In this episode i speak with Darren Gleeman of MBO Ventures in New York City.
As he says on his Linked In, he is a ESOP (employee stock ownership plan) Evangelist.
But.. what is an ESOP and how do they work?
Investopedia tells us
- An employee stock ownership plan (ESOP) is an employee benefit plan that gives workers ownership interest in the company in the form of shares of stock.
- ESOPs encourage employees to give their all as the company’s success translates into financial rewards.
- They also help staff to feel more appreciated and better compensated for the work they do.
- Companies typically tie distributions from the plan to vesting, which gives employees rights to employer-provided assets over time.
- It’s important to read the terms of your ESOP, as each one may vary and have different rules.
- Other versions of employee ownership include direct-purchase programs, stock options, restricted stock, phantom stock, and stock appreciation rights.
I speak to Darren about ESOP’s and the cannabis sector in the US.
The tax benefits, the pros and the cons ( spoiler – it costs a fortune to set them up)
Darren Gleeman
Bio ( Linked In)
Darren Gleeman is a financial expert. Darren is the Managing Partner of MBO Ventures. He was the founder of e-Coupons, Managing Partner of both GMD Trading, and GB Trading. He’s highly sought after for his ESOP knowledge and financial acumen, as well as being a prolific angel investor with early investments in companies such as Screaming Media (NASDAQ:SCRM), Blackboard (NASDAQ:BBBB), Social Radar and his latest investments in ClassEdu and Accelerant Manufacturing.
Darren understands finance. Beginning at Wharton, he understood the value of hard work, quantitative modeling and the scientific method. From there, he founded a firm that took the human element out of trading. He transitioned the company into one of the first high frequency trading platforms in the world, trading over 1% of all US Equities every day.
Today, Darren is the managing partner of MBO Ventures (www.mboventures.com). The firm provides ESOP Expertise & will invest it’s capital alongside company owners and/or the management team. MBO implements exit strategies, whether it’s for family succession, a management buy-out, or a 100% sale to employees.
To accomplish a successful exit, a business owner can sell their firm (or a portion of it) to their employees via a leveraged ESOP.
Congress has bestowed tremendous tax advantages on this structure (ESOP), enabling owners to earn significantly more money when selling to an ESOP, over private equity. Let us educate you:
1. No employee funds required.
2. Owners can defer their capital gains on the sale of the company indefinitely.
3. 100% S Corp ESOP is a tax free entity.
4. Loan principal to buyout owner is paid back with pre-tax dollars.
5. Owner can still maintain managerial control and upside potential.
6. Employees keep their jobs; become owners; work harder and better
Source: https://www.linkedin.com/in/darrengleeman/
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