Repurchase Obligation Studies & The Other Importance of Future Share Price Estimates

Download ArticleDownload Article

Planning for ESOP repurchase obligation is an important issue facing companies with an employee stock ownership plan (“ESOP”) when their stock is not traded on a public exchange. This liability is the result of the company’s obligation to pay participants for their allocated and vested shares when they separate from the company or when ESOP participants choose to exercise diversification rights under the terms of the ESOP. Repurchase obligation often represents a significant cash demand that can impact operating decisions as well as per share value. This article will review a number of common issues that lead to inaccurate estimates of future share price and the resulting impact on repurchase obligation studies.

David Diehl is the CEO of Prairie Capital Advisors, Inc. He can be contacted at 630.413.5577 or by email: ddiehl@prairiecap.com

Middle - Market Focus

Middle - Market Focus

Prairie Capital Advisors is dedicated to serving the investment banking and financial advisory needs of middle - market business owners

Ownership Transition

Ownership Transition

A successful transition needs a well-thought- out strategy. We will help define, shape, and implement a plan that meets your short-term and long-term objectives

Corporate Growth

Corporate Growth

Build or buy? It could be both. Prairie Capital Advisor’s strong relationships with debt and equity capital sources will help you realize your corporate growth strategies

Business Sustainability

Business Sustainability

Sustainability requires strategies that grow the enterprise and minimize risks. Prairie advises companies on strategies that result in long-term shareholder value