ABRC-ESOP
Monday, April 16, 2007
ESOPS - Wave of the future?
An article in the April 9, 2007 edition of the Wall Street Journal elevates the national discussion about ESOPs. The article entitled "Why Flush Financiers Court Unloved Businesses" by Karen Richardson and Serena Ng (Wall Street Journal, Page C1) discusses the four-way bid by private-money managers to acquire Daimler-Chrysler. One proposal is to convert Chrysler to an S-Corporation and adopt an ESOP, similar to Zell's plan for the Tribune.
The article explains the advantages of converting a public company to private: "Shareholders of an S-Corporation generally are required to pay tax on income they earn from the company, but under a tax-code exemption, they aren't taxed if they are part of an employee stock ownership plan, or ESOP. Once private, Tribune will adopt an ESOP, meaning shareholders won't need to pay taxes on income from Tribune."
"The company is treated, effectively, like a charity. It'll be a tax-exempt entity," says Robert Willens, an accounting-and-tax analyst at Lehman Brothers. Other financiers may be eyeing proposals tied to ESOPs. Mr. Willens expects Chrysler...to also be structured as an ESOP and S-corporation. "This is going to be the wave of the future," he says.
My travel schedule will take me to Sacramento, Chicago and Madison, WI in the next month. If anyone would like a personal meeting, please call or email me ASAP.
Regards, Evan L. Rhodes American Business Resource Corporation ESOP is the Key
The article explains the advantages of converting a public company to private: "Shareholders of an S-Corporation generally are required to pay tax on income they earn from the company, but under a tax-code exemption, they aren't taxed if they are part of an employee stock ownership plan, or ESOP. Once private, Tribune will adopt an ESOP, meaning shareholders won't need to pay taxes on income from Tribune."
"The company is treated, effectively, like a charity. It'll be a tax-exempt entity," says Robert Willens, an accounting-and-tax analyst at Lehman Brothers. Other financiers may be eyeing proposals tied to ESOPs. Mr. Willens expects Chrysler...to also be structured as an ESOP and S-corporation. "This is going to be the wave of the future," he says.
My travel schedule will take me to Sacramento, Chicago and Madison, WI in the next month. If anyone would like a personal meeting, please call or email me ASAP.
Regards, Evan L. Rhodes American Business Resource Corporation ESOP is the Key
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