Silverstone provides both feasibility, advisory and representation services for companies contemplating an ESOP.
These services include feasibility-level business valuations, proprietary scenario modeling designed to test ESOP transaction and capital structure alternatives, as well as test sufficiency of cash coverage for operating expenses, anticipated enterprise growth, debt service and ESOP redemption liabilities.
In addition to determining the overall financial feasibility of an ESOP transaction, Silverstone quarterbacks the entire process, including undertaking shareholder and board presentations and bringing in qualified legal and tax counsel who will be needed to fully execute the process.
There are several favorable advantages to an ESOP, these include:
- Providing a statutorily mandated fair market value exit for existing shareholders;
- Ensuring high certainty of a well-capitalized exit for current shareholders which is generally debt funded and employing tax-exempt cash flows to service transaction debt;
- Allowing current management to remain in their leadership roles in the company;
- Allowing selling shareholders to take a second bite at the apple as ESOP members;
- Establishing higher employee retention – where the employee builds retirement value as the company builds equity value by way of a) repayment of funding debt, b) increase in business value;
- Creating high value employee retirement & personal estate benefits;
- Competing with union benefit plans.