[Promo] What would selling to your employees look like?

[O'Donnell, Brian C]

For business owners -    What would selling to your employees look like?

While a sale may not be front of mind given the turbulent environment, perhaps events have afforded you more time to step back and evaluate where you see the business in the future.  If you are considering a sale, one of the most powerful ways of transitioning a company is to share ownership with your employees through an Employee Stock Ownership Plan (ESOP).  While each situation needs to be assessed individually, the following characteristics can be used to identify a potential ESOP candidate:


*         In order to maximize an ESOP (i.e.,

effectuate a tax-advantaged sale of

stock for the ESOP) the company must

currently be, or be willing to convert to, a

C corporation. S corporations do not give

sellers to ESOPs owning at least 30%

of the stock the ability to defer taxation

on the gain



*          The company must have sufficient
capacity (collateral or cash flow) to
support funded debt.


*          A successor management team
should be in place.


*          Owners must be open to the concept
of broad-based ownership.


*          The company should have been in
business for several years and have
enough employees (i.e., at least 25) to
make the plan worthwhile.


*          The company should be able to
reasonably predict future revenue
and cash flows (this is probably more
important than having hard assets to

support the loan).

An employee stock ownership plan is a specific way to sell an ownership stake to company employees that can provide tax benefits to the company, the sellers of stock and to employees.  Business owners selling a minority or majority interest to an ESOP often see this approach as the best way to preserve the company's legacy, reward the people who helped build the business and provide options for the owners to remain in the business in a capacity they choose.

Please see attached brochure for additional information on ESOPs and reach out if you have interest in exploring this process!

Regards,
Brian

Brian C. O'Donnell
Financial Advisor
Alternative Investments Director

The Tisi Hernandez Group
Morgan Stanley Wealth Management
522 Fifth Avenue, 11th floor | New York, NY 10036
Direct: +1 212 230-3446
Fax: +1 347 767-2473
brian.c.odonnell at morganstanley.com<mailto:brian.c.odonnell at morganstanley.com>
NMLS# 1393540

http://www.morganstanleyfa.com/thetisihernandezgroup/
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