Transcription of Financing an ESOP - Vermont Employee Ownership Center
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Financing an ESOP - Vermont Employee Ownership Center
Vermont Employee Ownership CenterSixth Annual Employee Ownership ConferenceFinancing an ESOPB urlington, VTJune 6, 2008 Copyright 2008 by SES Advisors, Inc. All rights Agenda Basic leveraged ESOP Structure Types of Money Financing a <100% ESOP Financing a 100% ESOP Second Stage ESOP Financing Banking Market Today Preparing For Your Bank Meeting2 Basic leveraged ESOP Structure leveraged ESOPs Structure Outside loan vs. inside loan loan terms Annual contribution limits Differences Between Inside and Outside Loans Release of shares loan Sizing Credit and collateral capacities3 Basic leveraged ESOP: Example XYZ Company has been valued at $15 million on a minority, non-marketable basis ESOP purchases 33% of XYZ s stock from Jim for $5 million The stock purchase is financed with a $5 million loan , which will be repaid over time4 Bank$5 Million Note Payable$5 Million Cashc$5 Mi
2 Basic Leveraged ESOP Structure ¾Leveraged ESOPs Structure ¾Outside loan vs. inside loan ¾Loan terms ¾Annual contribution limits ¾Differences Between Inside and Outside
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