ESOP vs. Private Equity (or other buyer)
An After-Tax Proceeds Comparison
Inputs
Taxable Gain
—
Business Value—
Tax Basis—
Taxable Gain—
State—
Results
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Sale to Private Equity or Other Buyer
Federal Capital Gains Tax (20.00%)—
State Capital Gains Tax—
Federal and State Capital Gains Tax Rate—
PE Or Other After-Tax Proceeds
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Sale to ESOP
Federal Capital Gains Tax (0.00%)$0
State Capital Gains Tax—
Federal and State Capital Gains Tax Rate—
ESOP Sale After-Tax Proceeds
—
ESOP Advantage
—
—
Taxable Equivalent Sale Price
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Total sale price you would need from private equity or other buyer to equal the after-tax proceeds of an ESOP
Greater Percent Needed
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Increased sale percentage that you would need from a sale to private equity or other buyer to equal the after-tax sales proceeds from a sale to an ESOP
Important Disclosure (1)
This calculator is provided for informational and illustrative purposes only and does not constitute tax, legal,
accounting, or investment advice. Results are estimates based on user inputs and stated assumptions, including
maximum federal long-term capital gains tax rates and selected state capital gains tax rates. Actual tax outcomes
may vary materially based on individual circumstances, transaction structure, timing, eligibility requirements,
and changes in law.
Important Disclosure (2)
Federal and state tax-free sale proceeds may be available to certain sellers who qualify under IRC 1042,
subject to applicable requirements and limitations (including state-level treatment in Pennsylvania and Arkansas).
Users should consult their own tax advisors, legal counsel, and financial professionals before relying on or acting upon any information generated by this calculator.
This summary is for informational and illustrative purposes only and does not constitute tax, legal, accounting, or investment advice. Results are estimates based on user inputs and stated assumptions and may not reflect actual outcomes. Please consult your professional advisors before making any decisions.
Next Steps
See whether an ESOP is the right fit for your business.
Schedule a complimentary consultation to review your options, discuss timing, and determine whether an ESOP aligns with your goals.
