The Fiduciary's Guide to ESOP Valuation

Valuations are central to the ESOP process. This innovative book has been written primarily for inside ESOP trustees, company leaders, and board members. We hope it will also be useful to ESOP professionals, although its approach is not as highly technical as in material directed specifically at them. The core of this book is chapter 1, "How Your Appraisal Report Works," an actual redacted valuation report that has been annotated with explanatory comments (printed in color). Subsequent chapters discuss how control premiums or discounts are calculated, reviewing the valuation (taught in a Q&A format), how to communicate valuation to employees, and how to select an appraiser. An appendix has a useful checklist for reviewing the appraisal report.
The goal of this book is to help people who need to read and use valuation reports understand what is in them and how to use them. Board members, executives, and especially fiduciaries need to understand the valuation process well, know how to spot red flags and problems, and know how the report can tell them about how the company’s value might be improved. Readers who want to begin with a general overview of valuation before diving into the complexities of this book should read the chapter "Understanding ESOP Valuation" included in our books Understanding ESOPs and Selling to an ESOP.