For Wealth AdvisorsTransform Your Client's Exit Into
Transform Your Client's Exit Into
Your Greatest AUM Opportunity
When founders sell to traditional buyers, taxes destroy wealth and relationships evaporate. The ESOP alternative defers capital gains, multiplies your assets under management, and creates a legacy that endures.
0xAUM Potential
Discover the opportunity
The Hidden Risk
The Liquidity Event Trap
When a successful business owner decides to sell, wealth managers face a crisis disguised as a celebration. The traditional path destroys more value than it creates.
Traditional Sale
Sale$10M
→
Taxes-$2.38M
→
You Manage$7.62M
Plus:PE firm brings their own advisorsRelationship ends within 18 months
VS
Forhemit ESOP Path
Sale$10M
→
1042 Rollover$0 Tax
→
You Manage$10M+
Plus:ESOP Trust management feesGrowing employee client baseMulti-generational relationship
The Catalyst
Why ESOP Transitions Multiply Your Practice
An ESOP sale isn't just a transaction—it's structural tax arbitrage that requires your expertise at every turn.
The 1042 Tax Deferral
Maximize investable capital. Instead of managing diminished post-tax proceeds, you construct and oversee a Qualified Replacement Property portfolio equal to the entire pre-tax sale price.
The Legacy Bond
Create predictable income. The seller note provides your client with a high-yield, fixed-income stream over 5-10 years—integrated into their estate plan under your management.
Expanding Client Roster
Grow with the company. The ESOP Trust needs institutional management. Employee-owners build equity and need financial planning. One relationship becomes many.
See the Capital Retention Difference
Adjust Sale Amount$10M
Traditional Sale$7.62MAfter up to 23.8% federal capital gains
VS+$2.38M
ESOP + 1042$10MTax-deferred reinvestment
Partnership
How We Work Together
We are operators and continuity engineers. You are the trusted confidant. Together, we engineer the most tax-efficient, wealth-generating transition possible.
Your Role
- Guide personal financial goals
- Construct the QRP portfolio
- Manage the liquid wealth
- Lead estate planning strategy
Partnership
Our Role
- Structure ESOP transaction financing
- Architect the ESOP structure
- Install COOP resilience systems
- Ensure operational continuity
The Opportunity
The "Reluctant Seller"
You likely have clients past retirement age who refuse to sell. They fear that traditional private equity will strip their company, fire their loyal employees, and destroy the legacy they spent a lifetime building.
We are the solution you can bring to them. By introducing the Forhemit model, you are no longer just asking about their retirement timeline—you are bringing a sophisticated structural solution.
Protects Their People
Protects Their Wealth
Protects Their Legacy
The Journey
From Introduction to Partnership
01
Confidential Discussion
We meet to understand your practice, your client base, and how ESOP transitions might fit your advisory approach.
02
Client Opportunity Mapping
Together, we identify which of your clients fit the stewardship model—founders aged 55-70 with $3M–$15M EBITDA who value legacy.
03
Joint Client Meeting
You introduce us as a specialized partner. We listen first. If there's alignment, we proceed; if not, your relationship is stronger for the thoughtful introduction.
04
Structure & Execute
We handle the ESOP architecture and transaction execution. You lead the QRP portfolio construction and personal wealth strategy.
05
Ongoing Stewardship
Post-close, we manage operational continuity. You expand your role with the ESOP Trust, employee financial planning, and multi-generational estate work.
Questions
Common Questions from Advisors
Section 1042 of the Internal Revenue Code allows sellers of stock to an ESOP to defer capital gains taxes indefinitely, provided the proceeds are reinvested in Qualified Replacement Property (QRP) within 12 months. QRP includes stocks and bonds of operating companies incorporated in the U.S. As the wealth manager, you construct and manage this QRP portfolio—dramatically expanding your AUM while providing the founder with tax-efficient wealth preservation.
The ESOP structure actually strengthens your position. The founder's QRP portfolio transfers to their estate, where you continue managing it. Meanwhile, the ESOP Trust requires ongoing institutional asset management, and the growing employee-owners become your next generation of clients. Rather than a single relationship ending, you gain multiple enduring ones.
The Legacy Bond is a carefully structured promissory note from the company to the selling founder, typically yielding 8-12% over 5-10 years. We structure it with appropriate collateral and covenants, then you integrate the income stream into the founder's estate plan. It's predictable, high-yield fixed income that creates ongoing touchpoints with your client.
No. You bring the client relationship and wealth management expertise; we bring the ESOP structuring and transaction execution. We handle the regulatory complexity, valuation coordination, and legal architecture. Your role is to identify suitable candidates and guide their personal financial planning—we handle the rest.
Ideal candidates have $3M–$15M in EBITDA, stable cash flows, strong company culture, and founders aged 55-70 who care about legacy. Professional services, manufacturing, distribution, and niche service companies tend to transition especially well. The key factor is a founder who values their people and community as much as the purchase price.
Most ESOP advisors focus narrowly on the transaction. Forhemit—a California public benefit corporation—stays involved for years post-close, ensuring the business thrives under employee ownership. For you, this means the client relationship doesn't end at closing—it evolves into ongoing governance work, employee wealth management, and multi-generational planning.
Let's Discuss Your Clients
Preserve Their Legacy. Secure Your Future.
You don't need to be an ESOP expert to present this option—that's what we're here for. If you have a client generating $3M–$15M in EBITDA who is concerned about taxes, employee welfare, and their legacy, let's talk.
Or contact us directly:
advisors@forhemit.com