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Established ESOPs


If your company has already established an ESOP, congratulations on completing the process and realizing some of the potential benefits of an ESOP. Moving forward, it is important to keep your plan on track to ensure that it remains in compliance with Internal Revenue Service and Department of Labor regulations.

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ESOP Financing

We advise clients on compliance audits and assist with corporate governance issues. Our professionals also work with clients employing an ESOP as an exit strategy to design and implement plan terms tailored to meet company needs and objectives, as well as legal guidelines.


We have decades of experience in structuring and financing ESOP transactions and working with lenders of all types across the country. Most of our clients rely upon us to help them structure transactions through the ESOP feasibility study process. 

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How are ESOP Transactions Financed

In most ESOP transactions, the company will borrow from a bank as much money as can be borrowed without impairing the company’s ability to make debt payments or capital expenditures and without impairing the Company’s ability to manage a downturn in the economy. Depending upon the current debt of the company, this could be as much as three or four times the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA). This typically provides enough senior debt capacity to sell 40-60 percent of the company to an ESOP and permit the owner to withdraw that cash when the transaction closes.



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How are ESOP Transactions Financed

Some owners desire to sell 100 percent of the company in one transaction. In that case, the value beyond what is available from third-party financing sources is often financed by a seller note. The seller note typically provides for a total higher rate of return than banks will normally charge and, if structured properly, also gives the selling shareholder the ability to receive equity-like returns on a portion of the seller financing through a warrant.


Need help with ESOP financing? We provide a complete range of ESOP finance and consulting services to companies considering an ESOP and to established ESOPs.

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Following ESOP implementation, we can provide services to assist the company in maintaining the tax-qualified status of the employee stock ownership plan, and also can provide a wide range of business-oriented, value-added services. We have long-standing relationships with third-party administration teams and can assist the company in selecting the team best-suited to provide annual plan recordkeeping and administration services.

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"Our leadership team appreciate Berman Hopkin’s advisors as we went through the formation of our ESOP given their solid ESOP knowledge and their customized approach to our specific needs as a company”. 

Michael Rodriguez
E-Z Bel Construction LLC

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