ESOPs

Power in Numbers

ESOPs are a great way to provide a long-term financial incentive to all employees to help grow the value of your business and provide rich retirement benefits for the ESOP participants.  One of the most important elements of an ESOP is consistently determining the market value of the company's stock owned by the ESOP.  BAS has a long history of helping ESOP trustees and participants to realize and understand one of their most important financial assets - their ESOP retirement account.  Getting ESOP participants excited about their stock value will result in greater collective efforts to improve the efficiency of your company.

ESOP Valuation Services

The President of BAS, Brad Van Horn, has been performing independent valuations for ESOP Transactions and annual ESOP update valuations for nearly 30 years.  This is important because the watchdog of the ESOP world is the U.S. Department of Labor (“DOL”), and the regulations issued by the DOL stipulate that ESOP transactions in closely held companies must be based on a current appraisal by an independent, outside valuation expert.  These same regulations extend to annual update valuations that are required for ESOP plan administration and participant reporting purposes.  These regulations are intended to protect the financial interests of ESOP participants who are not directly involved in the initial purchase of shares by the ESOP and who also do not have other means to understand the annual value of their account balance in the ESOP.

Valuations for ESOP purposes are generally more complex than regular business valuations.  An ESOP valuation must incorporate all of the traditional business valuation issues, including determining fair market value using several different valuation methods, applying control premiums and liquidity discounts, considering pass-through tax structures, and many other factors. In addition, the valuation of an ESOP must be comprehensive enough to withstand a review by a regulatory agency such as the Internal Revenue Service ("IRS") and the DOL.

 BAS has worked extensively with independent trustees and internal trustees both at the front end when the ESOP purchases stock and for the annual update valuations.  We are supportive members of ESCA (Employee-Owned S-Corporation of America), The ESOP Association and the National Center for Employee Ownership to keep abreast of the central issues facing ESOPs today and to be in the mainstream of current thoughts and trends impacting ESOPs and their valuations.

Other ESOP-Related Services

BAS is able to provide ESOP plan administration and particpant reporting services to its ESOP clients.  These services include participant record keeping of stock allocations and account balances, printing of participant account statements, preparing the Summary Annual Report for the ESOP, and filing Form 5500 and related schedules for the ESOP.  In addition, BAS can prepare a repurchase liability study to assist an ESOP company in planning for future payouts of the account balances of terminated participants as well as participants who exercise their diversification rights.

Board Level Perspective

Brad Van Horn, President of BAS, is a member of the Board of Directors of a 100% ESOP-owned S-Corporation, giving him a unique perspective on the practical aspects of ESOP ownership.  Brad has seen first-hand how a successful S-Corporation ESOP company generates meaningful retirement benefits in ways that are far superior to non-ESOP companies.

 

Other valuation services:

 Corporate Valuations | Purchase and Price | Litigation Support | Fairness and Solvency Options