From a lender's perspective, an ESOP structure involves some added risk with no institutional investors behind the company and depending on the structure, owners are often times less incentivized to stay engaged in the business. Our firm is very active in the search fund space, but we have funded a few ESOP deals with success. It's not a non-starter, but the terms would be more conservative.

I've structured ESOPs before. As mentioned above its complicated for several reasons: For starter, regulatory oversight on ESOPs, resolving minority and illiquidity discount, fragmented votes if many minority interests.