Financial advisors, CPAs, and accounting firms: Connect with us to explore how we can work together to help business owners navigate succession planning with ESOPs.
The clients you've guided through market cycles, retirement planning, and generational wealth decisions are quietly approaching the most consequential financial moment of their lives — and most of them haven't told you yet.
More than half of small-business owners over age 55 will exit their companies within the next decade. That's an estimated 6 million businesses in the United States, representing trillions in accumulated value — most of it tied up in a single illiquid asset.
For your clients, this transition is personal. They didn't just build a business. They built a livelihood, a team, a legacy. How they exit will shape their financial future for decades. And it will determine whether you remain at the center of that future — or find yourself on the outside looking in.
of heirs switch financial advisors after inheriting wealth
of employer businesses are owned by people 55 and older
federal long-term capital gains rate at the top bracket (before state taxes)
When a founder sells to a private equity firm or strategic buyer, the dynamics shift immediately. New ownership consolidates vendors. Wealth management relationships are reviewed. The proceeds leave the business — and often leave your purview — in ways that are difficult or impossible to recapture.
This isn't a hypothetical. It happens every day to advisors who were never brought into the conversation early enough.
Forhemit, a California Public Benefit Corporation, works with business owners to transition their companies into employee ownership through ESOPs (Employee Stock Ownership Plans). Our approach isn't just about closing a transaction. It's about building a transition that protects the seller's employees, preserves the company's independence, and — critically — unlocks a tax structure most advisors have never offered their clients.
When a C-Corporation founder sells to an ESOP, they may elect to defer 100% of their capital gains taxes under IRC Section 1042 — provided they reinvest the proceeds into Qualified Replacement Property (QRP) within a specific window.
What this means for you: You build and manage the QRP portfolio. Your client defers a tax bill that could otherwise consume a quarter or more of their proceeds. You capture the full liquidity event as investable assets under your management — not a reduced remainder after taxes.
For a business owner selling a $10 million company, the difference between a traditional sale and a 1042-qualified ESOP sale could represent $2–3 million in capital gains taxes deferred or avoided entirely. That's $2–3 million that stays in your client's portfolio.
Important: IRC Section 1042 applies to C-Corporations only. S-Corporation ESOPs have distinct but meaningful tax advantages — including elimination of corporate income tax on the ESOP-owned portion. We'll help you understand which structure applies to your client's situation.
Your clients are being approached. Private equity firms, business brokers, and M&A advisors are reaching out to boomer business owners every week. Once a client accepts a traditional offer, the transition is locked. The tax elections are gone. The relationship often follows.
By introducing the Stewardship model early — before your client gets deep into another process — you become the advisor who opened a door they didn't know existed. That's not just good service. That's irreplaceable positioning.
Think about two or three of your closest business-owner clients. Are any of them over 55? Have any of them mentioned a desire to slow down, transition, or protect their team? Have any of them received unsolicited interest from buyers?
That's where we start. We'll work with you to review which clients may be approaching a transition, model what a Stewardship exit could mean for their specific situation, and equip you with the language and materials to start the conversation naturally.
You don't need to be an ESOP expert. You need to be the advisor who brought the right people to the table.
Contact our Stewardship team to schedule a confidential conversation about your client base and how we can work together to serve them through their most important financial transition.
Connect With UsThis document is for informational purposes only and does not constitute tax, legal, or investment advice. Consult qualified professionals before making any financial decisions.