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Transcript of All About ESOPS
ALL ABOUT ESOPS
Part of the BUSINESS TRANSITION AND EXIT PLANNING 2015
Series
Premier Date: November 19, 2015
ALL ABOUT ESOPS
MEET THE FACULTY
PANELISTSPhillip Chou AmroseAdvisorsAlan Kandel Husch BlackwellDavid Solomon Levenfeld Pearlstein LLP
ALL ABOUT ESOPS
MODERATORJonathan Friedland,
Sugar Felsenthal Grais & Hammer
2
Practical and entertaining education for business owners and executives, Accredited Investors, and their
legal and financial advisors.
For more information, visit www.financialpoisewebinars.com
DISCLAIMER:
THE MATERIAL IN THIS PRESENTATION IS FOR INFORMATIONAL PURPOSES ONLY. IT SHOULD NOT BE CONSIDERED LEGAL ADVICE. YOU SHOULD CONSULT WITH AN ATTORNEY TO DETERMINE WHAT
MAY BE BEST FOR YOUR INDIVIDUAL NEEDS
ALL ABOUT ESOPS
3
ABOUT THIS EPISODE
ALL ABOUT ESOPS
4
An Employee Stock Ownership Plan (ESOP) is a qualified retirement plan (like a 401(k)) that buys, holds and sells company stock for the benefit of the employees, providing them with an ownership stake in the company. Selling to an employee stock ownership plan (ESOP) can provide a business owner with a ready market to sell all or a portion of the company, providing the owner with diversification and liquidity. It can also allow a business owner a way to sell the company while still retaining control of the company in a gradual transition.
ABOUT THIS SERIESALL ABOUT ESOPS
5
Hundreds of thousands of businesses are bought and sold each year. Most sellers, while successful business owners, are not expert at the “art of the deal.” That is, while they know their business inside and out and are sophisticated on matters related to it, most simply don’t have experience in selling a business. From how to market a business (do you hire a business broker or I Banker?) to how to structure the ultimate deal (asset sale v. stock sale), and all the issues in between (how do you value your business? Explaining what an earn-out is and when to use one), this series will cover issues that ever business owners should understand before selling a business. As with all Financial Poise webinars, each episode in the series is designed to be viewed independently of the other episodes: think sitcom rather than soap opera.
EPISODES IN THIS SERIES
EPISODE #1 Business Valuation Explored 4/23/15
EPISODE #2 How to Get a Business Ready for Sale 5/21/15
EPISODE #3 The Marketing Stage of Selling Your Business 6/18/15
EPISODE #4 Letter of Intent Stage 9/17/15
EPISODE #5 Closing Stage 10/15/15
EPISODE #6 All about ESOPS 11/19/15
EPISODE #7 Post Sale Topics 12/17/15
6
ALL ABOUT ESOPS
(Dates below are premier dates; all webinars also available on demand)
ALL ABOUT ESOPS
INTRODUCTION
7
Definition of Fable:
A false or improbable account of something
Definition of Fact:
The truth or actual existence of something
ALL ABOUT ESOPS
INTRODUCTION cont.
8
Currently ESOPs are mostly described as a fable by advisors to closely-held companies wishing to sell their company
Goal of Today’s Presentation: Identify the facts about how ESOPs can be used for “Business Succession”
ALL ABOUT ESOPS
THE ‘BUSINESS SUCCESSION” DECISION PROCESS
9
• Determine Objectives
• Analyze Company Resources/ Capabilities
•Review Strategic Alternatives
ReviewStrategic
Alternatives
Objectives
1. Maximize Cash/ Retirement Income2. Transfer Business to Next Generation3. Employee Retention/ Reward Key Employees4. Maintain Investment/ Control of Company5. Ensure Continued Operations and Protect Legacy
Company Resources/Capability
• Cash Flow• Leveragability• Management
Capabilities• Sound Business Plan
Do Nothing
Sophisticated Estate Planning Techniques
Stock Repurchase/Recapitalization
Sale of Company
ESOPRecapitalization
Financial Buyer/MBO
Strategic/Corporate Buyer
10
THE ‘BUSINESS SUCCESSION’ STRATEGY ANALYSIS
ALL ABOUT ESOPS
ALL ABOUT ESOPS
REASONS TO SELL TO AN ESOP
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• Create an exit vehicle for a business where alternatives are limited or if want to do a gradual sale
• Desire to maintain an equity interest in the company and/or remain active in the business
• Desire to protect management team/children active in the business/ensure continued operations/protect legacy
• Desire to reward employees by offering benefits based on value of the stock of the company
• Desire to take advantage of ESOP tax benefits
What is an ESOP and How
is it Used to Sell a
Company?
ALL ABOUT ESOPS
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ALL ABOUT ESOPS
WHAT IS AN ESOP?
13
• Stands for Employee Stock Ownership Plan
• A qualified “defined contribution” retirement plan sponsored by the company
• Similar to a 401(k) plan, but has several key differences:o Must be invested primarily in the stock of the sponsoro Employees generally do not invest their own money in the plan (with
certain exceptions depending on transaction structure)• Unlike other qualified plans, an ESOP can borrow money to purchase the
stock to be held for funding the employees’ retirement benefits
• IRC Section 404(a)(9) – Increased Plan Contribution Deduction Limits
• IRC Section 415(c) – Increased Annual Addition Limits
• IRC Section 404(k) – ESOP Dividend Deductions
ESOPs are used to facilitate the transition of ownership of a company in the following manner:
SellerESOPLender Company
External Loan
InternalLoan
Purchase Price
Pledge-ESOP Documents & Other Property
Pledge-ESOP Stock ESOP Stock
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TYPICAL STRUCTURE OF AN ESOP TRANSACTION
ALL ABOUT ESOPS
ESOP Company Lender
ESOP Contribution
Principal and Interest
Principal and Interest
ALL ABOUT ESOPS
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MECHANICS OF AN ESOP TRANSACTION
Participant Account
Stock
Inside Loan Repayment
Term of Internal ESOP Loan
Annual Contribution to ESOP
ALL ABOUT ESOPS
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HOW ESOPS WORK
ESOP
Company
Employee
Step #3: Cash Paid to Employee
Step #1: Stock Distributed upon Death, Disability, other Termination of Employment or Retirement
Step #2: Stock sold back to
Company or ESOP
IRS
Step #4: Tax Paid on Distribution*
*Tax can be deferred if roll-over proceeds to an IRA or other qualified plan
ALL ABOUT ESOPS
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HOW ESOPS WORK cont.
ALL ABOUT ESOPS
BENEFITS OF AN ESOP TRANSACTION
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• An ESOP allows employees to share in the growth of the company and still maintain existing corporate culture/management structure
• An ESOP can provide tax benefits to the shareholders who sell stock to an ESOP
• An ESOP can provide tax savings and cash flow benefits to the Company/Plan Sponsor
ALL ABOUT ESOPS
BENEFITS TO EMPLOYEES
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• Current management and operational structure of the company can be maintained
• Obtain benefits as an owner of the company stock without any personal investment required
• ESOP benefits are an additional source of retirement savingso Most ESOP companies use ESOP’s to supplement
existing compensation/retirement plans (i.e. 401(k)’s)
• Stock in an ESOP is not a passive investmento By performing well on job to contribute to
achievement of company goals, value of ESOP stock will increase
ALL ABOUT ESOPS
TAX BENEFITS TO A SELLING SHAREHOLDER
(IRC SECTION 1042
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Section 1042Sale to ESOP
$5,000,000 0
$5,000,000
Non-ESOPTransaction
$5,000,000 1,000,000$4,000,000
*Assumption: Cost Basis = $0
Gross Sale ProceedsCapital Gains Tax (20%)Net Sales Proceeds
ALL ABOUT ESOPS
REQUIREMENTS OF A SECTION 1042 TRANSACTION
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• Seller must have held stock for at least three years prior to the sale to the ESOP
• 30% ESOP Ownership Post-Transaction• Reinvestment of Proceeds in “Qualified
Replacement Property”• ESOP must hold securities for three years after the
transaction• Prohibited allocation rules (i.e. selling
shareholder/family members cannot participate in the ESOP)
• Only available if the Company is a C corporation
ALL ABOUT ESOPS
TAX BENEFITS TO ESOP COMPANIES
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• An ESOP can provide tax savings and cash flow benefits to the Company/Plan Sponsoro Repayment of ESOP Debt with Pre-Tax Dollarso Potential to Eliminate Corporate Income Taxes (S
Corporation ESOPs)
ALL ABOUT ESOPS
BENEFITS OF REPAYMENT OF DEBT USING AN ESOP
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*Assumption: $5 mm principal payment on debt due on an annual basis
Non-ESOP Company ESOP Company
Operating Profit $10mm $10mm
ESOP Contribution 0 $ 5mm
Pre-tax Income $10mm $5mm
Taxes (35%) $ 3.5mm $1.75mm
Net Profit $6.5mm $3.25mm
Debt Payment $5mm 0
Net Cash Flow $1.5mm $3.25mm
• Having an ESOP as a shareholder of an "S" Corporation has significant tax consequences.o Since an ESOP is a "tax-exempt"
shareholder, no tax is payable on ESOP's share of taxable income.
24
BENEFITS OF AN S CORPORATION ESOP
ALL ABOUT ESOPS
S CORPORATION ESOP CASH FLOW ANALYSIS
S Corporation ESOP
$1,000,000 0
$1,000,000
C CorporationESOP
$1,000,000 350,000$650,000
Taxable IncomeCorporate Tax Rate (35%)Net Cash Flow
ALL ABOUT ESOPS
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IS AN S CORPORATION ESOPALWAYS A GOOD IDEA?
• Ineligibility For Section 1042 Rollover• Special Plan Administrative Rules Under IRC• Special S Corporation Requirements
o S election requires unanimous shareholder consento Limit on the number of shareholderso Prohibition on who can own stocko Prohibition on multiple classes of stock
• Not work as well if ESOP owns less than 100% of the Company’s stock
ALL ABOUT ESOPS
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• ESOP Feasibility Issues• Valuation Issues• Financing Issues• Repurchase Liability
ESOP TRANSACTION ISSUES
ALL ABOUT ESOPS
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ESOP FEASIBILITY
• So you’ve decided an ESOP is an appropriate ownership succession vehicle for your firm, what’s next?
• Hire advisors to conduct a feasibility studyo Experienced benefits consultanto Experienced ESOP appraiser
ALL ABOUT ESOPS
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• Issues impacting feasibilityo Size of block of stock to be acquired by the ESOPo Value of the block of stock (hence the need for
preliminary appraisal)o Design of the transactiono Financing terms (if a leveraged transaction)o Size of “covered payroll”o Existence of other defined contribution plans [401(k)]o Projected cash flow and its volatilityo Future repurchase liabilities (on-going analysis)
ALL ABOUT ESOPS
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ESOP FEASIBILITY cont.
VALUATION ISSUES UNIQUE TO ESOPS
• Per ERISA, the ESOP cannot pay more than adequate consideration (fair market value) for the stock of the Companyo The standard of value for ESOP transactions is “fair
market value”o Fair Market Value is defined as the price at which as
asset would change hands between a willing buyer and a willing seller where the former is not under any compulsion to buy and the latter is not under any compulsion to sell, and both parties are able, as well as willing, to trade and are well informed about the asset and the market for such asset
ALL ABOUT ESOPS
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•“Fair Market Value” may be less than the value that can be attained if the Company were sold to a “strategic” buyer
Relative Levels of Value
Strategic Value (Enterprise)
Enterprise (Controlling Interest) Value
Marketable Minority Interest Value
Non-marketable Minority Interest Value
Strategic Premium
Discount for Lack of Marketability
Minority Interest Discount Premium for Control
ALL ABOUT ESOPS
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VALUATION ISSUES UNIQUE TO ESOPS cont.
• Valuations MUST be conducted at least annually by qualified and independent appraiserso “Qualified” is loosely defined. Seek experienced
appraisers accredited through: ASA, NACVA, AICPAo Appraiser should follow USPAP guidelineso Appraiser should have ESOP experience and know
your industryo Independence provision rules out your CPA firmo Note that business appraisal is not a regulated
industry – Caveat Emptor
ALL ABOUT ESOPS
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VALUATION ISSUES UNIQUE TO ESOPS cont.
FINANCING ISSUES• One of the most critical elements to
implementing an ESOP is the ability to obtain debt financing for the transaction
• There are several potential sources of debt financingo Senior Lenders – Asset Basedo Senior Lenders – Cash Flow Basedo Mezzanine Fundso B Loan Lenderso Seller Financing
ALL ABOUT ESOPS
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• General Lender Considerationso Collateral Base (real estate, inventory, receivables, etc.)o Cash Flowo Character
• Additional Considerations for ESOP Transactionso ESOP transaction is a highly leveraged transactiono Unlike debt financing for operations, the proceeds of the loan
"leave the company“o Enhanced cash flow available for debt service from ESOP tax
benefits• Given the nature of an ESOP Company's operations, leverage
multiples are likely to be considerably lower than current overall marketo Low collateral baseo Potential for high degree of earnings volatility
ALL ABOUT ESOPS
34
FINANCING ISSUES cont.
• The implementation of an ESOP creates a repurchase liability for the stock sold to the ESOP
• In privately held companies, when employees retire they have a right to put their allocated shares to the Company for cash
• The Company must allocate future cash to pay these retiree benefits
REPURCHASE LIABILITY
ALL ABOUT ESOPS
35
• ESOP Transactions Never Succeed• Only large companies can implement an ESOP• Ownership/Management need to sell all of their stock
and will Lose Control of the Company• Employees will be entitled to confidential information
(i.e., financial results, owner/management salaries) and will interfere with Company Operations
• Banks do not lend to ESOP companies• ESOPs are Difficult for Employees to Understand• By selling to an ESOP the owner is not getting full
value for their company• The fees to do an ESOP deal are higher than for a
sale to a third party
ESOP “FABLES” – ARE THEY TRUE?
ALL ABOUT ESOPS
36
ESOP FACTS• Studies show employee-owned companies perform
better financially then non-employee owned peer companies.
• Approximately 7,000 ESOP companies in the U.S.; 13.5 million employee owners (5% of total US workforce)
• Less than 15% of ESOP-owned firms are public companies
• Deal can be done in multiple stages and Company management may remain in place and can continue to own equity post-ESOP transaction (even if sell 100% of the Company)
• Employees not entitled to any confidential information (sole legal requirement is annual benefit statement)
ALL ABOUT ESOPS
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• Many effective financing options for ESOP transactions
• ESOP stock investment is monitored by trustee and not require employees to choose from a menu of potential investment alternatives
• ESOP can pay “fair market value” for stock and owners can continue to participate in growth in stock value post-transaction
• Fees for an ESOP transaction are similar to other transactions (just paid to different people)
ALL ABOUT ESOPS
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ESOP FACTS cont.
WHO RUNS AN ESOP COMPANY?
Appraiser
Trustee
Administrator Legal advisor
ESOP Trust
Board of Director
s
Employees
Management
ESOP COMMITTEE
ALL ABOUT ESOPS
39
WHAT IS THE ESOP’S ROLEIN COMPANY MANAGEMENT?
The ESOP is Represented by the
Trustee
ESOP TRUSTEE- Is Appointed by the Board of Directors- Is an ESOP Fiduciary- May be an Institution or Individuals- Is the legal owner of Shares- Votes shares on all matters (including Election of Directors)- Must solicit voting instructions from Participants on major issues and may be directed by another fiduciary
Shareholders Elect The Board of Directors
The Board of Directors is the elected Body
Responsible for the Direction of the Company
Non-ESOPShareholders Vote Directly
In order to effectively operate the ESOP or assist communication, the Board may make use of Advisory Committee
Board of Directors
OFFICERS MANAGE THE COMPANY
--ESOP Administration-Communication-Other Operations
Appoints Officers & Determines
Compensation of Company
Management
ALL ABOUT ESOPS
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ROLE OF TRUSTEE
• Create a fiduciary process to withstand scrutiny by the United States Department of Labor and IRS
• Remove conflicts of interest• Act solely on behalf of employees• Not on behalf of Board or Senior
Management or Sellers
ALL ABOUT ESOPS
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FEDERAL LAW REQUIRES TRUSTEES TO ACT
• Solely in the interest of participants;• Exclusive purpose of providing benefits
and defraying expenses• Prudently• In accordance with the plan, as long as
the plan and trust are consistent with ERISA
ALL ABOUT ESOPS
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PRUDENCE DUTY
•Courts provide deference to independent trustee•Procedural diligence•Not judged after the fact
ALL ABOUT ESOPS
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WHAT DOES A TRUSEE DO?NEGOTIATE INITIAL ESOP
TRANSACTIONo Hire INDEPENDENT Financial Advisoro Hire Legal Counsel (separate from
Company’s counsel)o Due Diligence Reviewo Document Reviewo Committee Reviewo Fairness Opinion
ALL ABOUT ESOPS
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VALUE THE ESOP STOCK ANNUALLYo Hire financial advisor (usually same as
transaction)o Due Diligence Reviewo Examine methodology o Question Assumptions o Understand Conclusiono ESOP Trustee sets price
ALL ABOUT ESOPS
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WHAT DOES A TRUSEE DO? cont.
COMPLETE PURCHASES AND SALES FOLLOWING INITIAL TRANSACTIONo Independently Negotiate Purchases
and Sales of ESOP Stocko Respond to Offers Presented to Boardo Avoid Prohibited Transactions
ALL ABOUT ESOPS
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WHAT DOES A TRUSEE DO? cont.
VOTE THE STOCK IN THE ESOPo Board of Directorso Pass-through Voting o May follow directions to the extent
doing so does not violate ERISA
ALL ABOUT ESOPS
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WHAT DOES A TRUSEE DO? cont.
MONITOR MANAGEMENTo Management Incentive Planso Acquisitions and Dispositions of
other Businesseso Issuances of Debto Review Financial Resultso Stay Informed
ALL ABOUT ESOPS
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WHAT DOES A TRUSEE DO? cont.
TRUST ADMINISTRATIONo Loan Paymentso Allocationso Distributionso Assure Plan Operated in Accordance
with Plan Document and Trust Agreement
ALL ABOUT ESOPS
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WHAT DOES A TRUSEE DO? cont.
WHAT DOES A TRUSTEE NOT DO?DON’T MAKE BOARD DECISIONS,
SUCH AS:o Acquiring Other Companieso Selling Business Lineso Appointing Officers and Managemento Forming Strategyo Determining Compensationo Terminating the ESOP
ALL ABOUT ESOPS
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DO NOT DESIGN OR AMEND ESOP PLANo Distribution, Vesting, Participation, Allocations,
Diversification, etc. are Company’s decisions
DO NOT MANAGE REPURCHASE LIABILITY
DO NOT DO RECORDKEEPINGo Look at Trust on “macro” level, not participant level
ALL ABOUT ESOPS
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WHAT DOES A TRUSTEE NOT DO? cont.
DO NOT TRY TO GET THE HIGHEST VALUE FOR THE STOCK
o Want a Value that is Reasonably Supportable
ALL ABOUT ESOPS
52
WHAT DOES A TRUSTEE NOT DO? cont.
Trustee doesn’t shop the companyBoard decision to sell companyTrustee considers offer after being
approached by Board
ALL ABOUT ESOPS
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WHAT DOES A TRUSTEE NOT DO? cont.
RISKS OF AN ESOP TRANSACTION
Deal done for the wrong reasonsBad Business Model/Industry RisksBad ManagementCash Flow/Payroll Insufficient to Repay DebtNo planning for post-closing ESOP
administration issues (i.e. repurchase liability)
ALL ABOUT ESOPS
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FACTORS FOR A SUCCESSFUL ESOP TRANSACTION
Proper Motivation for the TransactionNo “Contingent Liabilities”
Industry Risks Customer Concentration Other Undisclosed Liabilities
Company has strong historical financial performance/prospects for growth
Sufficient Number of Employees/Payroll BaseStrong Succession Management TeamPlanning for post-ESOP administration done upfront
ALL ABOUT ESOPS
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The Company Selling ShareholdersThe ESOP
Investment Banker/Financial Advisor
● ESOP Feasibility Analysis
● ESOP Transaction Design
● Manage ESOP Implementation Process
Corporate Legal Counsel
● Prepare required corporate documents for ESOP implementation
ERISA Legal Counsel
● Assist in ESOP Transaction Design
● Draft ESOP Documents
Lender
ESOP Trustee ESOP Trustee's Financial Advisor
● Valuation & Fairness Opinion to Trustee
ESOP Trustee's Legal Advisor
ESOP Administrator ESOP Committee
Financial Advisor
● Assist in 1042 Rollover Process Legal Counsel
● Review Transaction Documents
● Estate Planning
PLAYERS INVOLVED IN ESOP TRANSACTION
ALL ABOUT ESOPS
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• Hire Investment Banker/Financial Advisor
• Conduct Feasibility Analysiso Preliminary Range of Valueso Analysis of Financing Capacity & Review of Debt Marketso Transaction Scenario Analyses
• Design Transaction
• Select Trustee
• Arrange Financing
• Negotiate Sale with Trustee
• Transaction Closing
• Invest Sale Proceeds in Qualified Replacement Property
1 - 2 Months
2 - 6 Months
Max = 1 Year After Closing
ESOP TRANSACTION PROCESS
ALL ABOUT ESOPS
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CONCLUSIONS An ESOP is a viable exit strategy under the right
circumstances Should be considered in connection with comprehensive
estate planning Need strong creative financial advisory team:
Investment Banker/Financial Advisor Experienced Attorney Knowledgeable Lender Reputable Valuation Firm Plan Administration 1042 Asset Management
ALL ABOUT ESOPS
58
MORE ABOUT THE FACULTYJONATHAN FRIEDLAND
59
[email protected] Friedland is a partner with Sugar Felsenthal Grais & Hammer.
Jonathan P. Friedland is well recognized as a lawyer’s lawyer. Clients turn to Jonathan with their most challenging restructuring and business matters. In addition to counseling privately owned businesses in their acquisition and divestiture transactions, Jonathan is highly regarded for serving as outside general counsel to closely-held companies and their principals. In addition, he frequently serves as co-counsel to other law firms whose clients are facing financial distress. Jonathan’s practice is national, regional and local in scope. He is licensed to practice law in Arizona, Illinois, New Jersey and New York.Jonathan’s practice includes representing private equity funds and other investors in mergers and acquisitions activities. Additionally he advises clients about fiduciary duties and helps structure relationships between shareholders, LLC members and joint venturers. He counsels on succession planning, , employee matters and a host of other corporate matters. During the course of his representation, Jonathan is frequently engaged in negotiating loans and equipment leases and general contract issues.In his extensive restructuring and insolvency work, Jonathan as guided scores of companies through challenging financial situations, including Chapter 11, assignments for the benefit of creditors and out-of-court workouts. For over two decades, he has also represented buyers of distressed assets and creditors and creditor committees against distressed business.Jonathan is a highly regarded author, editor and speaker. He has authored more than 100 published articles in professional journals. He also has been profiled, interviewed and/or quoted in such publications as Buyouts Magazine, The M&A Journal, Inside Counsel, LAW360,Business Week.com, The Bankruptcy Strategist, Dow Jones Daily Bankruptcy Review; Dow Jones LBO Wire, and The Daily Deal.Jonathan is lead author of Strategic Alternatives for Distressed Businesses, and Commercial Bankruptcy Litigation treatises, published by West, and the general editor of A Comparison Shopping Guide for 363 Sales, published by the American Bankruptcy Institute.Jonathan is also the founder and chairman of DailyDAC, LLC, d/b/a Financial Poise™, an on-line provider of continuing education, information, and business intelligence for business owners, investors, and their trusted advisors. He is also on the editorial board of “The Corporate Counselor.”
MORE ABOUT THE FACULTYPHILLIP CHOU
ALL ABOUT ESOPS
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Phillip Chou is co-founder and managing director of AmbroseAdvisors. He has over 12 years of relevant experience in investment banking and corporate strategy / development. He has advised clients across a wide spectrum of industries in the structuring and execution of ESOP buyouts, mergers & acquisitions, and capital raising projects.
MORE ABOUT THE FACULTYALAN KANDEL
ALL ABOUT ESOPS
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Alan Kandel, of Husch Blackwell, counsels clients, including publicly traded, privately held, tax-exempt and governmental organizations, with respect to qualified and nonqualified retirement plans, welfare and fringe benefit plans, and deferred and equity-based plans. He has advised both buyers and sellers on employee benefit issues in corporate transactions. Alan has defended clients in connection with Internal Revenue Service, Department of Labor and Pension Benefit Guaranty Corporation examinations, and has represented clients in rulings and other matters before their national offices.
Alan was named one of the The Best Lawyers In America, Employee Benefits (ERISA) Law, 2010-201 as well as named in Missouri & Kansas Super Lawyers, Employee Benefits/ERISA, 2006.
MORE ABOUT THE FACULTYDAVID SOLOMON
ALL ABOUT ESOPS
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[email protected] Solomon is a Levenfeld Pearlstein partner in the Corporate & Securities Group. Upon joining Levenfeld Pearlstein in 2009, David founded and currently serves as the chair of the firm’s ESOP practice, which serves clients who are involved in transactions involving Employee Stock Ownership Plans (ESOPs). In addition to working on ESOP transactions and advising ESOP companies, David has extensive experience in structuring and consummating other types of mergers and acquisition transactions and in representing banks, mezzanine lenders and private equity firms when they make investments in companies.David also represents many middle-market companies in a "general counsel" capacity by handling various business law issues. He spends time developing personal relationships with each of his clients, knowing the insight gained from those conversations is crucial to serving as a better advisor to the company. David works to show his clients that when they need a legal resource, they can rely on his advice and judgment because he has taken the time to meet with the owners and executives of the company to understand their business and their appetite for risk.
David has been practicing law since 1994. He currently serves as the Executive Vice President of the Illinois Chapter of the ESOP Association and is also a member of the National Center For Employee Ownership (NCEO). David has lectured frequently on ESOPs and has published articles in various journals.
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IMPORTANT NOTE:
THE MATERIAL IN THIS PRESENTATION IS FOR GENERAL EDUCATIONAL PURPOSES ONLY. IT SHOULD NOT BE CONSIDERED LEGAL, INVESTMENT, FINANCIAL, OR ANY OTHER TYPE OF ADVICE ON WHICH YOU SHOULD RELY.YOU SHOULD CONSULT WITH AN APPROPRIATE PROFESSIONAL ADVISOR TO DETERMINE WHAT MAY BE BEST FOR YOUR INDIVIDUAL NEEDS. 68