Benefit #7 of selling to an ESOP: An ESOP transaction is always a stock sale at full fair market value. The ESOP cannot pay a synergistic premium. Selling part or all of a business to an ESOP enables a business owner to sell to a built-in buyer in as little as 90 days at full fair market value. There are many significant tax and cash flow benefits of selling to an ESOP. An ESOP also allows for a better-managed ownership transition, preservation of local jobs, and the maintenance of a company’s legacy in the community.
Did you know? Employee-owned companies are 235% better at job retention. (NCEO)
Additional key tax benefit; 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.