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Alternative Financing Resources in ESOP Transactions

By Dan Kaczmarek
TopicESOP

Alternative Financing Resources in ESOP Transactions

The purpose of this chapter is to describe alternative financing sources for transactions involving ESOP-owned companies. Transactions can be related to initial ESOP transactions, partial-to-full ESOP transactions, growth initiatives/acquisitions, or a myriad of other purposes. The type of alternative capital chosen depends on many things, including the amount of capital needed, the company’s cash flow or collateral coverage, strategic objectives, and uses of the capital. This chapter also explores what key stakeholders should consider before seeking these alternatives. This chapter does not discuss traditional financing sources in ESOP transactions. Throughout the chapter, “traditional financing sources” refers to senior bank debt and seller notes with detachable warrants.

Original content written for The National Center for Employee Ownership, Leveraged ESOPs and Employee Buyouts, Seventh Edition (2020). The full digital publication is available for purchase from NCEO here.

Dan Kaczmarek

Dan Kaczmarek

“Bringing a solutions-based approach is at the heart of what we do. Our clients’ objectives are the ultimate driver of how we approach and structure our capital markets transactions.”

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