Appraisers need to understand ESOP’s governance landscape

BVWireIssue #97-3
October 20, 2010

October is Employee Ownership Month according to the Employee Ownership Foundation.  And “as more mature, large ownership ESOPs come to dominate the landscape, governance issues have come to the forefront,” Donna Walker (Columbia Financial Advisors) told the audience at the ASA/CICBV Business Valuation Conference in Miami two weeks ago.  “Valuation practitioners who work with ESOPs should be aware of important issues and trends in the ESOP arena, one of which is the role of the appraiser vis-à-vis the board of directors, trustees and fiduciaries,” says Walker.

ESOPs’ increased role in corporate governance leads to greater emphasis on transparency, and with the evolving roles of ESOP trustees, advisory committees, and other groups comes the need for increased dialogue between the company and the employees. “You many want to talk to more and different people than just the CEO, CFO and trustee,” advises Walker.

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