ESOPs fall under the regulatory requirements of both the Department of Labor (DOL) and the Internal Revenue Service (IRS).
There are certain explicit regulatory requirements with which an ESOP valuation must comply. These involve concepts such as fair market value, adequate consideration, and prohibited transactions.
In addition, there are informal guidelines that regulatory agencies follow when auditing ESOP transactions and plans. While typically not formally documented, the DOL has taken certain positions on ESOP valuation topics that it adheres to when auditing and investigating ESOP transactions and plans.
Running afoul of these written, and unwritten, rules, can have painful consequences to ESOP trustees, sponsor companies, and selling shareholders. This is why it is critically important that ESOP valuation experts stay abreast of the latest guidance coming from DOL investigations, court cases, and sharing of best practices among ESOP professionals.
We build on this experience by participating in important gatherings of the ESOP community throughout the year and across the country. As members of the ESOP Association, NCEO, and OEOC, on average, someone from Adamy is participating in at least one ESOP event every six weeks.
We also have experience dealing directly with the DOL in supporting our ESOP trustee clients and sponsor companies with DOL audits and investigations. We draw on this base of knowledge and industry best-practices to address the issues that are important to the DOL and reach a positive outcome for the ESOP.