Benefit #1 of selling to an ESOP: The sale of the company to the ESOP is being paid for by the company tax and cash flow savings over time. An ESOP is one of the most cash and tax-efficient succession plans available to business owners.
The portion of a company owned by an S Corporation ESOP is not subject to federal or state income taxation, increasing cash flow and providing the company with a competitive advantage. This means that S Corporations that are 100% ESOP-owned are not subject to any federal or state income taxes, increasing cash flow and providing the company with a competitive advantage.
Check out this brief animated video to learn more about ESOPs.