Selling to an ESOP Rewards Loyal Employees & Preserves Company Legacy

 Email Article  

Tweet  

  

Legislation would encourage creation of more ESOP companies shares commentary from Van Meter and CarePro, two prominent Iowa ESOP companies, on Iowa House File 2085 – Iowa’s ESOP Initiative to promote Selling to an ESOP.  The article discusses the need for establishing incentives to Sell to an ESOP and how Selling to an ESOP Rewards Loyal Employees and Preserves the Company Legacy and Provides a Business Owner with Liquidity and Diversification: 

“One of the reasons we need to create incentives for the seller to create ESOPs is that ESOPs usually are not strategic buyers that can cut costs by coming in and consolidating operations and closing plants,” Leibold said.

“Anyone who’s worked in the ESOP area has seen situations where ESOPs could have been an effective tool for transitioning the company and instead the owner just sold to the highest bidder,” Leibold said, “but I’ve seen instances where the seller chose the ESOP just to keep the jobs in their hometown.”

Leibold said many owners decide to sell their Iowa companies or shares in them to retire or diversify their assets. Original owners of a company would often prefer to sell to their employees to preserve their legacy and reward loyal employees who helped them build the business, Leibold said.

Our series on Selling to an ESOP explores many of the benefits of selling to an ESOP:

• Selling to an ESOP in 2012 Increases After-Tax Proceeds by 43%

• Selling to an ESOP Pays for Itself

• Selling to an ESOP Provides a 15%+ Expected Rate of Return

• Selling to an ESOP Provides Full Payment at Fair Market Value

• Selling to an ESOP Provides Additional Value for the Seller

• Selling to an ESOP Increases Cash Flow by Eliminating Income Taxes

• Selling to an ESOP Enables a Business Owner to Defer/Avoid Taxation

• Selling to an ESOP Enables a Business Owner to Sell In 60-90 Days

• Selling to an ESOP Creates an Internal Market and Built-In Buyer

• Selling to an ESOP Enables a Business Owner to Sell While Retaining Control of the Company

• Selling to an ESOP Provides a Business Owner with Liquidity and Diversification

• Selling to an ESOP Provides Greater Employment Stability and Increases Job Satisfaction

• Selling to an ESOP Saves Local Jobs and Strengthens the Local Community

• Selling to an ESOP Rewards Loyal Employees & Preserves Company Legacy