ESOPs & ERISA Advisory Services

Companies that sponsor employee stock ownership plans (“ESOPs”) are required by ERISA to obtain an independent valuation of the stock held by the ESOP at least annually for purposes of administering the plan. The ESOP trustee is ultimately responsible for procuring, reviewing, and ultimately accepting this valuation.

The regulations are very clear in stating that the valuator must be independent in fact and in perception. The regulations actually allow the fiduciary to perform the valuation, provided they meet two requirements. First, the fiduciary must be independent of all the parties, other than the plan trust. Second, the fiduciary must have the facilities and the expertise to undertake the valuation. If the fiduciary does not possess the training and expertise to meet these requirements, the fiduciary would fail to meet the prudent investigation and the sound business principals requirement of §2510.3-18(b)(3)(iii).When this occurs, the trustee must hire an independent qualified valuation professional.

ESOP Experience

Valuation Advisory Services has extensive experience in the ESOP industry and clients throughout the country. Whether it is determining the feasibility of an ESOP, preliminary or initial transaction valuation and related fairness opinion, or determining the appropriate Repurchase Obligation, Valuation Advisory Services will work with you every stage of the ESOP’s life cycle.  As experienced in recent history, other appraisers may complete the annual valuation update but then not be there to support their conclusion when the Department of Labor (“DOL”) challenges.  Valuation Advisory Services,  has experience in documenting and defending our valuation analyses with regulatory agencies like the DOL, IRS, etc… Contact us today to see how we can help solve the complexity, compliance, or other consultative issues regarding your ESOP.