The valuation of an ESOP is generally more complex
than that of a company with conventional ownership. An ESOP valuation must
correctly incorporate all of the traditional business valuation issues relating
to fair market value, control premiums, liquidity discounts, tax pass-through
status and other factors.
Further, an ESOP valuation must be able to withstand
challenges by an employee, the IRS or the U.S. Department of Labor, which
administers the ERISA regulations for ESOPs. Those regulations add the “adequate
consideration” standard to the fair market value standard of IRS valuation
review.
Kotzin Valuation Partners works closely with other
ESOP advisors and administrators, from initial feasibility analysis and
preliminary valuation through final valuation and annual updates. Our valuations
and reports meet all federal standards for independence and documentation, and
we fully satisfy the Uniform Standards of Professional Appraisal Practice.
