October 2016 MINNEAPOLIS, MN – October 10, 2016 – In the Missouri legislature’s annual veto session, lawmakers voted overwhelmingly to override Governor Jay Nixon’s veto of a bill intended to encourage state business owners to form Employee Stock Ownership Plans (ESOPs), passing the widely-supported legislation into law. The Stock Ownership Deduction Tax Act passed with overwhelming bipartisan support in both chambers of the Missouri legislature at the end of May. Despite strong support from both lawmakers and the state business community, Governor Nixon’s veto was based on his view that businesses in Missouri were already choosing to become ESOP companies without the extra incentives offered by the bill. However, the Missouri General Assembly pushed back during its September 2016 veto session and overrode the governor’s veto. Effective January 1, 2017, the Stock Ownership Deduction Tax Act will allow a 50 percent tax deduction of the net capital gain from the sale of company stock to an ESOP, if the company is at least 30 percent employee-owned. The deduction will be available to owners of both S and C corporations establishing ESOP ownership. Other states have passed similar legislation, including neighboring Iowa and Nebraska. Over the last decade, a recent state Chamber of Commerce report indicates Missouri ranks poorly among the states for job creation (42nd), gross domestic product growth (43rd), and personal income growth (37th). Policymakers believe encouraging transitioning business owners to form ESOPs will help keep jobs in local communities and improve on these weak numbers. According to ESCA (Employee-owned S Corporations of America), Missouri has 31,000 business owners nearing retirement. As these entrepreneurs plan to retire, selling their business to the employees, rather than to a competitor or other buyer who might move operations out of the state, implement layoffs, or shut the business down altogether, is an attractive outcome for Missouri. Chartwell is a national leader in financial advisory, corporate finance, transaction opinions, and valuation, serving the unique needs of middle market companies. With more than 20 years in the business, we are experts in guiding our clients through ownership transition alternatives and are dedicated to providing the most creative, responsible, and unbiased advice and solutions in the financial advisory industry. Contact us today to find out how our team of exceptional professionals can provide you with innovative, unbiased financial solutions of the highest quality.