McKinnon Patten & Associates LLC

ESOP Advisory Services

ESOP Advisory Services

McKinnon Patten & Associates LLC, a Dallas CPA firm, is uniquely positioned to serve as an integrated provider of ESOP and ERISA advisory services through every stage of an ESOP’s life cycle.

An ESOP is a Qualified Plan under the Employees Retirement Income Securities Act of 1974 (ERISA). ESOPs provide unique corporate finance and tax opportunities due primarily to two distinctive features as a retirement plan. First, an ESOP is required to invest primarily in the sponsoring company’s securities. Second, an ESOP can borrow funds backed by the credit of the sponsoring company in order to purchase shares.

Employee stock ownership plans allow owners of closely-held companies to transition ownership to employees in a tax efficient manner.

Potential tax benefits (assuming proper transaction structure and implementation) include:

  • Deferral of capital gains tax for the selling shareholders
  • Tax deductibility of principal and interest of the ESOP transaction note
  • No federal income tax on S-corporation stock owned by an ESOP

Other possible benefits of an employee stock ownership plan are:

  • Enhanced liquidity and diversification for the selling shareholders
  • Financial incentives for key employees
  • Facilitation of business succession and/or estate planning
  • Cost effective employee benefit

Engagements include:

  • Pre-ESOP Planning
  • Assessment of strategic alternatives
  • ESOP feasibility studies
  • Preliminary valuations
  • ESOP Formation
  • Transaction structuring and negotiating
  • Initial valuations
  • Fairness opinions and solvency opinions
  • ERISA Compliance
  • Annual valuations
  • Follow-on transactions
  • ESOP loan restructurings
  • Trustee advisory ESOP and ERISA litigation support and expert testimony
  • Exit Merger and acquisition advisory
  • Recapitalizations
  • ESOP terminations
  • Fairness opinions

Contact us to Request a Consultation, or call Mark Patten at 214-696-1922 to discuss your particular needs.