Recently one of my customers chose an employee stock ownership plan (ESOP) to transfer the ownership of his construction company.
Through his experience I became a believer in ESOPs for contractors meeting certain criteria, especially since mergers and acquisition prospects are usually pretty limited for this sector. The best ESOP candidates are those with:
- Stable cash flow,
- Low debt levels, and
- A strong successor-management team.
Given the complexity and cost to set up and maintain, ESOP-owned contractors typically have at least 20 employees and more than $1 million in annual adjusted earnings. For the right candidates, the incredible tax benefits generally far outweigh the set-up and maintenance costs.
How Can I Help?
If you want to discuss how an ESOP might benefit you and your company, please get in touch. I would be pleased to help you connect with the advisory firm who set up and runs my customer’s ESOP.
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