In the Execute stage, all activities – legal, financial, and organizational – intersect to finalize the transaction. Purchase agreements are signed by employees. New legal entities are ratified and founding boards chosen. Loans are drawn on for the initial cash payment to the seller. If any leadership or management structures are planned for the execution of the sale, they begin. This stage requires committed attention from either an advisor or an internal champion to move slow external processes forward and keep employee morale high.
- WHAT: Loans are drawn, the company legally changes hands or entity, and a founding board is elected
- WHO: The selling owner; the employees; professional advisors; lenders
How Can We Use a 1042 Rollover to Defer Capital Gains Tax?
- Legal Information Institute – 26 U.S. Code § 1042. Sales of stock to employee stock ownership plans or certain cooperatives
- New York Times – Rushing Away from Taxes:The Capital Gains Bypass (1996)
- Project Equity – The 1042 Exchange Tax Incentives for Selling Your Business to a Cooperative (2018)
- Phillips – Tax Advantages of Selling To A Worker Cooperative (2018)
- Co-opLaw.org – The 1042 Rollover, ESOPs, and Worker Cooperatives
- Pugliese – 1042 Qualified Replacement Property: An Overview of ESOP Rollover Strategies (2016)
- Khorsand – 10 Things to Know about IRC1042 (2014)
- USDA – Worker-owned & ESOPs Can Help Preserve Business in Rural America (2007)
- Britton and Stewart – Selling to Your Employees through a Worker Cooperative and Sheltering Your Gain (2001)
- OEOC – The 1042 Rollover
