parties to the transaction? (This is Relative Fairness) Was a thorough process used to reach a proposed transaction? Whether the buyer is the best deal partner? Did the Board hire an investment banker? Was an auction process used? Was the contract with the investment banker structured to ensure the best deal possible for the Company? Are the Company decision makers motivated to get the best deal possible or just to get a deal done? 7

8 Other Issues for the ESOP Trustee in a Sale Transaction Can the ESOP Trustee agree to an earn out? Can escrowed funds/earn outs be considered a part of the purchase price for purposes of determining Adequate Consideration and Fairness? Can the Trustee take into consideration any other non-financial factors in evaluating the proposed transaction? 8

9 Administrative Issues in Connection with the Sale of an ESOP Company Participant voting requirements Repayment of ESOP Debt/Remaining shares in suspense account Plan Termination/Disposition of Plan Assets/Full Vesting Other qualified plans and protected benefits Triggering change in control provisions of deferred compensation plans Distribution of plan assets 9

10 Outstanding ESOP Loan Outstanding ESOP-related debt will have an impact on the ESOP s return from the transaction The obligation to repay the ESOP s outstanding debt should be negotiated as it may accrue to either the ESOP or the plan sponsor/other shareholders. The ESOP related debt affects the unallocated shares of stock held by the plan. ESOP Trustee may be able to obtain a final company contribution and/ or dividend payment to pay down the remaining ESOP loan (but issues under Section 415 may arise if the maximum limit is reached because of prior contributions) Will ESOP shares be sold for cash or shares of the buyer? Participant distribution and rollover issues 10

11 Alternatives for the Repayment of ESOP Loans/Disposition of Unallocated Shares Surrender of unallocated shares at deal price in exchange for cancellation of debt and allocate proceeds from remaining unallocated shares to ESOP participants May also need to negotiate replacement benefits if using unallocated share proceeds to repay ESOP debt Forgiveness of all or part of debt and allocation of shares to participants Substitution of buyer stock for company stock and continuation of ESOP 11

12 Transaction illustration Traditional Private Equity LBO and a leveraged ESOP Traditional PE LBO ESOP Sale Transaction Senior Shares Equity Debt Junior Buyer PE Firm (1) Capitalization Acquisition Company Cash (2) Shares Seller(s) Target Sub- Debt Debt Seller(s) Senior Junior Investor PE Firm (3) Cash Promissory Note + Warrants (1) Outside Loan Cash Cash ESOP (2) Inside Loan Selling Company Note Buyer 1. Private equity buyer capitalizes the acquisition through a combination of debt and equity capital 2. Funds used to purchase the target from the seller(s) 1. The company borrows money from a lender (Outside Loan) 2. The company lends the borrowed funds to the ESOP (Inside Loan) 3. The ESOP uses the borrowed funds to purchase the Company s stock 12

13 Investment Structure and Comparison Subordinated Debt Structure EBITDA Return and Credit Comparison Metric PE Deal ESOP Term: 5+ years Cash Pay: 10 13% PIK: 0 5% Equity Participation: 0 35% Detachable warrants Year 0 $10.0MM $10.0MM Year 5 (terminal) $14.5MM $14.5MM Cumulative Cash on B/S Year 0 $0 $0 Year 5 (terminal) $14.0MM $16.2MM Five Year Return Profile Amount Invested $22.9MM $22.9MM Amount Returned $82.1MM $69.1MM IRR 29.1% 27.9% Multiple of Invested Capital 3.6x 3.0x Note to Return and Credit Comparison: ESOP scenario s Five Year Return Profile reflects a subordinated structured equity investment with an 11.0% cash interest, no amortization, and a 35% warrant package exercisable in the terminal year Year 1 Credit Profile Senior Debt Fixed Charge Coverage 1.33x 1.87x Senior and Mezzanine Debt Fixed Charge Coverage 1.19x 1.60x Total Fixed Charge Coverage 1.19x 1.18x 13

14 Financing a Leveraged ESOP Buyout Currently financing is readily available, with leverage multiples varying based on type of loan and underlying business risk Selected Capital Sources Most ESOP transactions are leveraged Senior Credit Facility 2x 4x Seller financing can have unique structural elements (warrants, payment-in-kind) Mezzanine Debt 1x 2x Purchase Price ~ 5x 8x TTM EBITDA Seller financing returns may be difficult to replicate in public markets Seller has ability to finance all tranches of the debt structure EnhancedCapital Seller Financing / Structured Equity 1x 2x Expenses Employees can be given an opportunity to rollover a portion of their 401(k) to fund the ESOP purchase Sources Uses 14

15 Concluding Comments & Questions Alberto Toribio del Pilar ButcherJoseph & Co. 101 S. Hanley Rd., Suite 1450 St. Louis, MO P: (314) Daniel (Danny) Johnson, Jr. Moore & Van Allen 100 North Tryon Street, Suite 4700 CharloPe, NC P: (704) Bill Hayes Mosaic Capital Partners 101 South Tryon Street, Suite 2620 CharloPe, NC P: (704) cp.com 15

16 Disclaimer These presentation materials and the presentation itself are for the attendees of the 2015 ACG Charlotte Deal Crawl Affinity Seminar and intended to encourage thought and discussion and to provide seminar attendees with useful ideas with respect to buying and selling an ESOP company. The materials and the comments of Moore & Van Allen, PLLC attorneys do not constitute, and should not be treated as, legal or tax advice regarding the use of any particular estate, tax or other planning technique or suggestion, or any of the tax, legal or other consequences associated with them. The speakers, ButcherJoseph & Co., Mosaic Capital Partners, and Moore & Van Allen, PLLC assume no responsibility for any individual or entity s reliance on the verbal or written information presented during or in conjunction with the seminar, and pursuant to Circular 230 and the regulations promulgated by the U.S. Treasury, the information is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service. Each seminar attendee should independently verify all information contained in the materials and statements made during the seminar presentations before applying them to a particular client situation, and should independently determine the tax, legal and other consequences of using any particular technique or suggestion before recommending or implementing the same on a client or attendee s own behalf. Materials copyrighted by ButcherJoseph & Co., Mosaic Capital Partners, and Moore & Van Allen, PLLC All rights reserved 16

Buying and Selling ESOP Companies

Buying and Selling ESOP Companies Buying and Selling ESOP Companies 1 2015 CALIFORNIA/WESTERN STATES CHAPTER CONFERENCE UNITED FOR PEAK PERFORMANCE FRIDAY, SEPTEMBER 25 Alan Weissman Independent Trustee Therese Kingsbury Miles Treaster

More information

Business Succession Planning With ESOPs

Business Succession Planning With ESOPs acumen insight Business Succession Planning With ESOPs Presented by Alan Taylor, CPA Partner ideas attention reach expertise depth agility talent Disclaimer Information contained herein is of a general

More information

Insights Spring 2009. ESOP Transaction Insights. Michael McGinley

Insights Spring 2009. ESOP Transaction Insights. Michael McGinley 56 ESOP Transaction Insights Selling an ESOP-Owned Employer Corporation Michael McGinley When a sponsor company establishes an employee stock ownership plan (ESOP), the initial plan is usually (1) that

More information

What is an ESOP? ESOPs are defined contribution pension plans that invest primarily in the stock of the plan sponsor

What is an ESOP? ESOPs are defined contribution pension plans that invest primarily in the stock of the plan sponsor Employee Stock Ownership Plans May 2013 http://aicpa.org/ebpaqc ebpaqc@aicpa.org Topix Primer Series The AICPA Employee Benefit Plan Audit Quality Center (EBPAQC) has developed this primer to provide Center

More information

S CORPORATION ESOPS CREATE INVESTMENT, ACQUISITION, AND EXIT STRATEGY OPPORTUNITIES

S CORPORATION ESOPS CREATE INVESTMENT, ACQUISITION, AND EXIT STRATEGY OPPORTUNITIES ESOP Financial Advisory 3 S CORPORATION ESOPS CREATE INVESTMENT, ACQUISITION, AND EXIT STRATEGY OPPORTUNITIES FOR PRIVATE EQUITY GROUPS William W. Merten, Esq. M&A advisers are becoming increasingly familiar

More information

The Role of an Independent Financial Adviser in ESOP Installation Transactions

The Role of an Independent Financial Adviser in ESOP Installation Transactions ESOP Transaction Insights The Role of an Independent Financial Adviser in ESOP Installation Transactions Kyle J. Wishing, Weston C. Kirk, and John W. Haley Transactions are highly anticipated and highly

More information

The ESOP Business Model. February 2013

The ESOP Business Model. February 2013 The ESOP Business Model February 2013 Topics to be Covered + Purpose and Regulatory Environment + Major Benefits of ESOPs + ESOP Transactions + Business Valuation Standards + ESOP Accounting Rules + ESOP

More information

ESOPs can provide liquidity for business owners and trusts that hold closely held businesses. Non-tax advantages of selling to an ESOP include:

ESOPs can provide liquidity for business owners and trusts that hold closely held businesses. Non-tax advantages of selling to an ESOP include: Know your value Benefits of ESOPs An ESOP (Employee Stock Ownership Plan) is an employee benefit plan that makes the employees of a company beneficial owners of stock in that company. The tax code has

More information

ESOP Business Planning Group

ESOP Business Planning Group ESOP SOLUTIONS Services to Companies Provide initial feasibility analysis and transaction planning Recommend ESOP professional team members Negotiate and implement ESOP financing Coordinate ESOP implementation

More information

EMPLOYEE STOCK OWNERSHIP PLANS

EMPLOYEE STOCK OWNERSHIP PLANS EMPLOYEE STOCK OWNERSHIP PLANS AN EXTRAORDINARY FINANCIAL AND EMPLOYEE BENEFIT TOOL FOR THE CLOSELY-HELD COMPANY Copyright 2015 Olson Mills Law Firm, LLC All Rights Reserved PART TOPIC PAGE INTRODUCTION...1

More information

Moss Adams Introduction to ESOPs

Moss Adams Introduction to ESOPs Moss Adams Introduction to ESOPs Looking for an exit strategy Have you considered an ESOP? Since 1984, we have performed over 2,000 Employee Stock Ownership Plan (ESOP) valuations for companies with as

More information

Session 4B ESOP Challenges Facing Senior Management Taking Care of Business

Session 4B ESOP Challenges Facing Senior Management Taking Care of Business Session 4B ESOP Challenges Facing Senior Management Taking Care of Business The ESOP Association California/Western States Chapter Conference October 5-7, 2011 Paradise Point Resort, San Diego Larry Goldberg

More information

Vermont Employee Ownership Center. Sixth Annual Employee Ownership Conference. Financing an ESOP. Burlington, VT June 6, 2008

Vermont Employee Ownership Center. Sixth Annual Employee Ownership Conference. Financing an ESOP. Burlington, VT June 6, 2008 Vermont Employee Ownership Center Sixth Annual Employee Ownership Conference Financing an ESOP Burlington, VT June 6, 2008 Copyright 2008 by SES Advisors, Inc. All rights reserved. Program Agenda Basic

More information

Contents. Define ESOP 3. ESOP Advantages 4. Creating an ESOP 5. ESOP Tax Advantages 6. ESOP Laws 7. ESOP Rollover (Section 1042) 8.

Contents. Define ESOP 3. ESOP Advantages 4. Creating an ESOP 5. ESOP Tax Advantages 6. ESOP Laws 7. ESOP Rollover (Section 1042) 8. ESOPs Contents Define ESOP 3 ESOP Advantages 4 Creating an ESOP 5 ESOP Tax Advantages 6 ESOP Laws 7 ESOP Rollover (Section 1042) 8 ESOP Valuation 9 ESOP Distribution 10 Repurchase Obligation 11 Disadvantages

More information

An Instrument of Corporate Finance

An Instrument of Corporate Finance An Instrument of Corporate Finance Year-End Seminar Doing Business in Central Pennsylvania and Beyond November 12, 2014 Edward C. Renenger ecr@stevenslee.com A STEVENS & LEE/GRIFFIN COMPANY Introduction

More information

3/22/2011. Financing an ESOP Transaction. Table of Contents. I. The Leveraged ESOP Transaction. John L. Miscione Managing Director

3/22/2011. Financing an ESOP Transaction. Table of Contents. I. The Leveraged ESOP Transaction. John L. Miscione Managing Director Presented by John L. Miscione Managing Director Table of Contents I. The Leveraged ESOP Transaction II. ESOP Tax Benefits III. Debt Capacity IV. Financing Markets and Terms V. The Lender s Perspective

More information

EMPLOYEE STOCK OWNERSHIP PLANS (ESOPs): A BUSINESS SUCCESSION PLANNING TOOL WORTH CONSIDERING

EMPLOYEE STOCK OWNERSHIP PLANS (ESOPs): A BUSINESS SUCCESSION PLANNING TOOL WORTH CONSIDERING EMPLOYEE STOCK OWNERSHIP PLANS (ESOPs): A BUSINESS SUCCESSION PLANNING TOOL WORTH CONSIDERING By: Chuck Coyne, ASA Empire Valuation Consultants, LLC Tabitha Croscut, Esq. Steiker, Greenapple & Crosut,

More information

Leveraged Employee Stock Ownership Plans. May 29, 2007 J. Todd Butler, Esq.

Leveraged Employee Stock Ownership Plans. May 29, 2007 J. Todd Butler, Esq. Leveraged Employee Stock Ownership Plans May 29, 2007 J. Todd Butler, Esq. LESOPs in General An employee stock ownership plan ( ESOP ) is a qualified retirement plan. The main difference between an ESOP

More information

[NAME OF PRESENTATION TO COME]

[NAME OF PRESENTATION TO COME] Nuts and Bolts of Leveraged ESOP Finance [NAME OF PRESENTATION TO COME] Mark A. Bonenfant Buchalter Nemer Los Angeles, California PRESENTED IN TWO SEGMENTS BN 17886518 Third Party PRESENTED BY Legal Opinions

More information

Using ESOPS to Fund Owner Buyouts and Provide Business Capital

Using ESOPS to Fund Owner Buyouts and Provide Business Capital Using ESOPS to Fund Owner Buyouts and Provide Business Capital Harry I. Atlas John A. Wilhelm October 2012 1 What Is An ESOP An ESOP is a tax-qualified employee retirement plan (similar to a 401(k) plan).

More information

Use this section to learn more about business loans and specific financial products that might be right for your company.

Use this section to learn more about business loans and specific financial products that might be right for your company. Types of Financing Use this section to learn more about business loans and specific financial products that might be right for your company. Revolving Line Of Credit Revolving lines of credit are the most

More information

ESOPs in 2014 Myths and Reality. Indiana Benefits Conference March 18, 2014

ESOPs in 2014 Myths and Reality. Indiana Benefits Conference March 18, 2014 ESOPs in 2014 Myths and Reality Indiana Benefits Conference March 18, 2014 What Is an ESOP? An Employee Stock Ownership Plan (ESOP) is an employee benefit plan that is designed to invest primarily in the

More information

GETTING THE MOST OUT OF YOUR ESOP

GETTING THE MOST OUT OF YOUR ESOP GETTING THE MOST OUT OF YOUR ESOP Michael G. Keeley Hunton & Williams LLP 1445 Ross Avenue Suite 3700 Dallas, Texas 75202 (214) 468-3345 mkeeley@hunton.com Traditional Sources of Capital for Community

More information

ADVANCED ESOP STRATEGIES: OPTIONS AND ALTERNATIVES

ADVANCED ESOP STRATEGIES: OPTIONS AND ALTERNATIVES Welcome to ADVANCED ESOP STRATEGIES: OPTIONS AND ALTERNATIVES Presented by www.menke.com 1 Today s Agenda Introduction Basic ESOP Transactions Advanced ESOP Transactions Tax Considerations Financing Considerations

More information

EMPLOYEE STOCK OWNERSHIP PLANS

EMPLOYEE STOCK OWNERSHIP PLANS EMPLOYEE STOCK OWNERSHIP PLANS AN EXTRAORDINARY FINANCIAL AND EMPLOYEE BENEFIT TOOL FOR THE CLOSELY-HELD COMPANY Ice Miller LLP Legal Counsel 2013 Ice Miller LLP All Rights Reserved TABLE OF CONTENTS PART

More information

Information and Frequently Asked Questions for Employee Stock Ownership Plan (ESOP) Participants

Information and Frequently Asked Questions for Employee Stock Ownership Plan (ESOP) Participants Information and Frequently Asked Questions for Employee Stock Ownership Plan (ESOP) Participants An Opportunity to Take Part in Your Company's Success If you ve been invited to participate in your company

More information

Introduction. David R. Johanson Johanson Berenson LLP

Introduction. David R. Johanson Johanson Berenson LLP Introduction David R. Johanson Johanson Berenson LLP Perhaps the most powerful tax and business succession planning tool available to shareholders of a closely held company is the ability to sell stock

More information

Business Valuation and Exit Planning. Aaron J. Pryor, CFA, ASA

Business Valuation and Exit Planning. Aaron J. Pryor, CFA, ASA Business Valuation and Exit Planning Aaron J. Pryor, CFA, ASA Phases of a Business Valuation Assignment Define the valuation assignment What exactly is the subject of the valuation What is the purpose

More information

ESOP OPPORTUNITIES WHITE PAPER

ESOP OPPORTUNITIES WHITE PAPER ESOP OPPORTUNITIES WHITE PAPER This White Paper contains an overview of the Exit Planning Process. We have White Papers describing, in detail, many of its elements. Please contact the advisor who gave

More information

Employee Stock Ownership Plans for Banks and Bank Holding Companies The Tax-Exempt Stock Market

Employee Stock Ownership Plans for Banks and Bank Holding Companies The Tax-Exempt Stock Market Employee Stock Ownership Plans for Banks and Bank Holding Companies The Tax-Exempt Stock Market Presenters: W. William Gust, J.D., LLM President of Corporate Capital Resources, LLC Michael A. Coffey Managing

More information

What is an Employee Stock Ownership Plan (ESOP)?

What is an Employee Stock Ownership Plan (ESOP)? What is an Employee Stock Ownership Plan (ESOP)? An ESOP is a Tax Qualified, Defined Contribution Plan, governed by the Internal Revenue Service and Department of Labor that was put into law under the

More information

This Webcast Will Begin Shortly

This Webcast Will Begin Shortly This Webcast Will Begin Shortly If you have any technical problems with the Webcast or the streaming audio, please contact us via email at: webcast@acc.com Thank You! Employee Stock Ownership Plans: Is

More information

An ESOP is a very flexible instrument that uses tax-deductible or tax-free dollars to achieve a variety of corporate objectives, as outlined below:

An ESOP is a very flexible instrument that uses tax-deductible or tax-free dollars to achieve a variety of corporate objectives, as outlined below: Summary of ESOP Uses An ESOP is a very flexible instrument that uses tax-deductible or tax-free dollars to achieve a variety of corporate objectives, as outlined below: 1. Provide a market (at fair-market

More information

9. Employee Stock Ownership Plans

9. Employee Stock Ownership Plans 9. Employee Stock Ownership Plans Introduction An employee stock ownership plan (ESOP) allows companies to share ownership with employees without requiring the employees to invest their own money. With

More information

A look at the good, the bad, and the ugly of an Employee Stock Ownership Plan

A look at the good, the bad, and the ugly of an Employee Stock Ownership Plan Institutional Retirement and Trust A look at the good, the bad, and the ugly of an Employee Stock Ownership Plan Employee Stock Ownership Plans (ESOPs) are unique among retirement plans. An ESOP merges

More information

The Private Equity vs. Strategic Buyer:

The Private Equity vs. Strategic Buyer: The Private Equity vs. Strategic Buyer: Key Differences and Practical Considerations May 22, 2014 12:30-2:00 p.m. 2014 Stradley, Ronon, Stevens & Young, LLP 2 Presenter Biographies Joshua Aronson 3 Joshua

More information

Understanding a Firm s Different Financing Options. A Closer Look at Equity vs. Debt

Understanding a Firm s Different Financing Options. A Closer Look at Equity vs. Debt Understanding a Firm s Different Financing Options A Closer Look at Equity vs. Debt Financing Options: A Closer Look at Equity vs. Debt Business owners who seek financing face a fundamental choice: should

More information

ESOPs in Business Succession and Estate Planning

ESOPs in Business Succession and Estate Planning 2009 NCEO/Beyster Institute Employee Ownership Conference ESOPs in Business Succession and Estate Planning Bob Gross Senior Managing Director Oakbrook Terrace, Illinois 630-443-9933 Marc Schechter Attorney

More information

Section 1042: A tax deferred sale to an ESOP

Section 1042: A tax deferred sale to an ESOP Section 1042: A tax deferred sale to an ESOP Nick J. Francia Christopher T. Horner Thomas Roback, CEP, QKA UBS Financial Services Dickinson Wright Blue Ridge ESOP Associates The Capital ESOP Group Attorney

More information

CONSIDERATIONS IN ESTABLISHING A LEVERAGED ESOP

CONSIDERATIONS IN ESTABLISHING A LEVERAGED ESOP AUTHOR John A. Wilhelm, Partner Venable, LLP 8010 Towers Crescent Drive Suite 300 Vienna, VA 22182 PH: 703.760.1917 FAX: 703.821.8949 JAWilhelm@Venable.com CONSIDERATIONS IN ESTABLISHING A LEVERAGED ESOP

More information

ESOP An Alternative Exit Strategy (while Maximizing Business Cash Efficiency)

ESOP An Alternative Exit Strategy (while Maximizing Business Cash Efficiency) ESOP An Alternative Exit Strategy (while Maximizing Business Cash Efficiency) Presented to : Givner & Kaye Copyright 2009 Corporate Solutions Group, LLC No part of this presentation may be reproduced,

More information

1 Regional Bank Regional banks specialize in consumer and commercial products within one region of a country, such as a state or within a group of states. A regional bank is smaller than a bank that operates

More information

Employee Stock Ownership Plans ESOPs 101

Employee Stock Ownership Plans ESOPs 101 Employee Stock Ownership Plans ESOPs 101 BTA INC 2013 Complete Turn Key Services Full Service ESOP Implementation Services Preliminary Analysis Feasibility Studies Valuation Consulting Plan and Transaction

More information

Mezzanine Finance. by Corry Silbernagel Davis Vaitkunas Bond Capital. With a supplement by Ian Giddy

Mezzanine Finance. by Corry Silbernagel Davis Vaitkunas Bond Capital. With a supplement by Ian Giddy Mezzanine Finance by Corry Silbernagel Davis Vaitkunas Bond Capital With a supplement by Ian Giddy Mezzanine Debt--Another Level To Consider Mezzanine debt is used by companies that are cash flow positive

More information

Guide to Sources of Financing for Companies

Guide to Sources of Financing for Companies Guide to Sources of Financing for Companies By John A. Leonard Director, Fairfield and Woods, P.C. Below is a short guide to sources of financing for companies. Twenty-two sources of financing are listed,

More information

The ESOP Association Midwest Conference

The ESOP Association Midwest Conference The ESOP Association Midwest Conference September 11, 2015 Alternative Forms of Capital for Mature ESOP Companies Presented by: Elizabeth Perdue Peter Pricco John Solimine Agenda I. Mature ESOP Capital

More information

An Alternative to Selling Your Business: Employee Stock Ownership Plan

An Alternative to Selling Your Business: Employee Stock Ownership Plan An Alternative to Selling Your Business: Employee Stock Ownership Plan JANUARY 22 nd Sheraton Columbia Town Center Hotel 10207 Wincopin Circle Columbia, MD 21044 Steven B. Greenapple, Esq. Shareholder

More information

ESOP OVERVIEW. for Denver Estate Planning Council. November 12, 2015

ESOP OVERVIEW. for Denver Estate Planning Council. November 12, 2015 ESOP OVERVIEW for Denver Estate Planning Council November 12, 2015 BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee,

More information

The Art of the LBO. Agenda. November 2004

The Art of the LBO. Agenda. November 2004 The Art of the LBO November 2004 Agenda I. An Overview of Leveraged Buyouts II. The Building Blocks III. Putting It All Together IV. How It Happens in Reality 2 1 I. An Overview of Leveraged Buyouts What

More information

One COPYRIGHTED MATERIAL. Leveraged Buyout Overview. http://www.pbookshop.com. Part

One COPYRIGHTED MATERIAL. Leveraged Buyout Overview. http://www.pbookshop.com. Part Part One Leveraged Buyout Overview leveraged buyout (LBO) is a fundamental, yet complex acquisition commonly used in the investment banking and private equity industries. We A will take a look at the basic

More information

Advanced Merger Model Quick Reference Common Formulas & Model Setup. http://breakingintowallstreet.com. Transaction Structure & Assumptions

Advanced Merger Model Quick Reference Common Formulas & Model Setup. http://breakingintowallstreet.com. Transaction Structure & Assumptions Transaction Structure & Assumptions Equity Purchase Price = Diluted Shares Outstanding * Per Share Purchase Price For private companies, you don t have shares outstanding or share prices, so the equity

More information

Converting Business Equity Into Diversified Assets

Converting Business Equity Into Diversified Assets Converting Business Equity Into Diversified Assets Joe Wisniewski President & CEO (415) 898-5888 Paul Wiest COO & Managing Director-Southwest (480) 747-5035 What if there were a way for the owner of a

More information

Transferring Your Company to Key Employees White Paper

Transferring Your Company to Key Employees White Paper Transferring Your Company to Key Employees White Paper Owners wishing to sell their businesses to management (key employees) face one unpleasant fact: their employees have no money. Nor can they borrow

More information

Employers Accounting for Employee Stock Ownership Plans 19,741 NOTE

Employers Accounting for Employee Stock Ownership Plans 19,741 NOTE Employers Accounting for Employee Stock Ownership Plans 19,741 Section 10,580 Statement of Position 93-6 Employers Accounting for Employee Stock Ownership Plans NOTE November 22, 1993 Statements of Position

More information

Steven M. Burke McLane, Graf, Raulerson & Middleton, P.A. 900 Elm Street Manchester, NH 03105 (603) 628-1454 steve.burke@mclane.

Steven M. Burke McLane, Graf, Raulerson & Middleton, P.A. 900 Elm Street Manchester, NH 03105 (603) 628-1454 steve.burke@mclane. NINE HUNDRED ELM STREET P.O. BOX 326 MANCHESTER, NH 03105-0326 TELEPHONE (603) 625-6464 FACSIMILE (603) 625-5650 Steven M. Burke McLane, Graf, Raulerson & Middleton, P.A. 900 Elm Street Manchester, NH

More information

The Anatomy of a Successful ESOP Transaction

The Anatomy of a Successful ESOP Transaction The Anatomy of a Successful ESOP Transaction Acquiring 100% of the stock of The Ace Company, Inc. Presented by: Michael Harden Managing Director Sid Sullivan COO & CFO Michael Holzman Partner Neil Brozen

More information

The Zero to 100% ESOP Seems Daunting Is There an alternative? Midwest ESOP Conference Minneapolis, MN / September 10, 2015

The Zero to 100% ESOP Seems Daunting Is There an alternative? Midwest ESOP Conference Minneapolis, MN / September 10, 2015 The Zero to 100% ESOP Seems Daunting Is There an alternative? Midwest ESOP Conference Minneapolis, MN / September 10, 2015 Introduction Alternative Structures for New ESOPs Partial S Corp. ESOP 100% S

More information

FINANCIER 10QUESTIONS MANAGING REPURCHASE LIABILITY ARISING FROM AN ESOP JULY 2013 R E P R I N T F I N A N C I E R W O R L D W I D E.

FINANCIER 10QUESTIONS MANAGING REPURCHASE LIABILITY ARISING FROM AN ESOP JULY 2013 R E P R I N T F I N A N C I E R W O R L D W I D E. R E P R I N T F I N A N C I E R W O R L D W I D E. C O M PREPARED ON BEHALF OF 10QUESTIONS MANAGING REPURCHASE LIABILITY ARISING FROM AN ESOP REPRINTED FROM EXCLUSIVE ONLINE CONTENT PUBLISHED IN: JULY

More information

ESOP COMPANY ADVANTAGE IN MAKING ACQUISITIONS

ESOP COMPANY ADVANTAGE IN MAKING ACQUISITIONS ESOP COMPANY ADVANTAGE IN MAKING ACQUISITIONS 38 th Annual ESOP Conference May 7-8, 2015 Mark Fournier, CFA Managing Director, Valuation & Financial Opinions 8270 Greensboro Dr., Suite 900 McLean, VA 22102

More information

Employee Stock Ownership Plans (ESOPs) Introduction

Employee Stock Ownership Plans (ESOPs) Introduction Course Objective This course was created to teach advisors (CPAs, EAs, accountants, attorneys, financial planners, and insurance advisors) about ESOPs, which is a topic that has a mistaken reputation for

More information

EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS) MARC S. SCHECHTER ROBERT K. BUTTERFIELD ATTORNEYS AT LAW BUTTERFIELD SCHECHTER LLP ATTORNEYS & COUNSELORS

EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS) MARC S. SCHECHTER ROBERT K. BUTTERFIELD ATTORNEYS AT LAW BUTTERFIELD SCHECHTER LLP ATTORNEYS & COUNSELORS EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS) MARC S. SCHECHTER ROBERT K. BUTTERFIELD ATTORNEYS AT LAW BUTTERFIELD SCHECHTER LLP ATTORNEYS & COUNSELORS Butterfield Schechter LLP was founded in 1998 by Robert

More information

Funding Alternatives in the Current Economic Environment

Funding Alternatives in the Current Economic Environment Funding Alternatives in the Current Economic Environment RISE 2010 Alan Bickerstaff Technology and Emerging Companies Group Andrews Kurth LLP 111 Congress Avenue, Suite 1700 Austin, Texas 78701 (512) 320-9229

More information

Special Considerations in Designing and Operating an ESOP

Special Considerations in Designing and Operating an ESOP ERISA COMPLIANCE & ENFORCEMENT STRATEGY GUIDE Selected Audit and Compliance Issues Special Considerations in Designing and Operating an ESOP Gregory K. Brown Katten Muchin Rosenman LLP Chicago, Illinois

More information

COMMUNICATING THE VALUATION REPORT

COMMUNICATING THE VALUATION REPORT COMMUNICATING THE VALUATION REPORT Dave Diehl, CFA Prairie Capital Advisors, Inc. ddiehl@prairiecap.com Chieoke Moore, CPA Prairie Capital Advisors, Inc. cmoore@prairiecap.com OUTLINE OF TODAY S PRESENTATION

More information

ANATOMY OF AN ESOP. Employee Stock Ownership Plans From the Perspective of the Business Owner

ANATOMY OF AN ESOP. Employee Stock Ownership Plans From the Perspective of the Business Owner ANATOMY OF AN ESOP Employee Stock Ownership Plans From the Perspective of the Business Owner MARK D. WELKER mark.welker@huschblackwell.com 816-983-8148 KCP-1712449-3 Copyright Mark D. Welker 1/23/09 TABLE

More information

Employee Stock Ownership Plan (ESOP)

Employee Stock Ownership Plan (ESOP) Employee Stock Ownership Plan (ESOP) The basics: The ESOP is essentially a stock bonus plan in which employer stock may be used for contributions. How It Works Employer contributes company stock or cash

More information

Valuing S Corporation ESOP Companies

Valuing S Corporation ESOP Companies CHAPTER FOUR Valuing S Corporation ESOP Companies Kathryn F. Aschwald Donna J. Walker n January 1, 1998, corporations with employee stock ownership plans (ESOPs) became eligible to O elect S corporation

More information

WHITE PAPER: Creative Management Buyout Strategies

WHITE PAPER: Creative Management Buyout Strategies WHITE PAPER: Creative Management Buyout Strategies Abstract: Private equity firms particularly those that focus on buying smaller companies (less than $100 million in value), will often structure the financing

More information

Employee Stock Ownership Plans ("ESOPs") Michael J. Canan, Shareholder GrayRobinson, P.A. Orlando

Employee Stock Ownership Plans (ESOPs) Michael J. Canan, Shareholder GrayRobinson, P.A. Orlando Employee Stock Ownership Plans ("ESOPs") Michael J. Canan, Shareholder GrayRobinson, P.A. Orlando In appropriate situations, ESOPs can be extremely effective tools for transferring ownership interests

More information

ESOPs and Estate Planning. Kelly O. Finnell, J.D., CLU, AIF President, Executive Financial Services, Inc.

ESOPs and Estate Planning. Kelly O. Finnell, J.D., CLU, AIF President, Executive Financial Services, Inc. ESOPs and Estate Planning Kelly O. Finnell, J.D., CLU, AIF President, Executive Financial Services, Inc. Next Big Estate Planning Opportunity Baby Boomer Business Owners 72% Planning for Monetization Event

More information

ESOP Repurchase Obligation Funding

ESOP Repurchase Obligation Funding FOR BUSINESS OWNERS Employee Stock Ownership Plans ESOP Repurchase Obligation Funding What is your obligation? Repurchase obligation is the liability a company incurs when vested terminated participants

More information

Strategic Advisors. Marketing Presentation Recapitalizations May 2005. Middle Market Investment Bankers

Strategic Advisors. Marketing Presentation Recapitalizations May 2005. Middle Market Investment Bankers Marketing Presentation Recapitalizations May 2005 Strategic Advisors Middle Market Investment Bankers 400 Southpointe Blvd. Plaza I, Suite 120 Canonsburg, PA 15317 (724) 743-5800 www.strategicad.com An

More information

Liquidity & Succession Planning Using ESOPs The State of the Market

Liquidity & Succession Planning Using ESOPs The State of the Market Liquidity & Succession Planning Using ESOPs The State of the Market William E. O Brien Corporate Client Group Director Senior Vice President / Financial Advisor The O Brien Group at Morgan Stanley Since

More information

FINANCING OPTIONS AVAILABLE TO ASSET AND WEALTH MANAGERS IN THE CONTEXT OF M&A AND SUCCESSION PLANNING

FINANCING OPTIONS AVAILABLE TO ASSET AND WEALTH MANAGERS IN THE CONTEXT OF M&A AND SUCCESSION PLANNING FINANCING OPTIONS AVAILABLE TO ASSET AND WEALTH MANAGERS IN THE CONTEXT OF M&A AND SUCCESSION PLANNING Overview Prior to the Great Recession of 2008-2009, and for the past few years, M&A transactions were

More information

Paschall Truck Lines, Inc. Frequently Asked Questions Regarding our ESOP

Paschall Truck Lines, Inc. Frequently Asked Questions Regarding our ESOP Frequently Asked Questions Regarding our ESOP 1 Table of Contents Introduction to this FAQ... 4 1. Overview... 4 2. Purpose... 4 ESOP Basics... 5 3. What is an ESOP? What does ESOP stand for?... 5 4. What

More information

SPAWN IDEAS EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST SUMMARY PLAN DESCRIPTION

SPAWN IDEAS EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST SUMMARY PLAN DESCRIPTION SPAWN IDEAS EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST SUMMARY PLAN DESCRIPTION FEBRUARY, 2015 SPAWN IDEAS EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST SUMMARY PLAN DESCRIPTION TABLE OF CONTENTS Page 1. INTRODUCTION...

More information

How It Works. Additional Considerations. The basics: The ESOP is essentially a stock bonus plan in which employer stock may be used for contributions.

How It Works. Additional Considerations. The basics: The ESOP is essentially a stock bonus plan in which employer stock may be used for contributions. The basics: The ESOP is essentially a stock bonus plan in which employer stock may be used for contributions. How It Works Employer contributes company stock or cash to the plan. Employer contributions

More information

Creating Carryback Financing. Chapter 1 Outline

Creating Carryback Financing. Chapter 1 Outline Creating Carryback Financing Carryback financing in lieu of cash Chapter 1 This chapter introduces the concept of carryback financing and presents the various forms of documentation and risks of loss involved.

More information

85.52 Investments. 85.52.10 July 1, 2003. About investments. Short-term investments. 85.52.20 June 1, 2003 85.52.10

85.52 Investments. 85.52.10 July 1, 2003. About investments. Short-term investments. 85.52.20 June 1, 2003 85.52.10 85.52.10 85.52 Investments 85.52.10 July 1, 2003 About investments Investments are made as authorized by law and/or contractual agreement. Investment purchase and sale transactions are to be reported for

More information

ESOPs--- ACCOUNTING ISSUES AND CONSIDERATIONS. Peter J. Chudyk Maloney + Novotny LLC Cleveland, Ohio

ESOPs--- ACCOUNTING ISSUES AND CONSIDERATIONS. Peter J. Chudyk Maloney + Novotny LLC Cleveland, Ohio ESOPs--- ACCOUNTING ISSUES AND CONSIDERATIONS Peter J. Chudyk Maloney + Novotny LLC Cleveland, Ohio HOW DOES A LEVERAGE ESOP WORK? Company forms an ESOP In order to effectuate the purchase, the Company

More information

Lawyers Guide to Formulas in Deal Documents and Sec Filings

Lawyers Guide to Formulas in Deal Documents and Sec Filings Brochure More information from http://www.researchandmarkets.com/reports/2130254/ Lawyers Guide to Formulas in Deal Documents and Sec Filings Description: Written for lawyers at all levels of mathematical

More information

A Comprehensive Guide to ESOPs

A Comprehensive Guide to ESOPs A Comprehensive Guide to ESOPs Audit Tax Advisory Risk Performance The Unique Alternative to the Big Four Crowe Horwath LLP Table of Contents Introduction... 3 What Is an ESOP?... 4 ESOPs as a Corporate

More information

U.S. Department of Labor Sues Cactus Feeders, Inc. for Millions Over ESOP Plan What s the Beef?

U.S. Department of Labor Sues Cactus Feeders, Inc. for Millions Over ESOP Plan What s the Beef? washburnlaw.edu/waltr Article 2016-008 April 4, 2016 U.S. Department of Labor Sues Cactus Feeders, Inc. for Millions Over ESOP Plan What s the Beef? Roger A. McEowen Kansas Farm Bureau Professor of Agricultural

More information

Leveraged Buyout Model Quick Reference

Leveraged Buyout Model Quick Reference Leveraged Buyout (LBO) Model Overview A leveraged buyout model shows what happens when a private equity firm acquires a company using a combination of equity (cash) and debt, and then sells it in 3-5 years.

More information

Note on Search Funds

Note on Search Funds Case # 5-0034 Updated October 18, 2005 Note on Search Funds A search fund is an investment vehicle used by one or two individuals to finance the process of finding and acquiring a company. The initial

More information

Selling to an ESOP: A Step-by-Step Guide

Selling to an ESOP: A Step-by-Step Guide Vermont Employee Ownership Center Annual Conference June 8, 2012 Selling to an ESOP: A Step-by-Step Guide Tabitha Croscut, Esq. Steiker, Fischer, Edwards & Greenapple, P.C. & SES Advisors, Inc. 1 Agenda

More information

Financial Planning. One afternoon, your client, Fred. Using ESOPs for Business and Retirement Planning

Financial Planning. One afternoon, your client, Fred. Using ESOPs for Business and Retirement Planning VOL. CLXXV NO. 12 INDEX 1176 MARCH 22, 2004 ESTABLISHED 1878 Financial Planning Using ESOPs for Business and Retirement Planning A powerful and flexible tool that helps a retiring shareholder sell his

More information

VALUATION observations

VALUATION observations November 2010 Vol. 2010-05 230 West Street Suite 700 Columbus, OH 43215 614.221.1120 www.gbqconsulting.com 111 Monument Circle Suite 500 Indianapolis, IN 46204 317.423.0150 www.gbqgoelzer.com VALUATION

More information

T he restrictions of Sections 23A and Regulation W

T he restrictions of Sections 23A and Regulation W BNA s Banking Report Reproduced with permission from BNA s Banking Report, 100 BBR 109, 1/15/13, 01/15/2013. Copyright 2013 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com REGULATION

More information

ARCH CAPITAL ADVISORS

ARCH CAPITAL ADVISORS ARCH CAPITAL ADVISORS TERM SHEET Mezzanine Debt This term sheet does not constitute an offer and is solely for discussion purposes. This term sheet shall not be construed as creating any obligations on

More information

Overview (continued)

Overview (continued) Overview Alternative Exit Strategies Criteria for Evaluating Alternatives Introduction to ESOPs Profile of an Ideal ESOP Candidate ESOP Corporate Governance How Does an ESOP Work? 1 Overview (continued)

More information

Employee Benefits at the Time of Mergers and Acquisitions

Employee Benefits at the Time of Mergers and Acquisitions Employee Benefits at the Time of Mergers and Acquisitions Mary Komornicka, CEBS Attorney Larkin Hoffman Minneapolis, Minnesota The opinions expressed in this presentation are those of the speaker. The

More information

The ESOP Solution for Private Companies

The ESOP Solution for Private Companies The ESOP Solution for Private Companies An e-seminar presented by the Beyster Institute at the Rady School of Management University of California, San Diego Copyright 2006 Regents of the University of

More information

INVESTMENT DICTIONARY

INVESTMENT DICTIONARY INVESTMENT DICTIONARY Annual Report An annual report is a document that offers information about the company s activities and operations and contains financial details, cash flow statement, profit and

More information

ASPE AT A GLANCE Section 3856 Financial Instruments

ASPE AT A GLANCE Section 3856 Financial Instruments ASPE AT A GLANCE Section 3856 Financial Instruments December 2014 Section 3856 Financial Instruments Effective Date Fiscal years beginning on or after January 1, 2011 1 SCOPE Applies to all financial instruments

More information

ESOP LOGIC. How to Cash Out Tax-Free and Still Keep Your Business. A Practical Guide for Business Owners and Their Advisors. www.morganlewis.

ESOP LOGIC. How to Cash Out Tax-Free and Still Keep Your Business. A Practical Guide for Business Owners and Their Advisors. www.morganlewis. ESOP LOGIC How to Cash Out Tax-Free and Still Keep Your Business A Practical Guide for Business Owners and Their Advisors David Ackerman John A. Kober ESOP LOGIC TABLE OF CONTENTS INTRODUCTION THE MAGIC

More information

Virtual Stock Market Game Glossary

Virtual Stock Market Game Glossary Virtual Stock Market Game Glossary American Stock Exchange-AMEX An open auction market similar to the NYSE where buyers and sellers compete in a centralized marketplace. The AMEX typically lists small

More information

Assurance and accounting A Guide to Financial Instruments for Private

Assurance and accounting A Guide to Financial Instruments for Private june 2011 www.bdo.ca Assurance and accounting A Guide to Financial Instruments for Private Enterprises and Private Sector t-for-profit Organizations For many entities adopting the Accounting Standards

More information

Understanding Working Capital in a Successful Business Acquisition or Where is the Working Capital?

Understanding Working Capital in a Successful Business Acquisition or Where is the Working Capital? Understanding Working Capital in a Successful Business Acquisition or Where is the Working Capital? Working capital definition- 1. The amount of capital needed to carry on a business. 2. Accounting- current

More information

Web. Chapter FINANCIAL INSTITUTIONS AND MARKETS

Web. Chapter FINANCIAL INSTITUTIONS AND MARKETS FINANCIAL INSTITUTIONS AND MARKETS T Chapter Summary Chapter Web he Web Chapter provides an overview of the various financial institutions and markets that serve managers of firms and investors who invest

More information