Financial Valuation of Employee Stock Ownership Plan Shares [Hardcover]

Larry R. Cook (Author)

Book Description

ISBN-10: 0471678473 | ISBN-13: 978-0471678472 | Publication Date: June 14, 2005 | Edition: 1

A must-read for accountants and professionals with a business valuation accreditation or certification, pension actuaries, ERISA lawyers, Financial Valuation of Employee Stock Ownership Plan Shares identifies, explains, and explores the ins and outs of ESOPs, with a focus on what benefits a company/shareholder/plan participant would receive by transacting shares of stock with an ESOP, the formula for an Employee Stock Ownership Plan, stock incentives and their attractiveness to employees, the nature and function of ERISA, Department of Labor, and IRS. It includes training material, the full text of Department of Labor–proposed regulations, details of important court cases, various examples and illustrations to be used as reference and research tools for the experienced and trained valuation professional, and more.

Editorial Reviews

From the Inside Flap

It is estimated that more than 20 million employees currently hold stock in their companies through a variety of benefit options, including employee stock ownership plans (ESOPs), broadly granted stock options, or 401(k) plans with heavy concentrations of employer stock. As more companies offer these valuable opportunities to employees, it is important for business appraisers, accountants, pension actuaries, Employee Retirement Income Security Act (ERISA) lawyers, and business leaders to understand both the implications of such processes and the valuation of companies with employee stock ownership plans.

Financial Valuation of Employee Stock Ownership Plan Shares explains the unique considerations specific to the valuation of equity interests for ESOPs of private companies, including:

• Entity structure
• Tax incentives
• Put rights
• Repurchase obligations
• ESOPs with debt
• Adjustments for voting power and market liquidity for shares

Financial Valuation of Employee Stock Ownership Plan Shares is a complete reference and research guide to valuation of transactions with stock incentives and ESOPs. It's packed with useful and practical coverage of:

• The ins and outs of ESOPs, including company and shareholder benefits of selling to an ESOP
• Thorough descriptions of stock incentives and their attractiveness to employees
• The nature and function of ERISA, Department of Labor, and IRS, including training material and Department of Labor–proposed regulations
• The pros and cons of different methodologies and interpretations used in important court cases

Useful, complete, and thoroughly practical, Financial Valuation of Employee Stock Ownership Plan Shares provides business appraisers with the underlying logic, theory, laws, and principles for the financial valuation of private businesses.

From the Back Cover

An indispensable road map to the financial valuation of ESOPs

A must-read for accountants and professionals with a business valuation accreditation or certification, pension actuaries, ERISA lawyers, Financial Valuation of Employee Stock Ownership Plan Shares identifies, explains, and explores:

• The ins and outs of ESOPs, with a focus on what benefits a company/shareholder/plan participant would receive by transacting shares of stock with an ESOP
• The formula for an Employee Stock Ownership Plan
• Stock incentives and their attractiveness to employees
• The nature and function of ERISA, Department of Labor, and IRS, including training material and the full text of Department of Labor–proposed regulations
• Details of important court cases, with differences in methodologies and interpretations evaluated by their respective pros and cons
• Various examples and illustrations to be used as reference and research tools for the experienced and trained valuation professional

See all Editorial Reviews

Product Details

• Hardcover: 272 pages
• Publisher: Wiley; 1 edition (June 14, 2005)
• Language: English
• ISBN-10: 0471678473
• ISBN-13: 978-0471678472
• Product Dimensions: 9.1 x 6.3 x 0.9 inches
• Shipping Weight: 1.1 pounds (View shipping rates and policies)
• Average Customer Review: 5.0 out of 5 stars  See all reviews (4 customer reviews)
• Amazon Best Sellers Rank: #1,988,205 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

3 of 3 people found the following review helpful:

5.0 out of 5 stars Practical and readable advice on ESOPs, January 10, 2006

By 

Jim Hitchner - See all my reviews

This review is from: Financial Valuation of Employee Stock Ownership Plan Shares (Hardcover)

Larry Cook has done a wonderful job in writing a book on ESOPs that is practical, readable and understandable. He accomplishes this feat even though the formation, valuation and maintenance of ESOPs can be a difficult endeavor given the complexities and nuances surrounding this area. Although titled "Financial Valuation of Employee Stock Ownership Plan Shares," it includes good insight into the decisions that go into whether to form an ESOP and whether an ESOP is feasible for a given company. For example, chapter 2 includes a very interesting story of a CFO that went through the process with two companies. He also presents his thoughts on the controversial areas of the actual valuation of a company for ESOP purposes as well as the DOL, tax and financial reporting requirements. The two appendices include the DOL proposed regs and the IRS training class materials regarding examination of ESOPs. In summary, Mr. Cook's book is an important read for business owners, Plan Trustees, CPAs, Appraisers and Financial Advisers and should be a part of any business library.

1 of 1 people found the following review helpful:

5.0 out of 5 stars An Important Addition to Your Business Valuation Library, July 27, 2005

By 

Eva M. Lang (Memphis, TN) - See all my reviews
(REAL NAME)   

This review is from: Financial Valuation of Employee Stock Ownership Plan Shares (Hardcover)

Financial Valuation of Employee Stock Ownership Plan Shares is a great resource for anyone looking to learn about ESOPS. The book takes a business owner's perspective in walking the reader through the elements of a good plan. Often overlooked when establishing an ESOP is the question of whether an ESOP even makes sense. This book devotes an entire chapter to that very question of who makes a good ESOP candidate. But the heart of the book is the focus on determining the value of ESOP shares. In this area, Cook goes into great detail on every aspect of ESOP valuation from independence issues and governing case law to control vs. minority positions. He covers repurchase obligations, adequate consideration, and phantom equity. One thing that really sets the book apart from other valuation tomes is the great supporting material like the great 70 page Appendix containing the IRS training guide to examining ESOPS. No business valuation library will be complete without Financial Valuation of Employee Stock Ownership Plan Shares.

5.0 out of 5 stars Invaluable Desk Reference and Learning Tool for ESOP Stakeholders and Professionals Who Service Them, June 27, 2011

By 

Old Bull (Orange County, CA) - See all my reviews

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This review is from: Financial Valuation of Employee Stock Ownership Plan Shares (Hardcover)

Mr. Cook goes through about every major issue you will likely encounter in a business valuation engagement for an ESOP.

What's more important is the pending legislation sought by the DOL to make valuators responsible for their valuation reports as if they are trustees. At this writing, the legislation is pending, but if passed, the outlook for ESOP valuations will be become much harsher on valuators who submit substandard reports to their trusee-clients.

More troubling is that some trustees or valuators may not realize the specialized requirements of ESOP valuations, so may skip this resource under the assumption they know all about it. Truth is, most people don't know what they don't know, at least, not for sure.

Whether you're a trustee, valuator, ESOP advisor, executive in the sponsoring company, attorney, ESOP lender, plan participant or other stakeholder, you'll find good value in Mr. Cook's work. Yes, it's bit expensive, but the advice and insight is invaluable.