A Very Engaging Audience at the ASA ESOP Virtual Conference
Speakers answered a lot of audience questions at the recent ASA ESOP Virtual Conference about feasibility studies, the valuation of transaction-related items (such as warrants, earnouts, etc.), the nuances of ESOP-related valuation reports, and upcoming proposed regs from the Department of Labor.
ESOP Experts Worried Over Upcoming DOL Regs on Valuations
At the recent ASA ESOP Virtual Conference, a panel talked with some concern about upcoming proposed regulations from the Department of Labor on how to establish the fair market value of shares of a business to be acquired by an ESOP. They urged the audience to make their voices heard when the comment period opens (no word yet) and talked about recourse strategies if the final regs are problematic.
DOL prevails in ESOP valuation lawsuit
The former owners of the company behind those ubiquitous Cruise America RVs must not be happy campers after a recent ruling from an Arizona court. The court found that they violated ERISA and breached their fiduciary duties when setting up an ESOP that the DOL said overpaid them for their shares.
Julie A Su v. Bensen
This case was one in a line of suits the Department of Labor brought against fiduciaries, including trustees and owners of businesses, in ESOP transactions challenging the value of the business the owners/defendants sold. Once again, the DOL won this case choosing the value their expert presented, which was substantially below the purchase price the ESOP paid for the business.
The U.S. District Court (Arizona) Accepts the Valuation of the DOL’s Expert in Finding the Defendants Breached Their Fiduciary Duties (ESOP)
This case was one in a line of suits the Department of Labor brought against fiduciaries, including trustees and owners of businesses, in ESOP transactions challenging the value of the business the owners/defendants sold. Once again, the DOL won this case choosing the value their expert presented, which was substantially below the purchase price the ESOP paid for the business.
Senators to DOL: Get moving on ESOP valuation rule
U.S. Senator Roger Marshall (R-KS) led a bipartisan letter calling on the U.S. Department of Labor (DOL) to complete a final regulation governing the “adequate consideration” exemption for employee stock ownership plans (ESOPs).
Reminder: Email your senator regarding DOL’s ESOP valuation rule
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.
Action needed! Email your senator re: DOL’s ESOP valuation rule
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.
DOL’s ESOP valuation slammed in amicus briefs to SCOTUS
The American Society of Appraisers (ASA) and The ESOP Association (TEA) have filed amicus briefs with the U.S. Supreme Court related to the Bowers ESOP case in support of the petitioners’ attempt to recover attorneys’ fees and costs from the government.
ESOP experts anxious about upcoming DOL regs
A panel at the ASA ESOP Virtual Conference last week was clearly concerned over proposed rules the DOL is expected to issue on how to establish fair market value for shares of a business to be acquired by an ESOP, i.e., “adequate consideration.”
Still waiting for the DOL ESOP regs
First, they were expected at the end of 2023, then the end of March 2024, but there is no sign yet (at the time of this writing) of the proposed regulations regarding ESOP valuations.
ESOP group drafts rule framework for DOL valuation regs
In advance of the Department of Labor issuing its proposed final regulations related to ESOP valuations, the ESOP Association has drafted a “proposed regulatory framework,” according to the group’s blog post.
Time to Engage Over Upcoming ESOP Valuation Rules
Some examples of how the valuation profession has worked with regulators in the past may help inform interactions with the Department of Labor (DOL), which will soon issue regulations regarding ESOP valuations.
Don’t hold your breath over the DOL valuation regs, some say
While in Las Vegas, BVWire stopped in at the ESOP Association’s Employee Owned Conference, billed as the largest ESOP conference in the world.
Regulatory uncertainty regarding ESOP valuation is a major problem
The regulatory uncertainty around valuations for employee stock ownership plans (ESOPs) is a significant burden that creates undue risk and can “hamper employee-owned businesses,” says Alex Brill, a senior research fellow at the American Enterprise Institute, in a new paper.
DOL ESOP valuation regs coming by year-end
The Department of Labor (DOL) will issue long-awaited guidance on ESOP valuations by the end of this year, according to a blog post from the National Center for Employee Ownership (NCEO).
Takeaways From ASA’s ESOP Virtual Conference
ESOP valuation basics, sell-side transactions, issues with mature ESOPs, and common critiques with valuations in litigation were the topics of discussion at ASA ESOP Virtual Conference.
Valuation Implications of the Changing ESOP Litigation Landscape
The tide has started to turn with respect to litigation over ESOP valuations, speakers reported at the recent ASA ESOP Virtual Conference. There has been a major court victory and pressure from the ESOP and valuation profession, and now the DOL has committed to moving forward—hopefully— with long-awaited regulations on the valuation of company shares to be bought by an ESOP.
Tide has turned (somewhat) for ESOP valuations
From a regulatory standpoint, the tide has turned to some degree with respect to ESOP valuations, speakers said at the ASA’s ESOP Virtual Conference on June 20.
Bennetti v. Oxford Restructuring Advisors LLC (In re Community Providers of Enrichment Services AZ Liquidating, Inc.)
Employee members of an ESOP had their claims against the debtors, based on cash option rights in an ESOP, denied. The debtors were not obligated to employees under the ESOP. The ESOP needed only to provide distributions in cash. There was no right of payment from the debtors. The U.S. Bankruptcy Appellate Panel for the 9th Circuit affirmed.
Bankruptcy Appellate Panel Denies Employee Members of ESOP Claims Against Debtors
Employee members of an ESOP had their claims against the debtors, based on cash option rights in an ESOP, denied. The debtors were not obligated to employees under the ESOP. The ESOP needed only to provide distributions in cash. There was no right of payment from the debtors. The U.S. Bankruptcy Appellate Panel for the 9th Circuit affirmed.
Attorney gets Daubert challenge over ESOP employment agreements
In a federal court in Georgia, an employee benefits lawyer prepared a report and was deposed regarding the process by which employment agreements were negotiated as part of a transaction involving an ESOP.
DOL—finally—agrees to provide regs on ESOP valuations
At long last, the door has been opened for the Department of Labor (DOL) and the valuation profession to work together to develop guidance on ESOP valuations.
Gamache v. Hogue
In a motion related to a lawsuit asserting ERISA violations under the ESOP plan for the defendants, including the Administrative Committee of Technical Associates of Georgia Inc. ESOP and certain individuals, the defendants moved to exclude the testimony and report of the plaintiffs’ expert, Jeffrey Krenzel. Krenzel was an “employee benefits lawyer” with 21 years’ experience, including eight years as a partner in a firm specializing in ESOP transactions. The court determined that Krenzel was qualified and that his opinions and report were reliable and helpful to the trier of fact.
U.S. District Court in Georgia Allows Testimony of Attorney as to ESOP Transaction Process for Employment Agreements
In a motion related to a lawsuit asserting ERISA violations under the ESOP plan for the defendants, including the Administrative Committee of Technical Associates of Georgia Inc. ESOP and certain individuals, the defendants moved to exclude the testimony and report of the plaintiffs’ expert, Jeffrey Krenzel. Krenzel was an “employee benefits lawyer” with 21 years’ experience, including eight years as a partner in a firm specializing in ESOP transactions. The court determined that Krenzel was qualified and that his opinions and report were reliable and helpful to the trier of fact.