ESOP Feasibility Analysis

One of the first steps for any company considering an ESOP is to determine the financial and practical viability of such a transaction in light of existing shareholder objectives and the financial condition of the company.

In making the determination as to whether an ESOP transaction is appropriate, we:

  • Review the sponsor company’s and shareholders’ objectives including the need for liquidity, tax deferral, and value creation
  • Analyze the financial condition of the company such as growth prospects, profit margins, operating history, customer concentration, and cash flow
  • Estimate the equity value of the company in an ESOP buy-out scenario
  • Determine the optimal capital structure for the transaction
  • Analyze the debt service capacity of the company and the market for the required financing

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