Action needed! Email your senator re: DOL’s ESOP valuation rule

BVWireIssue #262-4
July 31, 2024

ESOP valuations
appraisal, breach of fiduciary duty, fair market value (FMV), overpayment, employee stock ownership plan (ESOP)

Regardless of whether your practice involves ESOP valuations, you will want to consider a request from The ESOP Association (TEA) to email your senator about signing a bipartisan letter being sent to the Department of Labor (DOL) about an important valuation rule. The letter is from Senators Roger Marshall (R-KS) and Tim Kaine (D-VA) and is also asking the DOL to consult with Treasury about the rule (as required by law) and to have a robust public comment period once the draft rule is released. To see the letter and to send an automated response to your senator, click here.

Some worry: There is a concern that the draft rule on “adequate consideration,” which will give guidance on how to establish fair market value for shares of a business to be acquired by an ESOP, will not be consistent with accepted valuation standards. Valuation experts contend that the DOL has been violating these standards in its aggressive enforcement of ESOPs and the courts recently have put the DOL in its place about that (see related coverage here). To have a government agency that does not follow generally accepted valuation practice should be of concern to every valuation professional.

The ESOP community has been waiting for this rule for 50 years, and this is the latest move to urge the DOL to finish it up as required by law.

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