Repurchase obligations

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Use Cases

  • New ESOP repurchase liability

    New ESOP

    When setting up an ESOP or in the first few years of the ESOP's life, the repurchase liability is usually small, but it is likely going to increase, and it is worth understanding the order of magnitude. See our case below…

  • Ongoing ESOP

    Understanding and managing the repurchase liability earlier is better. ESOP liabilities will spring up in years 7–10 of the ESOP's life. See the case below.

  • Mature ESOP

    When an ESOP is mature, the repurchase liability is high and needs to be managed carefully and regularly. See our case below.

  • Trustee

    The ESOP trustee has a fiduciary duty to ensure that repurchase obligations are paid according to the distribution policy and ERISA requirements. See our case below.

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Our services.

  • Repurchase Liability Study

    Maximizing your ESOP's potential starts with a thorough repurchase obligation study. Our experts will predict the amount needed to buy back stock from employees and update it every 2-4 years.

    Regular monitoring of the repurchase obligation is crucial to understand its impact on the business as a future liability. Various events can trigger the need for repurchase, such as retirement, death, diversification, disability, and terminations.

    Our team provides comprehensive repurchase obligation studies and education on the topic. We focus on projecting cash flows and developing unique strategies to manage your ESOP's cash flow over the long-term. Contact us today to take the first step in maximizing your ESOP.

  • Sustainability Management

    Our analysis will assist plan sponsors in understanding the risks, costs, and talent considerations associated with various alternatives to the current ESOP structure, as well as alternative strategy for managing these risks and the repurchase liability. Our approach is a collaborative and iterative process. We will listen to your concerns and objectives, and will also provide you with guidance on how to avoid the pitfalls and impediments that we are aware of based on our years of experience working with many ESOPs.

  • Scenario Analysis

    In a repurchase liability study, it is important to include risk and sustainability management as part of the cash flow analysis to have a complete view of potential challenges.

    To achieve this, the study should include scenario analysis, sensitivity analysis and coordination with valuation firms. The analysis should consider the potential tax benefits, employee engagement and performance, and allow for valuation adjustments during the analysis process.

    This approach to repurchase liability studies is considered a holistic study, not just an isolated component.