Drake & Associates, Ltd. -ESOP

An ESOP can have advantages for all involved, from the company's owners to the employees. This benefit option allows company owners to take cash out of their business at a significant tax advantage while giving employees a potentially lucrative retirement plan. Below are a few of the potential advantages:

Drake & Associates, Ltd is a proud member of the Board of Directors of the Triangle ESOP Alliance.

Our preferred ESOP partners and members of the Alliance include:

President
David Bass
David Bass & Associates

Vice President
Philip Lewis
Morgan Creek Group

Treasurer
Mike Worsham
Paragon Commercial Bank

Secretary
Mary Lou Drake, SPHR
Drake & Associates, Ltd.

Bob Drake
Drake & Associates, Ltd.

Michael H. Womble,
CPA, ABV, CVA, BVAL
Williams Overman & Pierce, LLP

Bill Merten
McDermott Will & Emery

Charles L. Steel IV
Steven B. Long
Maupin Taylor, P.A.

Quan Williams
Quantum Benefit Solutions

Charter Members:
Gail Brown
Geoff Hudson
Don Monroe
Jessica Standifer
Wachovia Securities

Company

Stockholders

Employees

1. Substantial tax savings (up to 100%)

2. Corporate Perpetuation

3. Cash flow increased

4. Pre-tax dollars repay debt

5. S corporation stock owned by an ESOP is not subject to federal tax

6. Tax-deductible dividends

7. Net worth increased

8. Provides a match on employees’ 401(k) deferrals

9. Justifies accumulated retained earnings

1. Substantial tax savings (up to 100%) 1. Creates liquidity at fair market value

2. Control maintained (if desired)

3. “Tax-free rollover” treatment available to sellers in closely-held companies

4. Establishes valuation and provides liquidity for estate tax purposes

5. Selling stockholder-employee participates in ESOP if the “tax-free” rollover not elected.

6. Selling shareholders excluded from ESOP participation can be ‘”made whole” by the corporation

7. Additional equity incentives still available (stock option, bonus, purchase, phantom stock, etc.)

1. Employees share directly in equity growth of company

2. ESOP employer contributions tend to be larger than profit sharing contributions

3. Proven motivator. Builds unity and team spirit. Retains key employees

4. Accounts accumulate tax-deferred.

5. Employees can realize dividend income

6. Buy/sell agreements insure future employee ownership through the ESOP

7. 401(k) Plans can be enhanced with ESOPs

For more information on these suggested criteria, please contact a Drake Representative at (919) 969-9901, or one of our preferred partners in the Triangle ESOP Alliance.