Our Services
Our team’s approach in serving ESOP companies is about building quality relationships. Our commitment is to be available when you need us. We’re professional, responsive, involved, and dedicated to meeting the goals for your company’s ESOP implementation.
Trustee
It is a widely-accepted best practice to use a qualified independent ESOP trustee when executing employer stock transactions involving ESOPs, and to resolve potential conflicts of interests in the ongoing administration of an ESOP. Our trustee services in these two areas include, but are not limited to the following:
The Trustee’s duty is to represent the ESOP Trust for the exclusive benefit of ESOP participants. Our prudent process includes thoroughly documenting every step of the transaction, and adhering to the Department of Labor Settlement Agreement guidance by:
- Evaluating the sale of employer stock from an existing shareholder(s) to the ESOP.
- Performing due diligence with respect to the Company and the ESOP transaction.
- Negotiating on behalf of the ESOP the price, terms, and conditions of the sale of employer stock in the ESOP transaction.
When appointed as an Independent ESOP Trustee, the Trustee performs the services necessary to safeguard the assets of the ESOP trust and ensure the proper administration of the plan. These services include, but are not limited to, the following:
- Managing the assets of the ESOP trust.
- Establishing the annual employer stock price.
- Voting the ESOP employer stock shares.
- Administering employee “pass through” voting of ESOP shares when legally required.
- Satisfying the Trustee’s ERISA fiduciary responsibilities of acting prudently, solely in the interest of the plan’s participants, and acting in accordance with the plan documents.
Business Valuation
Establishing an employee stock ownership plan requires an independent business valuation. In a typical leveraged transaction - where a company’s stock is sold to an employee trust – the trustee hires an independent appraiser to determine the company’s fair market value (FMV). The ESOP trustee will use that valuation to negotiate the final sale price with the plan sponsor.
Crossover’s unique approach to ESOP implementations is in part based on the fact that an independent, accredited business valuation professional also serves as the trustee. This provides for significant transaction process efficiencies and transaction cost-savings in ESOP implementations. It also provides assurance that your expectation for transaction pricing falls within a range of values that the trustee is comfortable with prior to formally engaging for an ESOP implementation.
Once an ESOP is formed, an independent business appraiser will perform an annual valuation of the plan sponsor to determine the company’s FMV. Crossover provides expert ESOP valuations and advice to assist both independent and internal trustees in determining the annual FMV of employer stock held by the plan.
Crossover provides fairness opinions in connection with leveraged purchases of company stock by ESOPs, in connection with the acquisition of company stock from ESOPs by third party buyers, and in connection with the redemption of company stock from ESOPs in plan terminations.
Legal
Over 25 Years of Experience
With an average of over 25 years of experience, each of the attorneys that work with Crossover are highly skilled in all aspects of ESOP transaction planning and design, including ESOP formation, implementation, enforcement and regulation. They have extensive experience representing independent trustees, fiduciaries, and the selling shareholders of closely-held companies in a wide array of industries and businesses.
Each of them brings insight, creativity, and a practical problem-solving approach to structuring and completing transactions in reasonable time frames and budgets. Their experience in closing hundreds of varied, and often complex, ESOP transactions by working hand-in-hand with all parties is essential to successful ESOP transactions and works perfectly in Crossover’s team approach.
Third-Party Administrator (TPA)
ESOPs are unique among retirement plans and require special expertise.
While many TPAs and recordkeepers can handle defined contribution plan recordkeeping, not many are up to the specific challenges presented by ESOPs. The laws and regulations affecting ESOPs are more complicated than those governing other defined contribution plans. Our TPA partners have some of the most credentialed and knowledgeable ESOP plan practitioners in the U.S. and are supported by a deep bench of subject matter experts, actuaries, and in-house ERISA teams.
Crossover TPA providers have teams of dedicated specialists to support the complexities of ESOP plans and offer everything from tracking of cash shares and market value, to asset reconciliation and eligibility determination. The services our TPA partners offer include:
- Nondiscrimination testing
- Form 5500 filing
- Distribution of participant statements
- Distribution processing
- Employee eligibility tracking
- Compliance and legislative supervision
- Contribution limit tracking
- Contribution remittances
- Loan processing
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Asset Management
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