Many owners of closely held businesses realize Employee Stock Ownership Plans (ESOPs) effectively meet their liquidity and business succession needs. Through this process, they discover that ESOPs also have tremendous value as an estate planning tool, an often overlooked benefit. The benefits come in the form of reduction of estate taxes, gifting plans, accurate valuation and liquidity options.
One of the toughest questions a business owner will ultimately face is when to sell the company. But once that decision is made, a host of other questions arise: How do I ensure I get the best value for my company? Do I want to walk away completely or retain some ownership and How long do I need to stay on after the sale to ensure the transition goes smoothly? And what about my employees, how do I make sure their loyalty and support is rewarded and their future secure? And that dreaded of all questions, how do I minimize the tax bite?
Private Equity Groups (PEGs) continue to solidify themselves as a powerful force in the M&A market. The continued proliferation of PEGs, and monies flowing into the funds they control, has led to intense competition for acquisitions. Weathering an uncertain economy and tenuous credit market, we expect to see strategic buyers playing stronger roles in the M&A market.
In today’s business climate, business owners considering liquidity are facing challenging times in the marketplace. The reason: fewer buyers, with those active in the marketplace being more discerning in their acquisitions. In addition, businesses are receiving lower valuations compared to the historical values companies received a few years ago. And, it is most unlikely that high values will return to those record highs in the near future.
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