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ESOP Boot Camp, Part 5: How ESOPs Are Financed

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Chapters
0:00
Welcome to ESOP Boot Camp Part 5
0:41
The two ways ESOPs are financed
1:01
Example: combining bank financing with seller notes
2:16
Seller notes as long-term annuities for owners
2:48
All seller-financed ESOPs and when they work
3:21
How lenders evaluate ESOP transactions
4:10
Types of lenders that finance ESOPs
5:10
Key takeaways and what’s next in ESOP Boot Camp
ESOP Radio
ESOP Boot Camp, Part 5: How ESOPs Are Financed
Feb 11, 2026 Season 1 Episode 7
Menke

How are ESOP transactions actually financed?

In Part 5 of the ESOP Boot Camp series, Trevor Gilmore, CEO of Menke, explains the two primary ways ESOPs are financed: outside bank financing and seller financing—and how those approaches are often combined in practice.

Using real-world examples, this episode walks through how lenders evaluate ESOP transactions, what makes a company “bankable,” and how seller notes can function as a long-term liquidity and estate-planning tool for selling shareholders.

Topics covered include:

  • The two primary ESOP financing methods: bank financing and seller notes
  • How lenders evaluate cash flow, coverage ratios, and financial quality
  • Combining bank financing with seller financing in ESOP transactions
  • Seller notes as long-term annuities for owners
  • When all–seller-financed ESOPs can make sense
  • The role of lender selection and ESOP-specific expertise

This episode is designed for owners, CEOs, and CFOs who want a clear, practical overview of how ESOP financing works before diving deeper into structure or transaction planning.

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