Sale of Stock in Closely Held Company

Document Sample
Sale of Stock in Closely Held Company Powered By Docstoc
					   N E W Y O R K S TAT E B A R A S S O C I AT I O N

                                    Tuesday, November 18, 2008
                                    New York City

                                         MCLE          See inside for
                                        Credits        more details.

The Sale of Stock in a Closely-Held
Business to an “ESOP” (Employee
Stock Ownership Plan):
A Diversification Strategy for
Business Owners
                                    Register Now!
                                    Save Money, and Guarantee
                                    Your Seat at the Program!!!

                                    Sponsored by the Committee on
                                    Continuing Legal Education of the
                                    New York State Bar Association
Program Description
   We are pleased to present a well-rounded program on key                     that may be otherwise illiquid or has no established market,
practical and strategic aspects of employee stock ownership plans              thereby permitting the business owner to diversify his asset
that business owners, and their counsel, may come to contemplate               holdings and significantly reduce investment risk. An ESOP is
and implement.                                                                 also an employee benefit plan that allows a business owner to
                                                                               attract and retain key personnel.
   An ESOP is a qualified, defined contribution employee benefit
plan that invests primarily in the stock of the employer company.                 In this program, a highly experienced faculty from diverse
ESOPs are “qualified” in that in return for meeting certain rules              professional backgrounds will explain the overall structure
designed to protect the interests of plan participants, ESOP                   of a leveraged ESOP transaction, including the objectives in
sponsors receive substantial tax benefits. Alone among qualified               establishing an ESOP, the tax benefits available in an ESOP
employee benefit plans, an ESOP can also borrow money from or                  transaction, the financing aspects of an ESOP transaction and the
on the credit of the employer, provided the ESOP uses the money                special ESOP valuation requirements.
to buy employer stock.
                                                                                  The program will include ample opportunity for panel
  Most significantly, an ESOP provides a highly tax-efficient                  discussion and audience questions.
vehicle for a business owner to sell all or a portion of his business

8:30-9:00 a.m.                                                                      D.    Senior debt
REGISTRATION (outside meeting room)                                                       1. Asset-based financing
                                                                                          2. Borrowing base
                                                                                          3. “Overadvance” financing
I. Overall Structure of a Leveraged ESOP Transaction
                                                                                          4. Pricing
    A. Basic Structure of an ESOP Transaction
                                                                                          5. Covenants
         1. Flow of funds at closing
                                                                                          6. Lenders
         2. Bank financed vs. seller financed transactions
                                                                                    E.    Subordinated debt
         3. Outside loan/inside loan
                                                                                          1. Gamut of sources: from second lien to classic
         4. Debt servicing
    B. Statutory and regulatory requirements
                                                                                          2. Typical features: current interest, PIK interest,
         of an ESOP including:
         1. General benefit plan requirements
                                                                                          3. Pricing
         2. Specific ESOP requirements including voting rights
                                                                                          4. Subordination matters
              and distribution requirements
                                                                                    F.    Seller note
         3. Allocation of shares acquired with loan proceeds
                                                                                          1. Interest income for the shareholders
         4. ESOP loan exemption
                                                                                          2. Principal amortization deferred until out of
         5. Diversification rules
    C. The tax attributes of an ESOP including:
                                                                                    G.    Typical timeline
         1. Section 1042 tax deferral on sale of stock
              to an ESOP                                                       11:45-12:35 p.m.
         2. Deductibility of contributions to an ESOP                          III. Valuation Aspects of ESOPs
         3. Employer dividend payments                                              A. What is value?
         4. S Corporation ESOPs and tax-shield                                      B. Definition of fair market value
    D. ERISA fiduciary rules for ESOPs including:                                       1. Revenue Ruling 59-60 of the Internal Revenue
         1. Exclusive purpose and prudence rules                                             Service
         2. Exemption of sales to ESOPs from the prohibited                             2. Department of Labor regulations
              transaction rules                                                         3. Adequate consideration
         3. Adequate consideration                                                  C. Premises and levels of value
         4. Independent trustee                                                     D. Special ESOP Valuation Issues
                                                                                        1. S corporation valuation
                                                                                        2. ESOP transactions involving minority shares
Coffee Break
                                                                                        3. ESOP transactions involving controlling interests
10:55-11:45                                                                             4. Preferred stock transactions
II. Financing Aspects of an ESOP Transaction                                            5. Lack of marketability discount
    A. ESOP - as a “do it yourself” LBO                                                 6. The valuation process as it relates to an ESOP
        1. Tax deductions instead of the equity sponsor                                      transaction
        2. Creative techniques for qualified replacement                            E. Pre/Post valuation differences
    B. Capital structure: senior debt, subordinated debt,
                                                                               Audience Questions and Panel Discussion
        seller note
    C. Impact of the current economic environment                              1:00 p.m.
        on the ESOP deals                                                      Adjournment

                                                          4.5 TOTAL CREDITS
                     4.5 credit hours of practice management and/or professional practice
                             This advanced-level course may be used for New York MCLE credit by all attorneys,
                                        except those who are newly admitted (less than 24 months).

  This program has been approved for MCLE credit by the State Bar of California in the amount of 3.5 hours, and by the Pennsylvania Continuing
  Legal Education Board for 3.5 credit hours of substantive law. All inquiries regarding MCLE credits may be directed to (518) 487-5586.
  This course includes 4.5 hours of credit for the continuing professional education requirements of New York and New Jersey CPAs. New York sponsor
  number: 000026; New Jersey sponsor number: 20CE 00099900.
  The New York State Bar Association’s Committee on Continuing Legal Education has been certified by the New York State Continuing Legal
  Education Board as an accredited provider of continuing legal education in the State of New York.
  Regulations and Guidelines, attendees at CLE programs cannot receive MCLE credit for a program segment unless they are present for the entire segment.
  Persons who arrive late, depart early, or are absent for any portion of the segment will not receive credit for that segment.
Program Faculty
Overall Planning Chair            Speakers (in alphabetical order)
Stanley E. Bulua, Esq.            Stanley E. Bulua, Esq.
   Danziger &                        Danziger & Markhoff LLP
   Markhoff LLP                      White Plains
   White Plains                   Jay A. Fenster, Esq.
                                     Danziger & Markhoff LLP
                                     White Plains
                                  Larry Kaplan
                                     Managing Director and Founder, Corporate Solutions Group, LLC
                                     New York City
                                  Kenneth J. Pia, Jr., CPA, ABV, ASA, CBA
                                     Meyers, Harrison & Pia, LLC
                                     New Haven, CT

Information and Policies
Pre-registration Strongly Advised: You can save money and guarantee              Discounts and Scholarships: NYSBA members may apply for a discount
your seat and course materials by registering early. Registrations               or scholarship to attend this program, based on financial hardship. Under
received or postmarked within 10 days of the event, or at the door, are          that policy, any member of our Association who has a genuine financial
subject to a higher registration fee. Seating is limited in all locations and    hardship may apply in writing, not later than two working days prior to
registrations are taken on a first-come, first-served basis. If you plan         the program, explaining the basis of his/her hardship, and, if approved,
to pre-register within 10 days of the program or to register at the door,        may receive a discount or scholarship, depending on the circumstances. For
please call the CLE Registrar’s Office at (800) 582-2452 to verify that the      more details, please contact our CLE Registrar’s Office at (800) 582-2452.
program is not sold out or that the date or location has not been changed.       Non Members - Join the NYSBA and enjoy great discounts on CLE seminars,
Pre-registrants are guaranteed a seat and set of course materials, and           products, and other valuable NYSBA services. NYSBA members can save 30
will automatically be notified if there are any such changes in the date         percent or more over non-members on CLE seminars alone. Join now and
or location of the program.                                                      take advantage of NYSBA membership discounts throughout the year.
Cancellations are easy – full refunds are given: Your full registration fee      If you wish to join, please contact NYSBA Membership Services at (518)
will be refunded if you give us notice no later than the close of business
                                                                                 487-5577 and an application will be sent to you.
(4:45 p.m. EST) on the day prior to the date of the program for which you
registered. To cancel, write the CLE Registrar’s Office at One Elk Street,       Tape Recording of NYSBA Seminars is not permitted.
Albany, New York 12207; or fax (518) 487-5618; or call (800) 582-2452.                   Accommodations for Persons with Disabilities: We will make
If you do not cancel and do not attend the program, a complete set of                    every reasonable effort to ensure that our programs are held
materials will be forwarded to you in consideration of the registration                  in locations with barrier-free access for persons with mobility
fee. Non-registrants may purchase program materials after the final              impairments. If you are planning to attend one of our programs and
program date.                                                                    need assistance relating to some other type of disability, please contact us
MCLE Credit: This program is acceptable for MCLE credit in New York              sufficiently in advance and let us know so that we can be prepared to make
and many other MCLE jurisdictions. Please see inside of this brochure            reasonable accommodations.
for details.

                                                   R E G I S T R AT I O N F O R M
Name____________________________________________________________________________________           Member ID ___________________________________________
Address _________________________________________________________________________                  Business Phone ( ________ ) ___________________________
_________________________________________________________________________________                  Email _________________________________________________
City _________________________________________ State _________ Zip ________________
Please enroll me in “The Sale of Stock in a Closely-Held Business to an ESOP”
■ New York City, November 18, 2008 (09494)
Early registrations, received or postmarked 10 days prior to the date of the registered session:
   NYSBA members–$150            non-members–$235        NYSBA student members–$45
Late registrations, received or postmarked thereafter, and on-site registrations:                    4 EASY WAYS TO REGISTER
   NYSBA members–$165            non-members–$250        NYSBA student members–$60

■ Check or money order enclosed in the amount of $ ____________                                            Online at
   (Please make checks payable to the New York State Bar Association.)
                                                                                                           Call us at 1.800.582.2452 (U.S. and Canada) or
■ Charge $ ___________ to ■ American Express ■ Discover ■ MasterCard ■ Visa                                518.463.3724 in the Albany & surrounding area
   Valid from __________ to __________
                                                                                                           Mail to:   Registrar’s Office
Card number                                                                                                           New York State Bar Association
                                                                                                                      One Elk Street, Albany, NY 12207

Authorized Signature ______________________________________________________________                        Fax the order form to 518.487.5618

For more information on our CLE Coupon Plan offering substantial savings on full-day, live programs, please contact the Registrar’s Office at 1.800.582.2452.
                                                                                                                                  Source Code: CL3164
              CONTINUING LEGAL EDUCATION                                                                                                 Non-Profit Org.
              Mail to: CLE Registration Office                                                                                             US Postage
              New York State Bar Association                                                POSTMASTER: CONTAINS DATED MATERIAL.
                                                                                                                                           Albany, NY
              One Elk Street, Albany, NY 12207                                              PLEASE DELIVER PROMPTLY. THANK YOU.
                                                                                                                                         Permit No. 155
Registrant note: Is your name and address listed correctly on the mailing label at the
right? If not, fill in correction below and return this page to NYSBA. If you receive
multiple copies of this brochure, please pass them along to colleagues who may be
interested in this program.
                      OR ADDRESS CORRECTION
 ■ Send program admission ticket to address shown on label at right
 ■ This is a new address, please change your records
 ■ Send to the address below
 Name ________________________________________________________________
 Firm _________________________________________________________________
 Business Address _____________________________________________________
                                    STREET/SUITE NUMBER/CITY/STATE/ZIP
 Telephone ( _________ ) ______________________________________________
                                                                                                                        more details.
                                                                                                                        See inside for      Credits
   Strategy for Business Owners
   Ownership Plan): A Diversification
   Business to an “ESOP” (Employee Stock
   The Sale of Stock in a Closely-Held
                                                                                         presents      NYSBACLE
                                                                                          See our Fall 2008 schedule online at
                                                              (212) 736-5000
                                                              New York, NY 10001                                                    New York City
                                                              401 Seventh Avenue (between 33rd and 32nd Streets)                    November 18, 2008
                                                              New York’s Hotel Pennsylvania                                         Tuesday
up to the day prior to the program, if they cannot attend and notify us of their cancellation. Please pre-register as early as possible.
changed. Those who pre-register in advance of the program will automatically be notified of any such changes and will receive a full refund
or in Albany and surrounding area, dial (518) 463-3724, to verify that the program is not sold out or that the date or location has not been
Important Note: If you plan to pre-register within 10 days of the program or register at the door, please call us at (800) 582-2452
                                                                                                       Program Locations

Shared By:
Description: Sale of Stock in Closely Held Company document sample