As the business owners of the baby boomer generation reach retirement age and seek liquidity for their life-long investments, many will need an exit strategy to transition ownership of their businesse…
ESOPs: A Tax Advantaged Exit Strategy for Business Owners
In Brief
- Although an ESOP is one of several alternatives that will enable an owner to gain liquidity and transition ownership, ESOP strategies have several advantages that are unavailable with alternative transition strategies.
- These advantages include significant tax benefits as well as nontax benefits such as a ready market for the business owner’s stock and a buyer for the business when there is no other readily apparent buyer.
- Special considerations in implementing an ESOP strategy include the fact that the ESOP is a qualified retirement plan governed not only by the Code, but also by ERISA’s fiduciary and disclosure rules.
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