have the opportunity to increase AUM by helping coordinate your client’s most important (and valuable) transaction.
receives a liquidity event by selling a portion or all of their business while retaining control of business operations if they choose.
can become owners of their company through a defined contribution retirement plan that might perform better than a 401(k). In fact, the average employee owner typically has retirement savings worth 3-4 times more than employees of non-ESOP companies.*
Employee Stock Ownership Plans can be a more creative solution than other traditional business succession options.
These can take months to complete and involve a multi-member team, which may include:
Wells Fargo Advisors is not a legal or tax advisor.
The Private Bank is an experience level for qualifying clients of Wells Fargo Wealth & Investment Management (WIM). WIM offers financial products and services through affiliates of Wells Fargo & Company. Bank products and services are available through Wells Fargo Bank, N.A., Member FDIC.
Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC, member NYSE, FINRA and SIPC and Wells Fargo Bank, National Association.
A feasibility study including a sell side valuation, to help determine the total value of the company, amount of liquidity that will be produced, the percentage of the business to be sold and other items of importance
Selecting an ESOP advisor or attorney to help your client find an institutional trustee and organize the transaction
A formal valuation on behalf of the trustee, where the company’s by-side valuation is established
Design and execution, including the implementation of the ESOP itself and education of the employees
Ongoing administration to maintain the ESOP’s tax-qualified status.
Once completed, both your client and the company garner tax advantages unique to ESOPs.
Wealth and estate planning with your client, ahead of the transaction closing, positions you to help them afterwards. This is likely the biggest liquidity event of their lives.
The mechanics of completing an ESOP are intricate. But identifying if one is right for your client is relatively simple.
You can start by answering these five questions:
If the answer to more than half of those questions is “Yes,” you might want to let them know Wells Fargo Advisors has a team dedicated to this specialized succession option. Download this helpful guide.
ESOPs provide tax benefits at a personal and company level. Capital gains taxes might even be eliminated permanently.
Your client can sell any amount, up to 100% of their company, while creating a buyer for future sales that doesn’t exist today
ESOPs reward employees for their loyalty, keep jobs in the community and maintain leadership continuity
Your client may choose to continue to work full time, part time, consultatively or not at all.
The advantages may be obvious, but ESOPs are relatively unknown. And you want to be the one to tell your business owner clients about them before someone else. Doing so increases the likelihood resulting assets from selling the business stay with you.
That’s why we’re here. As part of Wells Fargo Advisors, we work for you to provide a potentially stronger succession option for your clients so you and your firm can maintain or elevate its AUM.
The Fiocchi McCarthy ESOP Group of Wells Fargo Advisors have built a practice specializing in: