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.
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.
Pereira method used for marital interest in construction firm
In a Nevada divorce case, the court considered whether the valuation of the marital portion of a separate property business should be calculated under the Pereira or Van Camp approach.
BV News and Trends June 2023
A monthly roundup of key developments of interest to business valuation experts.
In re Tesla Motors Stockholder Litig.
At issue was a 2016 acquisition of Solar City Corp. by Tesla. Some Tesla shareholders claimed that Musk caused Tesla to overpay for Solar through his alleged domination and control of Tesla’s board. The primary focus of the shareholders was that Solar was insolvent at the time of the acquisition. The court applied the “entire fairness” standard. The Court of Chancery found the acquisition to be “entirely fair.” The Delaware Supreme Court affirmed the Court of Chancery decision.
Delaware Supreme Court Upholds ‘Entire Fairness’ of a Tesla Acquisition
At issue was a 2016 acquisition of Solar City Corp. by Tesla. Some Tesla shareholders claimed that Musk caused Tesla to overpay for Solar through his alleged domination and control of Tesla’s board. The primary focus of the shareholders was that Solar was insolvent at the time of the acquisition. The court applied the “entire fairness” standard. The Court of Chancery found the acquisition to be “entirely fair.” The Delaware Supreme Court affirmed the Court of Chancery decision.
Mamone v. Mamone
The Nevada appellate court affirmed the trial court’s use of the Pereira method of determining the value of separate property included in the total value of the husband’s business. It was clear that the value increase in the business during the marriage was due in large part to the efforts of the husband. The “excess value” of the business over the separate property value was included in the community property. The appellate court also affirmed the ruling of the trial court that no community expenses incurred during the marriage were paid from the separate property of the husband and the husband was, therefore, not entitled to any reimbursement of those community expenses.
Nevada Appellate Court Affirms Value of Husband’s Business and His Separate Property Value in the Business
The Nevada appellate court affirmed the trial court’s use of the Pereira method of determining the value of separate property included in the total value of the husband’s business. It was clear that the value increase in the business during the marriage was due in large part to the efforts of the husband. The “excess value” of the business over the separate property value was included in the community property. The appellate court also affirmed the ruling of the trial court that no community expenses incurred during the marriage were paid from the separate property of the husband and the husband was, therefore, not entitled to any reimbursement of those community expenses.
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.
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.
BV News and Trends November 2022
A monthly roundup of key developments of interest to business valuation experts.
Another big win for ESOP valuations vs. the DOL
Valuation experts have long maintained that the Department of Labor (DOL) has been playing by its own valuation rules in its aggressive enforcement of ESOPs—rules that are not consistent with accepted valuation standards. But a court has rejected the valuations the DOL did in a case alleging that an ESOP overvalued (and thus overpaid for) the stock of its sponsoring company.
ESOP valuations may be at a turning point
At last week’s inaugural ESOP Virtual Conference hosted by the American Society of Appraisers, the landmark Bowers case was discussed, which could represent a turning point for ESOP valuations.
Silver lining to Vinoskey ESOP appeal decision
In the well-publicized Vinoskey ESOP case (our latest coverage is here), the appellate court affirmed the district court in deciding that the company owner had extensive knowledge about the company and its prior valuations, and, thus, it was plausible to infer that “something was off.”
An Inside Look at the Landmark ESOP Valuation Case
For over a decade, the Department of Labor has not lost a major ESOP case on a valuation issue, but its winning streak ended with Walsh v. Bowers. The case involves many key valuation issues, and Ken Pia (Marcum LLP) and Ian Rusk (Rusk O’Brien Gido + Partners LLC), expert witnesses for the defense, give their insights.
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