ESOP fiduciaries must ensure that the diligence performed prior to consummating a transaction is well considered and properly documented. The trustees we work with know that we will give them our unbiased opinions, built on thorough analysis and diligent research. They rely on us for the tools necessary to make crucial financial decisions and carry out their fiduciary obligations.
We leverage our experience having worked on hundreds of ESOP transactions over the years to analyze a potential sale in its entirety, maintaining communication with the ESOP trustees throughout the process. From the preliminary range of value to the negotiation of a letter of intent, from drafting and issuance of the fairness opinion to facilitating a successful closing, we help trustees make well informed fiduciary decisions. We continue to address post-closing transaction issues that arise post closing, long after the initial terms were negotiated.
Whether the board is approached by a motivated suitor or chooses to pursue a sale for strategic reasons, the ESOP will add a nuanced layer of complexity to the sale of the company. That will be true both in the assessment of an offer and the transaction execution. Even if the company is not actively marketed for sale, the ESOP creates a fiduciary responsibility to seriously assess all legitimate offers, and potentially even “shop” the Company to determine the strength of the offer in hand. New and long-time clients turn to Marshall & Stevens to vet and negotiate an initial offer, structure key terms around certain must-have provisions, or in certain circumstances, to manage and execute a comprehensive sale (auction) process.
The timing and magnitude of a company’s obligations to repurchase stock from active or departing participants can vary greatly depending upon the provisions of the ESOP plan document, employee population demographics, trends in share value, and several other dynamic factors. Effectively managing the repurchase obligation and understanding the various options to navigate any challenge is key to an ESOP’s sustainability. Our clients rely on us to help them work through the complexities of those options and develop a strategy that brings the best result in their specific situation
A well-considered and responsible corporate governance structure is a cornerstone of ongoing success for any ESOP. We help our clients assure best practices are implemented, fine-tuned, and updated with the long term in mind. As seasoned independent advisors, we help develop optimal structures for board compensation and composition, board size and meeting format, trustee benchmarks, and more. Senior members of our team are also available to serve as independent directors of ESOP-owned companies, to bring the insights and expertise from our entire client base directly to the conversation.
An ESOP can help employees build long-term wealth to an extent that they otherwise never could have on their own. Every year, the ESOP participants receive statements to monitor the value of their account, but often don’t connect their own performance with that of the company or its value. We can help improve employee engagement by conducting employee presentations on core value drivers, providing tools to more effectively illustrate important concepts, and assisting in the development of employee communications and messaging. We draw a clear line of sight from employee behavior to value creation and share price growth, backstopping key leadership initiatives, and by illustrating their impact on value.
We help fiduciaries get to the right result, whether we are advising them directly, or providing an objective, rational, and impartial review of another firm’s opinion.
One of a trustee’s most crucial fiduciary responsibilities can be establishing a reasonable valuation with the help of an independent appraisal firm. Amid increasing regulatory scrutiny, our role is to go beyond the quantitative analysis evident in the valuation report and provide fiduciaries with insights and guidance to help them assess the quality of valuation opinions.
Whether as a second opinion on a pending transaction, or an occasional sanity check on the value of an ESOP-owned company post-transaction, Marshall & Stevens is here to help trustees gain comfort through independent and impartial peer review.
Our ESOP Valuation team collaborates with our internal multi-disciplinary professionals to provide the value analyses and fresh independent opinions to fiduciaries, financing sources and investors for public and private company transactions.
Yes, we are experts at assisting business owners assess, form, and implement ESOP transactions. Whether you are beginning to learn about ESOP’s, or are looking to work with an experienced advisor, contact us for a confidential, no obligation introductory meeting to learn more.
While valuation is a key component of assessing whether an ESOP is a viable strategy in your situation, many other factors come into play in deciding to implement an ESOP. We always recommend a Feasibility and Plan Design assessment, which includes a range of value for the company. Following that assessment, you will have a detailed understanding of the outcomes to the sellers, the Company and the employees, and then then decide whether to move into the implementation phase.
When properly structured, an ESOP transaction can enable the sellers to avoid the capital gains tax on the sale of stock, and can also result in the Company being tax free over time. Contact us to learn more about how this can be accomplished in your situation.
Yes, one of the great things about an ESOP is the flexibility that exists to structure an ESOP in various ways. You can sell all or part of a company to an ESOP, or you can contribute stock directly and receive a tax deduction for the fair market value of the stock contributed. You can also form an ESOP, contribute cash to it and receive a tax deduction, and then have the ESOP buy stock from the shareholder at a later date.
Marshall & Stevens provides Fairness and Solvency Opinions, valuation analyses, investigative accounting, and expert witness services to assist public and private clients with their important transactions and litigation matters.
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