Long Point Capital started investing in ESOP companies in 2004. Why? For two primary reasons – the tax incentives that Congress established to create ESOPs, and the employee productivity benefits encouraged by ESOPs. Please read an interview with Founding Partner Ira Starr in Forbes – The Private Equity-ESOP Hybrid for a history of Long Point Capital and ESOPs.
Many ESOP advisors are not aware that a private equity firm like Long Point Capital will invest in an ESOP transaction. We are trying to change that by educating the ESOP community of the advantages of a PE+ESOP Recap. If you believe that a PE+ESOP Recap will meet your goals better than a Traditional ESOP transaction, we are happy to discuss the specifics with your advisor.
An ESOP is a retirement plan—like a 401K—that invests in the stock of the company that established it. Like regular 401Ks, the investments grow tax-free until the securities are sold. Technically, an ESOP is organized as a tax-free trust that owns stock in the company. Congress wanted to incentivize employee ownership and established special tax savings for business owners to establish ESOPs. Learn more about ESOPs on our Resources page.
We have been investing in ESOP transactions since 2004 and are the private equity experts in the field. We have spent many years refining this structure so that it will work for you and for us. Others may think it is too complicated. We have done it many times – so we make it work simply and efficiently. Please read Private Equity and ESOPs – A Creative Combination for the basics.
If you are intrigued by the PE+ESOP Recap, we would be happy to perform a feasibility study for you. Please contact a member of our Team to learn how to do this.