ESOP TRANSACTION ADVISORY
Maximize your success today and ensure significance for tomorrow
Why Choose An Employee Stock Ownership Plan?
FOR ESOP COMPANIES
- Operate as a tax-free entity
- Attract and retain talent at a 4:1 ratio compared to non-ESOP competitors
- Maintain continuity for your team, clients, and community
- More likely to remain in business than comparable non-ESOPs
- 5% productivity increase in the year an ESOP is adopted
FOR BUSINESS OWNERS
- Ability to defer and ultimately eliminate capital gains tax through Section 1042
- Preserve independence and legacy
- Maintain operational control and leadership continuity
- Guaranteed buyer at full and fair value
- Flexible alternative to a third-party or private equity sale
FOR ESOP EMPLOYEES
- 92% higher median household net worth
- Median job tenure is 53% higher
- 4x less likely to be laid off during a recession
- Shared ownership creates greater engagement and accountability
- Opportunity to build long-term retirement wealth through ownership
What is
an ESOP?
Employee Stock Ownership Plans (ESOPs), created by Congress in 1974, offer a tax-advantaged way for owners to sell their company at full and fair market value to employees via a newly created retirement plan.
The result? A smart exit for the owner, long-term stability for the company, and meaningful retirement benefits for employees at no personal cost.
ESOP Financial Benefits
Internal Revenue Code Section 1042 was created to encourage business owners to sell their shares to their employees and it enables selling shareholders to defer, and in conjunction with their estate planning, to eliminate income taxes on the sale of their shares to an ESOP. 1042 increases a seller’s net receipts by approximately 1/3 over a taxable sale.
A 100% S-Corp ESOP is exempt from Federal and State Income Tax. This tax savings will significantly increase the cash available to pay the selling shareholders and will greatly enhance the Employees’ retirement benefits.
The Federal Estate Tax, commonly known as the “Death Tax,” is 40% on all assets greater than a permitted exemption. Sellers who sell to ESOPs have unique estate planning opportunities that can be used to reduce the Death Tax and preserve wealth for your heirs.
Podcast: The ESOP Insider
Think of our podcast as your go-to resource for exploring this unique path to ownership transition, featuring stories from business owners who have successfully navigated the ESOP process. Whether you’re exploring your options or just want to learn more, our episodes are packed with insights to help you make confident decisions for your business’s future.
To implement an ESOP transaction at the highest level, our clients will require a team of experts in each of the following specialties:
Our team of tax attorneys and CPAs is the most knowledgeable and creative in the ESOP community, providing our clients with tax savings that cannot be matched.
- Section 1042 of the tax code enables shareholders to sell on a tax-deferred and ultimately tax-free basis. Our tax strategy team has innovative, proprietary structures that unlock these savings.
- Proprietary 1042 Solutions: Lazear’s innovative proprietary Section 1042 strategies deliver tax savings while eliminating the inefficiencies inherent in every other structure.
- Tax-free post-close operations: Our tax strategy team has created innovative solutions that provide almost every client the ability to have their company be tax-free once owned by the ESOP.
- Estate planning: The federal estate tax rate is 40%, meaning assets above certain estate thresholds may be subject to significant taxation upon death. Our innovative strategies help protect family wealth and reduce the impact of this substantial tax burden.
Our team of former commercial bankers and credit underwriters delivers creative financing structures designed to maximize cash at closing.
- With more than 200 years of combined banking experience, Lazear brings unmatched expertise in raising capital to support ESOP transactions, helping clients achieve stronger financial structures and greater liquidity at closing.
Our experienced valuation team brings deep industry expertise to every transaction, helping clearly articulate and support our clients’ value proposition throughout the process.
- Backed by CPAs, Chartered Financial Analysts, and Accredited Business Valuation professionals, we work to ensure our clients receive full and fair market value for their companies.
Our team of CPAs, MBAs, and bankers structures financing solutions designed to preserve the company’s financial flexibility and support future growth.
We do things differently. Learn about our unique approach to Employee Stock Ownership Plans.
How to know if an ESOP is right for Your Business
- You believe in the future of your business.
- You have reasonably stable cash flow.
- You are interested in minimizing taxes through ownership.
- You have minimal to moderate bank debt.
- You have at least 25 W-2 employees.
- You prioritize the personal and financial well-being of your employees.
- You have a strong management team or the ability to recruit new team members.
- You maintain good financial record keeping, such as having annual Reviewed or Audited statements.
- You have a competent accounting and finance team.
Lead with insight, plan with purpose
Unlock the true value of your life’s work by subscribing to The Unlock by Lazear, a monthly newsletter offering tips on succession planning, aligning exit strategy with team culture, and maximizing tax planning opportunities.
Let's get started
Every ownership transition starts with a vision—one that goes beyond finances to secure a legacy, empower a team, and define success. At Lazear, we’ve spent 25+ years helping business owners navigate this journey, ensuring their next chapter reflects their purpose and maximizes value.
By empowering business owners with access to the best resources, insight, and data, we can transform the future of business ownership.
Maximize Your ESOP Exit: Eliminate Capital Gains Tax With a 1042 Election
Lazear has developed a proprietary solution that has saved clients $500,000,000 in capital gains tax while eliminating the negative aspects of every other 1042 strategy.
ESOP vs. Private Equity Sale: Which Option Is Right for Your Business?
Discover the advantages and considerations of each approach in this informative discussion.
Smart Transitions, Strong Legacies
Watch our client success story to learn how selling to employees through an ESOP can maximize your wealth and secure your company’s future—then contact us to explore your options.
Let's Get Started
We love sharing the game-changing value of ESOPs and developing succession plans that align with what matters most to you.
More News & Resources
Lead with Insight, Plan with Purpose
Unlock the true value of your life’s work with The Unlock by Lazear, a monthly newsletter offering tips on succession planning, aligning exit strategy with team culture, and maximizing tax planning opportunities.
Get the Scoop from the ESOP Insider Podcast
On the ESOP Insider Podcast, we’ll take you through all you need to know about selling your company through an employee stock ownership plan (ESOP).
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