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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.”

BV News and Trends April 2024

A monthly roundup of key developments of interest to business valuation experts.

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.

BV News and Trends January 2024

A monthly roundup of key developments of interest to business valuation experts.

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.

BV News and Trends December 2023

A monthly roundup of key developments of interest to business valuation experts.

Julie A. Su v. Reliance Trust Co.

In this ESOP-related case, the court ruled that two experts of a former defendant can testify for the remaining defendants to the extent their testimony was not duplicative. The defendant’s motion to exclude testimony of the government’s (plaintiff’s) witness because the new FRE 702 rules were not followed was denied, as the court explained the new FRE 702 had not been violated.

U.S. District Court Allows Nonduplicative Testimony of Experts and Allows Testimony on Clarification of New FRE 702

In this ESOP-related case, the court ruled that two experts of a former defendant can testify for the remaining defendants to the extent their testimony was not duplicative. The defendant’s motion to exclude testimony of the government’s (plaintiff’s) witness because the new FRE 702 rules were not followed was denied, as the court explained the new FRE 702 had not been violated.

BV News and Trends November 2023

A monthly roundup of key developments of interest to business valuation experts.

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.

BV News and Trends June 2023

A monthly roundup of key developments of interest to business valuation experts.

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.

BVWire continues on the BV conference circuit

June is busting out with two events that BVWire is looking forward to attending.

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.

The Walsh v. Preston ESOP Case—Is It a Victory or an Escape?

Commentary from BVR’s legal editor on an important ESOP valuation case.

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