Consulting Conversations: Selling a Company vs ESOP

Author:Hank Harris
Publish Date: Sep 01, 2021 04:24 PM EDT

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What factors should be considered when deciding to sell a company vs ESOP?

Director of Consulting, Hank Harris answers the question in this episode of Consulting Conversations. Watch it now!

Selling to an outside party versus doing an ESOP: First of all, ESOPs are not for every company. There are only some companies for whom that would make sense for. The same thing could be said for selling to a third party because not all company companies would be necessarily saleable on the outside.

But I think the short answer: probably two main things to consider. You know one is what things are going to look like for the people that are selling on an after-tax basis. ESOPs are heavily tax-advantaged, and it can be for some companies that it could be almost as remunerative for the sellers to do an ESOPs as it might be to sell to an outside party - that's a matter of specific financial analysis in a specific situation, but for some owners, that can make sense.

The other thing to consider is whether or not you feel some sense of allegiance or altruism or legacy value or whatever you might call it that would make you want would want to perpetuate your business with your employee base as opposed to selling it to somebody you don't know. That's more of a personal... how you feel about things kind-of-issue, but those are the two big ones I would think about.

We'd love to hear from any private business hunt owner in North Carolina that thinks we could be of some help to them and understanding how their business gets better or where it might go in the future you.




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