ESOP Valuations & Repurchase Liability
Telephone Dial-In Audio Conference
Tuesday, July 10, 2007
10:00am-11:40am PDT / 11:00am-12:40pm MDT / 12:00pm-1:40pm CDT / 1:00pm-2:40pm EDT
Presented by Business Valuation Resources, LLC
Earn TWO INTERACTIVE CPE credits for participating in this conference. Price is: $249.00 for a single dial-in connection. Use your conference room and the whole office can listen in. Two CPE credits are available for each additional listener sharing the same phone connection - only $49.00 per person.
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Why Should you Attend?
One of the biggest issues today for ESOP companies is the handling of the repurchase of ESOP shares. As large as this issue is today, it will only grow in significance because:
- More ESOPs are becoming mature
- More ESOPs are moving to 100% S corporation status
So, basically, all of the stock of ESOP companies are subject to the ESOP put option which the company must honor. One very large challenge is to properly account for this contingent liability in the valuing of the ESOP shares. This session will make transparent the various valuation methods to handle this. In addition, this teleconference will explain the remedies available to ESOP sponsor companies in amending their plans to help deal with uneven demands on cash flows. Join Bob Schweihs, Mike Hartman, Stephen Smith, and Judith Kornfeld as they discuss this important topic.
- Panelist Presentation on ESOP Repurchase Liability:
- The History Of ESOP Repurchase Liability
- Why has there been great emphasis recently?
- How it was addressed in the past?
- What Will Be the Impact Of More And More ESOP Companies Converting To S Status And Becoming Tax Free?
- How Has Repurchase Liability Been Addressed In ESOP Valuation Historically?
- Plan Design: What Elements Should Go Into An ESOP That Will Impact Repurchase Liability?
- What Do You Do If the Plan Calls For Immediate Payout On ESOP Shares Put Back to the Company?
- Can you amend the plan?
- What are the rules and guidelines in doing so?
- What if ESOP shares have been allowed to leave the company with departed employees?
- What About Diversification?
- What is the history of older employees taking advantage of this?
- When Do You Get A Repurchase Liability Study? What’s In It?
- How Do You Model Repurchase Obligations?
- How would you account for recycling versus redeeming ESOP shares?
- How Does The Valuation Firm Use the Information In the Study?
- What are We Seeing Clients Do About Repurchase Liability?
- Should ESOP Firms Do Formal Studies To Determine The Optimal Capital Structure?
- Structuring ESOP Loans
- The History Of ESOP Repurchase Liability
- Participant Q & A
- Concluding Remarks
- Gain a historical perspective on ESOP repurchase liability and why it affects appraiser's and attorney's work
- Understand why acquiring knowledge related to repurchase liability is necessary to execute ESOP valuations properly
- Learn from a diversity of ESOP practitioners, detailing industry trends and issues impacting ESOP valuations
Mr. Schweihs is managing director of Willamette Management Associates. He has performed the following types of valuation assignments: ESOP appraisals, merger and acquisition appraisals, post-acquisition purchase price allocation appraisals, business and stock valuations, real estate valuations and evaluations, tangible personal property appraisals, real estate feasibility and investment analyses, ad valorem assessment appeal appraisals, construction cost segregation appraisals, insurance appraisals, litigation support, forensic valuation analyses, and expert witness testimony.
Before joining Willamette Management Associates, Mr. Schweihs was involved in a variety of valuation, marketing, and administrative management positions. He was founder, national partner, and national director of valuation services for Valuation Engineering Associates, a business unit of Deloitte & Touche. Before that, he was region manager of the valuation division of Arthur D. Little, Inc.
Mr. Schweihs has a Master of Business Administration, Economics and Finance, from the University of Chicago, Graduate School of Business and a Bachelor of Science, Mechanical Engineering from the University of Notre Dame. He is an accredited senior appraiser (ASA), certified in business valuation, of the American Society of Appraisers. He is also a Certified Business Appraiser with The Institute of Business Appraisers, Inc. He is also a member of The ESOP Association and the Institute of Professionals in Taxation and a former Trustee of The Appraisal Foundation.
Malcolm R. (Mike) Hartman is a principal with Willamette Management Associates and directs the firm’s national ESOP practice. He is among the best known ESOP financial advisors in the country. For ESOP engagements, he provides the following services:
In recent years, Hartman has spent a great deal of time working with middle market companies on issues related to management and ownership transition. He has assisted clients in evaluating the alternatives for shareholder wealth diversification and for transition to the next generation of management. Assignments often include strategic planning with CEO’s and boards of directors to develop long term business plans that will maximize value accumulation for shareholders and insure continued growth for the company.
In connection with his ESOP work, Mike assists client companies in developing and implementing equity based compensation programs for top management and other key employees. These programs are designed to insure that management’s goals are aligned with those of the ESOP. Such programs include the use of stock options, synthetic equity, performance units and stock appreciation rights.
Mr. Hartman is active in The ESOP Association, the ESOP community’s primary trade association, and serves on its Board of Directors. He is also a member of its Board of Governors and was part of the nominating committee, a group that determines the future leadership positions within the organization. Mr. Hartman received a national award for membership recruitment in 1995 after he founded the New South Chapter of that Association in 1994. He continues to direct the activities of this Chapter, including the planning and executing of regional ESOP meetings. Mike is also active in the National Center for Employee Ownership (NCEO) and speaks at many of their meetings.
Since 1984, Mr. Smith has dedicated his private law practice primarily to employee stock ownership plans ("ESOPs") and structuring ESOP transactions. Mr. Smith has been responsible for structuring over 150 ESOP transactions for public and private companies. He also designs and implements equity and non-equity-based incentive compensation programs for public and private companies. Mr. Smith represents ESOP sponsors, ESOP fiduciaries, including employer-appointed "committees" and independent ESOP trustees, in ESOP transactions throughout the United States, including the sale of ESOP companies and the termination of ESOPs.
Judith L. Kornfeld is the founder and president of ESOP Economics, Inc., a firm that specializes in repurchase obligation services for ESOP companies. The firm performs repurchase obligation studies and provides consulting services to assist companies in developing strategies for managing and funding repurchase obligations. It also developed Telescope™, a software program for projecting ESOP repurchase obligations, which it licenses to ESOP companies that want to do their own projections.
Judy has been working with ESOP companies for nearly 20 years, focusing on repurchase obligation issues. She has authored many articles on ESOP repurchase obligations and is a popular speaker at ESOP conferences at both the state and national level.
She currently chairs The ESOP Association’s Interdisciplinary Advisory Committee on Fiduciary Issues. She also serves on its Advisory Committee on Finance and is a past chair of that committee. She has also served on the Board of Directors of TEA, on many committees, and as an officer of the Pennsylvania Chapter. She is also on the Board of Trustees of the Employee Ownership Foundation.
Judy received her law degree from the University of Pennsylvania Law School, her M.B.A from the Wharton School, and her B.A. in Economics from the University of Pennsylvania.
2 Interactive CPE Credits (Consulting Services)
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