| The stock market is crashing. Government | | | | capital gains tax on your sale indefinitely. But, who |
| bailouts are rampant. The political climate is | | | | wants to put their money in the stock market |
| uncertain. Credit has all but disappeared for ready | | | | these days? And, since credit has tightened so |
| buyers if you can even find one. Yet, your | | | | much in the last year, it's very difficult to find |
| dreams of retirement remain. What can you do? | | | | lenders who will fund 100% of the transaction. |
| There is an answer that you may have | | | | Financing is still available for a portion of the |
| overlooked. By understanding the power of an | | | | transaction depending on the collateral position of |
| ESOP you could be well on your way to your | | | | the company, but in most cases it's more |
| retirement in the next 90 days. | | | | attractive for you to be the banker yourself and |
| An ESOP (Employee Stock Ownership Plan) is a | | | | avoid all the red tape that goes along with dealing |
| tax-advantaged vehicle that enables you to sell | | | | with banks these days. This structure allows you |
| your business to your employees. This program | | | | to collect the interest income rather than paying it |
| was established by Congress in 1974 and today | | | | to the banks. |
| there are about 12,000 ESOP owned companies. | | | | Why should I finance the sale of my own |
| Many business owners have either never heard of | | | | company? Typically, if you were dealing with a |
| an ESOP or have a misunderstanding of how it | | | | third party buyer, it would not make much sense |
| works. Here are some common misconceptions | | | | at all. It would be like loaning several million dollars |
| along with solutions to your dilemma. | | | | to someone you don't know and also giving up |
| My employees can't afford to buy my company | | | | control of your company. But, with an ESOP, you |
| and they are not "ownership material." In reality, | | | | still control the company, and by remaining in |
| an ESOP doesn't cost your employees anything. | | | | control you can assure that you get paid in a |
| The ESOP is created which buys your stock. Your | | | | timely manner. You can structure the loan terms |
| employees are beneficiaries of the ESOP. The | | | | however you want, and if the company should |
| ESOP distributes stock to your employees' ESOP | | | | have a bad month you have the ability as the |
| accounts each year based on their percentage of | | | | lender to delay or defer a payment rather than |
| the overall payroll. The employees continue to | | | | risk a default on a bank loan. The biggest question |
| perform their regular duties and answer to | | | | to ask yourself is "What would I be doing with |
| management as they currently do. They do not | | | | the money if I got cash?" If you are truly selling |
| have general voting power or control of how the | | | | to retire you are likely going to put it somewhere |
| company is managed. An employee's ESOP | | | | safe to generate retirement income. You could |
| account is like a free retirement account that | | | | put it in the bank and maybe get 5% interest, but |
| they earn by loyal service to the company. When | | | | banks aren't doing so well these days as we have |
| they retire or leave after becoming vested they | | | | seen in the news, and the FDIC only insures |
| take the value of their account with them. Many | | | | accounts up to $100,000. By leaving your money |
| companies with "blue-collar" employees are | | | | invested in the company that you have spent a |
| ESOP-owned. | | | | lifetime building, you know that as long as you are |
| I want to retire in the next few years. Who is | | | | in control it is secured by something of value. |
| going to run the company? The beauty of an | | | | And, by properly structuring your finance package |
| ESOP is that you can "have your cake and eat it | | | | to include trustee compensation, stock options, |
| too". An ESOP allows you to create a definite exit | | | | and other perks, your rate of return can exceed |
| strategy while letting you remain in the control of | | | | 30% rather than 5% at the bank. |
| the company for as long as you like. As Trustee | | | | How long does it take to set all this up? As the |
| of the ESOT you continue to run the company as | | | | banker, you would avoid a great deal of time and |
| you do right now and you continue to draw a | | | | expense by not dealing with an outside bank. |
| salary. You are still the boss even though you | | | | Dynasty Capital Advisors will analyze your |
| don't own the company. Your goal will be to work | | | | company, prepare a Feasibility Study for the |
| yourself out of a job so you can begin your | | | | ESOP, prepare all plan documents, coordinate |
| retirement. That is accomplished by either | | | | outside professionals such as an independent |
| grooming one of your senior employees to take | | | | valuation expert and the Trust attorney, and |
| your place or by hiring a qualified replacement as | | | | close the sale to the ESOP in less than 90 days. |
| a manager. That can happen within months if | | | | Will I get my price? A sale to an ESOP is always |
| you're anxious to leave or you can stage the | | | | at fair market value as established by an |
| transition over several years. The bottom line is | | | | independent valuation. This means that you will |
| that it is always your choice. | | | | receive the highest price possible that can be |
| Who is the buyer? That's the great thing about | | | | supported by factual data. You don't have to deal |
| selling to an ESOP. You don't need a buyer. The | | | | with buyers who will try to beat you down on |
| ESOP is the entity that is created to buy your | | | | your price. Dynasty Capital will provide you with a |
| stock. You can create your exit strategy today | | | | valuation that will come within 5% of the final |
| by enlisting the help of Dynasty Capital Advisors. | | | | price for your review at no cost. |
| They specialize in setting up an ESOP and they | | | | How can I find out if this is right for me? Dynasty |
| take care of all the details. | | | | Capital Advisors will prepare a Pre-Feasibility Study |
| Where does the money come from? Now we're | | | | at no cost for you to determine whether an |
| getting down to the real purpose of this article. | | | | ESOP is right for your company. You will receive a |
| Typically, specialized ESOP lenders would fund the | | | | free stock valuation to help you decide if the |
| entire transaction and you would get a big check | | | | money is right. You will also receive an |
| at closing. One downside was that a portion of | | | | Investment Analysis that will show the benefits of |
| that check was pledged back to the lender to | | | | financing the transaction. There is no obligation for |
| help secure the loan. One of the main benefits of | | | | you to explore the benefits of an ESOP |
| an ESOP is that you can take that cash and | | | | transaction. |
| reinvest it in stocks and bonds and defer the | | | | |