Situation

An owner of a business with a highly dedicated staff wanted to exit—and preferred to pass the torch to his management team and employees in recognition of their contribution to the company over the years. The employees, however, did not have the cash to purchase the business, and the owner, while he was willing to make some concessions and consider other options, still wanted a fair payout for the years of sweat equity he had invested in building the business.

The TobinLeff Solution

As we do with all client assignments, we entered the engagement with no pre-conceived solutions in mind, with the belief that our mission is to assess the facts and provide our clients with the information they need to make informed decisions based upon a full understanding of the options available to them. We placed a value on the business, then created alternative financial models illustrating the economics and workings of a management buy-out (MBO), what selling to a third party would look like, and the establishment of an ESOP. After several presentations to the client, his managers and employees, and the firm’s advisors, all parties agreed that the ESOP would best benefit all parties. Our client received 100% of his equity stake at closing.

Get in contact with the TobinLeff team today to learn if an ESOP is the best exit strategy for selling your company.

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