Experts in
ESOP
Two brands. One goal.
ESOP SErvices
- ESOP stock valuations for annual plan administration
- Fairness opinions for ESOP implementations and secondary stock purchases
- Fairness opinions for plan terminations and ESOP company sales
- Adequate consideration opinions for ESOP transactions
- Initial valuations for transaction fiduciaries
- Financial advisory services to trustees for company acquisitions and other transactions
What are clients say
Let me extend my appreciation for the quality and thoroughness of your work. I have seen a number of valuation projects throughout the years and your work product is one of the best!
Regulatory and Legal Requirements
What is it
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.
Why it matters
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, litigation, settlements, and sharing of best practices among ESOP professionals.
How we do this well
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. As members of the ESOP Association, NCEO, and OEOC, Pilot Hill Adamy Valuation has team members participating in meetings of the ESOP community throughout the year. Furthermore, with our extensive ongoing transaction and annual ESOP valuation work, we are engaged with a diverse mix of trustees and other ESOP professionals in our ongoing work.
We Understand the Technical Nuances of ESOP Valuation
What is it
Some of the unique characteristics of ESOP companies can have important impacts on the value of ESOP stock.
EXAMPLES OF ESOP-SPECIFIC VALUATION FACTORS INCLUDE:
- ESOP retirement benefits expense
- Repurchase obligation
- Owner/former owner compensation
- Control
- ESOP-generated tax savings
Why it matters
In addition to regulatory and legal consequences, overlooking or misunderstanding these factors can lead to serious economic consequences for participants and the company.
Appropriate valuation of ESOP stock is important for reasons that go beyond mere compliance. The valuation must match the economic reality of the company in order for ESOP ownership to remain in sustainable equilibrium. When this equilibrium breaks, unintended consequences ensue.
How we do this well
We combine continuous learning from our deep engagement in the ESOP community with rigorous company-specific analysis to appropriately capture the economics of the ESOP companies we value. We have developed a deep base of expertise by working with ESOP professionals across the country on a variety of different ESOP transactions, and we leverage our experience with non-ESOP transactions to serve trustees with best-in-class analysis and opinions.
