ESOP sale structures offer tax advantaged shareholder liquidity in a difficult credit environment while providing employee incentives through equity ownership
NEW YORK, Oct. 13 /PRNewswire/ -- Pegasus Capital Advisors and Corporate Solutions Group (CSG) announced today that they have formed a strategic alliance for the purpose of providing Employee Stock Ownership Program (ESOP)-based solutions to middle-market businesses. Operating under the name of Pegasus-CSG ESOP Strategies, LLC, the companies will work together to advise, structure and provide funding for leveraged ESOP transactions.
ESOP plans, originally authorized by the Employee Retirement Income Security Act of 1974 (ERISA), are a tax-advantaged mechanism for companies to share ownership with employees. They operate through a trust that accepts tax-deductible contributions from the company to accumulate company stock, which is then allocated to accounts for individual participants. The trust can borrow money to purchase the stock, with the company repaying the loan by making tax-deductible contributions to the ESOP. There are over 11,000 companies with ESOPs in place today, covering over 8 million employees.
"A leveraged ESOP offers owners of privately-held businesses an outstanding opportunity to gain personal liquidity and is a very attractive solution for succession planning, management buyouts and acquisitions," said Craig Cogut, founding partner of Pegasus. "An ESOP also provides the added benefit of giving employees a real stake in their employer's business. CSG is a leader in corporate finance services for ESOP transactions and we are delighted to be partnering with them to bring the benefits of ESOPs to a wider audience."
"The advantages of ESOPs have always been exceptional, but today's difficult credit markets make an ESOP an even more attractive option for potential buyers and sellers," said Larry Kaplan, managing director of CSG.
Jonathan Spier, managing director of Pegasus-CSG ESOP Strategies added: "We are excited to join with Pegasus, a leader in creative private equity solutions, to provide this option to businesses seeking tax-advantaged liquidity."
About Pegasus Capital Advisors
Pegasus Capital Advisors, L.P. is a private equity fund manager that provides capital to middle market companies across a wide variety of industries. It is currently pursuing initiatives in several key emerging sectors, including alternative energy, all-natural human and pet foods, alternative building materials, LED lighting, homeland security and sustainable business solutions in a number of industries. Established in 1995, Pegasus manages over $1.8 billion in assets through several private equity funds and has made more than 70 investments. The firm employs over 50 uniquely talented investment and advisory professionals located in Cos Cob, CT, New York, NY, as well as several satellite offices. http://www.pcalp.com
About Corporate Solutions Group
Corporate Solutions Group was founded by Larry Kaplan in 2000 to focus exclusively on middle market companies. By providing such companies with a full range of expert financial services--leveraged ESOP corporate finance, debt and equity placements, mergers and acquisitions and restructuring advice--CSG has established itself as a leading financial adviser to businesses with revenues of $10 million to $1 billion.
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