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Selling Closely-Held Companies to Employees - 2 CLE hours
Many closely held companies have only two potential sets of buyers – children or grandchildren of the founding generation or managers and other employees of the enterprise. The market of third-party buyers for closely held companies can be thin, so when family members are not suitable buyers of a company, often the best solution is to sell to employees. But sales to employees are unlike sales to third-parties or family members, involving complex issues of how to finance the sale, transition of management and control, employee retention, and tax concerns. This program will provide you with a detailed discussion of the major issues of selling to employees, including valuation, how the sale price is financed over time, transition periods, retaining managers not in the buyout group, liability, and more.
Day 1 – January 20, 2015:
• Long-range planning of sales to employees – and benefits over selling to third parties or family members
• Identifying the right employees to whom a sale is practical & preserving enterprise value
• Negotiating with employees over sales price and valuation issues
• Transitions of management control, including retaining seller/founder for a period of time
• Practical governance issues when employees are identified as potential buyers
Day 2 – January 21, 2015:
• Overview of alternative structures and the tradeoffs of each
• ESOPs – structural, practical and tax issues, including leveraged buyout options
• Use of company redemptions of founders to accomplish a transfer
• Crucial issues in drafting “earnouts” on sales to employees
• Seller financing options, including long-term notes and security interest in assets
• Creditor and successor liability issues
Paul Kaplun is a partner in the Washington, D.C. office of Venable, LLP where he has an extensive corporate and business planning practice, and provides advisory services to emerging growth companies and entrepreneurs in a variety of industries. He formerly served as an Adjunct Professor of Law at Georgetown University Law Center, where he taught business planning. Before entering law practice of law, he was a Certified Public Accountant with a national accounting firm, specializing in corporate and individual income tax planning and compliance. Mr. Kaplun received his B.S.B.A., magna cum laude, from Georgetown University and J.D. from Georgetown University Law Center.
John Wilhelm is a partner in the Tysons Corner, Virginia office of Venable, LLP, where he counsels businesses regarding employee benefits and compensation matters, including the establishment, operation, and tax and ERISA implications of qualified retirement plans, ESOPs, stock purchase and restricted stock plans. He is a member of The ESOP Association, National Center for Employee Ownership and the Employee Benefits Committee of the ABA’s Tax Section. Mr. Wilhelm received his B.A., magna cum laude, from Theil College, his J.D. from Memphis State University, and his LL.M. from Georgetown University.