Aegis makes all decisions through its fiduciary committee that consists of experienced attorneys, a certified public accountant and an accredited valuation advisor. One of the most important fiduciary decisions a trustee makes concerns the valuation of the stock it purchases on behalf of the participants. An ESOP trustee is prohibited by law from paying more than fair market value for the stock. Aegis works closely with its independent financial advisor to arrive at the appropriate price. The collective expertise of the committee members assures that the ESOP participants pay no more than fair market value for the stock. The professionals with valuation and financial expertise work closely with the independent financial advisor. Aegis’s legal team communicates with the financial advisor regularly to discuss anything in Aegis’s due diligence review that may have an impact on value. The committee also focuses on loan terms, compensation for the selling shareholders, board composition, synthetic equity and other pertinent issues.
An ESOP transaction commonly takes between two and four months. Aegis initially sends a detailed list of the legal and financial documents needed to conduct its due diligence. Thereafter, Aegis and its independent financial advisor meets with the company’s senior management team to gather first-hand information about the company’s operations, financial history and expectations about future performance. Once Aegis is satisfied that it understands the information, the company, selling shareholders and Aegis as trustee then negotiate the terms of the transaction. Upon agreement, those terms will be memorialized in transaction documents.
Aegis’s fiduciary committee meets regularly to discuss issues that arise during the course of the negotiation of the transaction documents and the status of the valuation of the stock. Throughout the transaction, our experienced committee discusses valuation issues and methodologies with Aegis’s independent financial advisor.
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