As a result, 'leveraged ESOPs
' may be used as a technique for corporate finance."
New leveraged ESOPs
that borrow a large amount relative to their EBITDA, Rogers says, “may find that their deductible expenses will be lower, and, therefore, their taxable income may be higher under this change.” However, 100% ESOP-owned corporations will not be affected because they pay no tax, he says.
Anthony Dolan, Director, has significant experience advising middle market companies and shareholders on mergers and acquisitions, capital raising, leveraged ESOPs
, and strategic advisory engagements.
use debt to purchase all or a portion of the company stock.
and Employee Buyouts," Fifth Edition, National Center for Employee Ownership (Fifth Edition, p.1).
As a result, "leveraged ESOPs
" may be used as a technique of corporate finance.
404(a)(9) more literally--as exempting leveraged ESOPs
It has also facilitated other sales of businesses, leveraged buyouts, leveraged ESOPs
An ESOP also has special borrowing rights, which allow for leveraged ESOPs
to be facilitated as a method for corporate finance.
Companies created leveraged ESOPs
in the late 1980s and early 1990s, borrowing funds to purchase company stock.
If tax benefits are the reason, we expect the coefficient of this variable to be positive because tax benefits are available only for leveraged ESOPs
, and they are proportional to the amount of borrowing (adjusted to the total equity value).