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3 Benefits of ESOPs in Succession Planning (Video)

3 Benefits of ESOPs in Succession Planning (Video)

3 Benefits of ESOPs in Succession Planning (Video Transcript)

One of the many benefits of Employee Stock Ownership Plans, or ESOPs, is that they simplify succession planning for business owners seeking sustainability.

As Baby Boomers consider retirement, more businesses are choosing to sell to an ESOP rather than a private buyer. There are approximately 6,800 employee-owned companies in the United States, covering more than 14 million individuals, with about 250+ new ESOPs being formed annually.

The increasing popularity of ESOPs among business owners engaging in succession planning is mainly due to three benefits:

  1. Potential financial advantages.
    Selling to an ESOP can come with tax benefits for the seller, such as deferred or reduced capital gains taxes and income taxes.
  2. Minimized turmoil for the company and its employees.
    Selling to an ESOP allows the company to retain all of its employees, which is not always possible in mergers and acquisitions. This results in a smoother transition for employees and the business as a whole.
  3. More control over the business owner’s legacy.
    Especially for businesses in small communities, selling to an ESOP is also a strategy founders may use to ensure employees are taken care of and their legacy remains intact even after they leave the company.

Is an ESOP right for your company? The experts on Bankers Trust’s ESOP Finance team can help at each step along your succession planning journey.

Learn more about ESOP Finance at Education.BankersTrust.com.

Next steps:

  1. Learn more about Bankers Trust’s ESOP Finance capabilities and expertise.
  2. Subscribe to receive more Business articles in your inbox.
  3. Read more of our Business articles.
Joe DeJong

Joe DeJong

Managing Director, ESOP / VP, Senior Commercial Relationship Manager (515) 245-5251 Email Joe

Joe DeJong joined Bankers Trust as Vice President and Commercial Lending Officer in December 2008. Prior to joining Bankers Trust, Joe spent four years in the Business Banking Division of Wells Fargo Bank. Beginning in 2013, Joe began serving as the Managing Director of ESOP Finance, working with middle market companies in the structuring and financing of ESOP plans throughout the Midwest. Joe holds a Bachelor of Arts degree in accounting from the University of Northern Iowa with a minor in real estate finance and an Executive Leadership Certificate from the Graduate School of Banking at the University of Wisconsin-Madison. Joe is a current member of the ESOP Association and the National Center for Employee Ownership (NCEO) of which he is a speaker on the topic of ESOP Finance. Currently, Joe is a member of the Board of Directors for the Orchard Place Foundation and also volunteers as a Youth Soccer Coach for Vision Soccer Academy. Outside the bank, Joe enjoys spending time with his wife and two young boys and attending University of Northern Iowa and Iowa Hawkeye athletic events.

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