Considerations for Changing ESOP Appraisers

This article is a guide that outlines the reasons why a Trustee of an Employee Stock Ownership Plan (ESOP) should consider changing their appraiser. It begins by explaining the role of the Trustee in determining the fair market value of the ESOP stock and the importance of hiring an independent appraiser. The document details five common reasons for changing an appraiser, starting with problems related to the valuation report, such as inconsistent conclusions and errors. It also discusses issues of independence and conflicts of interest, emphasizing that the appraiser should only represent the Trustee. The guide highlights the trend of appraisers exiting the ESOP appraisal business due to increased scrutiny by the Department of Labor (DOL) and the need for Trustees to ensure their appraiser has the necessary qualifications. Additionally, it stresses the importance of receiving consultative advice from the appraiser rather than just a valuation report. Overall, the article emphasizes the need for Trustees to conduct thorough annual vetting of their appraiser.