Top Five Reasons You Should Consider Changing Your ESOP Valuation Firm

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Typically, companies that sponsor an Employee Stock Ownership Plan (“ESOP”) for the benefit of their employees are private companies whose shares are not traded on a public stock exchange. However, the Department of Labor (DOL) requires that an independent third-party valuation expert issue an opinion regarding the fair market value of the ESOP stock at least annually.

At the formation of the ESOP, the Board of Directors appoints a trustee (“Trustee”) of the ESOP, a qualified retirement trust. It is ultimately the Trustee’s duty to determine the fair market value of the stock held by the ESOP. In other words, it is the Trustee’s duty to hire an appraiser and to make a good faith judgement, based on the information provided in the valuation report, in order to determine the fair market value of the stock.

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