Advisory Committee on ESOP Valuation Releases Advanced Issue Brief
The ESOP Association is pleased to announce the release of Advanced ESOP Issue Brief # 25, Integrated Relationships of ESOP Repurchase Obligation and Valuation. A copy of the Issue Brief can be downloaded from the Members Only section of the website. Issue Briefs are free to members of The ESOP Association.
The ESOP Association would like to express its appreciation to our Advisory Committee on Valuation, Chaired by Kathryn Daly of Columbia Financial Advisors, Inc. and the members of the committee, who comprise the top ESOP valuation experts in the country.
Since 1998, the tax relief afforded to an ESOP-owned S-Corporation has led to situations that the ESOP community did not fully anticipate, including those who provide valuation services to ESOP sponsors. These situations are:
- An increase in the average percentages of stock ownership the ESOP owns in their respective ESOP companies.
- Compounded growth in stock value as S-Corporation tax benefits are combined with a good economy since the early to mid-2000s.
- Levels of repurchase obligation which should not be ignored.
- Unique opportunities and challenges as the ESOP world and M&A world intersect.
While there can be dialogue about “which came first” in a chronological sense, these interrelated factors are exerting a growing effect on the ESOP community.
In response thereto The ESOP Association's Advisory Committee on Valuation will in this “White Paper” articulate how an ESOP company’s repurchase obligation should be understood and managed, and how the repurchase obligation associated with the ESOP should be reflected in the valuation. Any financial and valuation analysis must go beyond the mechanics of repurchase obligation to how the ESOP company intends to manage its repurchase obligation.
This topic will be discussed at the Las Vegas ESOP Technical Conference & Trade Show, November 4 & 5, 2010.
All members of The ESOP Association have access to complimentary copies of ESOP Issue Briefs. To access a complete list of Issue Briefs and download a copy of Issue Brief #25, Integrated Relationships of ESOP Repurchase Obligation and Valuation, login to the Members Only section of the Association’s website.
Questions please contact Tony Marchena at toll free 1(866) 366-3832 or by emailing him at pubs@esopassociation.org.
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