Written by Anne R. Meltzer, CPA/ABV
Have you considered the ESOP Repurchase Obligation? This refers to the “put” right which obligates the company to purchase an employee’s shares. The majority of ESOP repurchases are due to employee terminations and retirements. Since both of these situations are fairly predictable, the repurchase obligation is also predictable and manageable.
The impact of the repurchase obligation on fair market value depends most strongly on the 1) percentage of stock owned by the ESOP, 2) distribution rules within the plan document and 3) the methods used to repurchase the shares. Read the rest of this entry »