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ESOP Valuations, Appraisals and Consulting 

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 and Adequate Consideration Options for ESOP transactions, plan modifications 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 corporate status (C corp vs. S corp) 
⦁    Estimation of control premiums or minority discounts

Only valuation firms that are “credentialed”, have a consistent track record of providing defensible ESOP valuations and understand the complexity of work involved can provide quality ESOP valuations.

The reports we produce in these instances amount to 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 to help management (and ourselves) understand the numbers generated by the business.  This analysis is often used by management for purposes beyond the ESOP valuation. 

In addition to valuation reports, we often create additional reports to be used by management, plan administrators and trustees to communicate important aspects of the ESOP and how the efforts of each employee can impact the value of the shares held by the plan.  These reports include: 

⦁    Brief summary appraisal reports 
⦁    Employee impact reports, showing how a dollar saved increases share value 
⦁    Various charts and graphs of Company operating metrics for internal and/or external use 



We have also provided regional, economy and industry specific reports for our ESOP clients to assist them with growing their businesses.  These reports can range from general reports on local economic conditions to in depth studies of industries and industry niches to the latest salary and employee cost comparisons. 
We are true believers in the many benefits of ESOP owned firms.  If you have questions regarding ESOPs or ESOP valuations, please contact us.


  We are happy to share the ESOP story with anyone interested in learning more.

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