Selling shareholder characteristics

• Owns (either individually, along with other selling shareholders or through a trust) at least 30% of all outstanding shares of stock in the company.
• Desires to sell because his/her net worth is concentrated in the company and would like to extract some cash from the business.
• Is looking to reduce involvement in the company over the next several years and then phase out completely.
• Would like to take out some cash from the value of the company on a tax-deferred basis.
• Is willing to transfer the beneficial ownership of some company stock to the employees.

Company Characteristics

• Mature company with modest capital expenditure requirements over the new few years.
• Sufficient balance sheet strength to absorb the ESOP acquisition debt.
• Sufficient cash flow from operations to cover all ESOP acquisition debt and other long term debt service requirements by at least 1.25 times.
• Historical and projected profitable operating performance.
• Annul payroll of approximately $400,000 or more.
• 10-15 employees or more.
• Potential successor.
• Participatory management environment and effective communications between employees and management.

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