ESOP Valuation

A significant amount of our work involves Employee Stock Ownership Plans, or ESOPs. We specialize in ESOP valuations and appraisals of the following types:

  • Original ESOP transaction valuations

  • Annual ESOP update valuations

  • Feasibility analysis for both C and S corporations

  • Fairness Opinions for ESOP transaction and plan terminations

ESOP valuations differ significantly from other types of valuations of closely held companies. They must meet the regulations of both the IRS and the Department of Labor. Valuation professionals need to be cognizant of these differences in order to prepare high quality, defensible valuations.

Some of the valuation issues that are unique to ESOP include:

  • Estimation of Fair Market Value (under the context of Adequate Consideration as defined by DOL)

  • Accounting for repurchase liability

  • Selection of liquidity discounts (DLOM)

  • Accounting for tax status (C corp vs. S corp)

  • Estimation of Control premium or minority discount

The reports we produce to our clients are full length, in depth analysis of the Company and its operating environment. They include numerous useful comparative charts and graphs as well as historical ratio analysis.