Business Valuations for Employee Stock Ownership Plans (ESOPs)

An ESOP is a succession planning tool used by many retiring business owners to transition business ownership to managers and employees. 

The business contributes ownership shares or cash into a tax-exempt trust with the money used to buy shares on behalf of employees. The ESOP provides capital, liquidity, and tax benefits for the retiring owner and the owner-employees while helping boost employee morale and increase retention rates.

An independent business valuation must be performed before an ESOP is implemented and annually thereafter to determine the price per share that will support transactions associated with the plan. Both the IRS and the Department of Labor maintain specific requirements relating to these valuations, and they carefully scrutinize ESOPs and even audit them periodically. 

OP Business Valuations has experience in providing business valuation services for Employee Stock Ownership Plans. This includes providing annual ESOP valuations, fairness opinions, and other valuation-related services for ESOP companies, such as ESOP feasibility assistance and appraisal review, complex ESOP transactions, financing structures, ESOP-related litigation, dispute resolution, etc. ESOP second stage transactions.

The valuation of ESOPs is a complex area that requires highly specialized expertise and knowledge. Therefore, we encourage you to contact OP Business Valuations for a detailed discussion of your ESOP valuation needs.