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ESOP Finance

ESOP Finance

Employee Stock Ownership Plans (ESOPs) are a powerful tool for business succession, employee engagement, and tax efficiency. Equivall Finance's ESOP Finance team specializes in structuring debt transactions to facilitate the formation and ongoing needs of ESOP-owned companies.

We work closely with business owners, trustees, and financial advisors to navigate the complexities of ESOP transactions. Whether you are selling 100% of your company or a minority stake, we can design a financing package that meets the liquidity needs of the selling shareholders while ensuring the long-term health of the company.

Our Services

Expert financing for employee ownership:

  • Leveraged ESOP Loans: Financing for the ESOP trust to purchase shares from selling shareholders.
  • Refinancing: Refinancing existing seller notes or senior debt.
  • Repurchase Obligation Financing: Lines of credit or term loans to fund share repurchases from departing employees.
  • Working Capital: Revolving lines of credit to support daily operations.
  • Acquisition Financing: Capital for ESOP companies to acquire other businesses.

Frequently Asked Questions

  • Do you finance 100% ESOP transactions?

    Yes, we can structure financing for 100% ESOP conversions, often utilizing a combination of senior bank debt and seller financing.

  • What is the minimum deal size?

    We generally look for companies with EBITDA of $2 million or more, but can review smaller opportunities on a case-by-case basis.

  • How does an ESOP affect the company's ability to borrow?

    While an ESOP adds leverage initially, the tax benefits (especially for S-Corp ESOPs) often improve cash flow, enhancing the company's debt service capacity over time.