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ESOP Valuation

Our Work / ESOP Evaluation

ESOP evaluation of a manufacturing company:

A company owned mostly by employees through an ESOP became the object of a litigation between the profit sharing trust, former shareholders and several trustees. The company's common stock was largely held by the ESOP; the preferred stock was owned by the company's profit sharing trust and the dividends from the preferred stock were additional preferred stock.

The preferred stock was convertible, but the agreement had some faulty provisions regarding the conversion. The challenge for us was to value both the common and the preferred stock and to overcome the problems in the conversion agreement.

An initial valuation had been done by another firm, and we had to correct it to provide the client with more accurate information.

This issue was solved because of our analysis, and the company became a long-term client and we provided them with many other valuations over the years.