The Benefits of a Leveraged ESOP in Divestitures and Buyouts

Author

Thomas L. Shea, Fontbonne College

Year of Award

1992

Degree

Master of Science in Taxation (MST)

College

College of Business & Professional Studies

Degree Program

Taxation

Department

Business Administration

Keywords

regulations, securities, loan, tax

Abstract

The topic I have chosen for my Capstone Research Project is "The Benefits of a Leveraged ESOP in Divestitures and Buyouts." The reason I am proposing to write on this subject is that it involves the possibility of a leveraged buyout of one of the companies within the group of companies owned by our parent organization.

I am presently working for a small property and casualty Company and managing general insurance agency, which is owned by a holding company that owns several insurance related companies. We now find ourselves on the open market for sale. However, we feel the insurance company will be sold separately and the managing general agency will be offered to the current management of the insurance company.

We feel this will be an opportunity to buy the agency with a leveraged ESOP buyout after the sale of the sister insurance company is completed.

The primary tax provisions considered in this paper are the following:

1. Section 4975(e)(7), which provides for a stock bonus plan election.

2. Section 401(a), which contains the basic elements of an ESOP.

3. Section 409, which contains the qualifications for tax credits for ESOPs.

Document Type

Restricted Thesis

Recommended Citation

Shea, Thomas L., "The Benefits of a Leveraged ESOP in Divestitures and Buyouts" (1992). All Theses, Dissertations, and Capstone Projects. 360.
https://griffinshare.fontbonne.edu/all-etds/360