When Emotional Capital Is Your Greatest Investment: Consider the ESOP
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"post_summary": "<p>Often business owners who are interested in bringing liquidity to their holdings seek only a sale to disinterested third parties. And that frequently works out just fine for both the buyer and seller. But sometimes the personal emotional strings attached to the business, whether on the surface or not, are simply too strong to break the ties and turn control over to “the new guys on the block.” You may have heard the term “emotional capital.” Emotional capital is comprised of all the softer assets an owner has invested in his company: sacrificing weekends and evenings to develop the business instead of enjoying the company of family and friends, going the extra mile to save or develop an account, consistently forging better procedures, always stretching one more hour out of the day and one more day out of the week – <em>the business of creating a business</em>. After all, the entrepreneur often spends more time with his or her “business family” than his or her immediate family. And the “gap” between an outsider who is never exactly like you and is unlikely to treat the business like you treat it, the selling entrepreneur, is huge! But it can be bridged.</p> \n",
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}ESOPs & PEGs: A Strategic Match Made in Acronym Heaven
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"post_summary": "<p>With over $302 billion raised in 2007 alone, Private Equity Groups (PEGs) have solidified themselves as a powerful force in the M&A market. The continued proliferation of PEGs, and monies flowing into the funds they control, has led to intense competition for acquisitions. As we move through 2008, weathering its uncertain economy and tenuous credit market, we expect to see strategic buyers playing stronger roles in the M&A market. PEGs will need to find new ways to compete using creative deal structures to off-set tighter credit markets. One alternative structuring method that may be effective is the use of an Employee Stock Ownership Plan (ESOP) as an acquisition tool. While PEGs have already begun to embrace ESOPs as a divestiture tool, there is less experience in using the ESOP structure as an acquisition strategy. Publicly featured last year in the controversial privatization of the Tribune Company, ESOPs have also proven to be a successful strategy for the middle market PEG for several reasons including tax advantages, borrowing capacity and cultural benefits.</p> \n",
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