Have A Company To Sell In The Down Economy? Think ESOP


Why use an ESOP?

• An ESOP can create a market for a closely held company's stock

• A selling shareholder can finance the sale to the ESOP by accepting a promissory note from the ESOP (the selling shareholder receives market rate interest)

• If a bank is willing, an ESOP can borrow all or portion of the money for the stock purchase

• An ESOP can repay the entire loan with pre-tax dollars (the ESOP sponsor deducts its entire ESOP contribution, principal as well as interest, making the entire ESOP loan repayment tax-deductible).........

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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