Peril of projections in ESOP valuations

BVWireIssue #138-1
March 5, 2014

While valuation analysts have a duty to seek out “adequate and reliable data,” they could run into problems if they disregard projections prepared by management in favor of their own projections, says a recent article on ESOP valuations.

Court trouble: “You need to do your own due diligence and you need to look at comparisons in the industry,” says Frank “Chip” Brown, ABV (Willamette Management Associates), in “DOL Enforcement Strategy Targets Problems in ESOP Valuations, Speaker Says.” The article is on the Bloomberg BNA website. Brown, speaking during a recent webinar, points out that “if you create the projections instead of management, my experience is that you're going to lose in a court case, because the judge is going to ask you if you know more than the company knows.”

To access a recording of the webinar, click here (purchase required). To access the article, click here (subscription required).

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