Page 25 - TACC 2025 Program

Other Alternatives

■ In a management buyout (MBO), a company’s ■ In an ESOP, or employee stock ownership
current management team acquires the plan, part or all of the company ownership
business by buying out the founding owner, goes to its employees. This route can provide
usually with the backing of a third-party tax advantages for the business owner while
capital provider, and continues to run allowing employees to be invested in the
operations. company. The potential downsides of ESOPs
include that an ESOP cannot pay above fair
■ Leveraged recapitalizations convert an
owner’s equity to debt and use the proceeds market value; they have complex operating
rules; and they attract regulatory scrutiny,
to buy back shares or a dividend. This which can lead to risk of penalties.
strategy can be used in preparation for
company growth or when interest rates
are low.

With the expectation that middle market M&A activity will continue to rise in 2025 and beyond, it’s important
for business owners to work with a professional advisor who has deep industry expertise. Middle market
companies often need a unique approach in finding the right exit strategy, and an advisor can carry out a
specialized plan to help business owners achieve their goals.

Trading in securities and financial instruments, strategic advisory and other investment banking activities are
performed by TCBI Securities, Inc., doing business as Texas Capital Securities (“TCS”), which is a member
of FINRA and SIPC and is registered with the SEC, MSRB and other state securities regulators as a broker-
dealer. TCBI Securities, Inc. is a subsidiary of Texas Capital Bancshares, Inc. and an affiliate of Texas Capital
Bank. All investing involves risks, including the total loss of principal invested, and performance is not
guaranteed. Past performance does not guarantee future results. Securities and other investment products
offered by TCS are not FDIC-insured, may lose value and are not bank guaranteed.