A repurchase obligation study is more than just numbers on a page. It provides the crucial information you need to make educated decisions for the future. Using our Telescope software, we prepare robust forecasts of future repurchase obligations.
Our focus is on the development of accurate, reasonable assumptions and interpretation of results. This requires extensive ESOP knowledge and a thorough understanding of your organization’s challenges and goals.
You can rely on us to:
Understand your planning issues and concerns
Collaborate with you to develop appropriate assumptions
Identify and analyze strategies for managing benefit levels and funding the repurchase obligations
Help your management team and Board of Directors understand your organization's repurchase obligation issues and alternatives
Present the results in an understandable, comprehensive report that provides the information you need to plan for repurchase obligations
If you’re new to repurchase obligation planning, we recommend that we work closely with you on your first repurchase. Then, you can update the forecast on your own by subscribing to our Telescope software with your study already loaded.
Will we have enough cash to meet our repurchase obligations as well as the other needs of the business? A sustainability analysis builds on a repurchase obligation study by integrating the repurchase obligation forecast into a dynamic three-statement financial model (income statement, balance sheet, cash flow). This allows you to see your repurchase obligations in the context of your projected income and cash flow so that you can determine how much cash will be available. This analysis can also help you understand alternative strategies for managing and funding the ESOP, by capturing their effect on income, cash flow, and share value.
Sustainability analyses can be an essential tool for planning for the future by providing an understanding of how repurchase obligations will fit into your overall financial picture.
Most ESOP organizations face decisions about how to manage its ESOP to achieve objectives such as optimizing benefit levels, avoiding “have and have-not’ issues, and managing cash flow. Aspects of these decisions may include:
Distribution policy – how quickly will you pay out terminated participants?
Repurchase method – is it better to redeem shares or to recirculate them within the ESOP?
Segregating terminated participant balances – understanding the additional cost versus the benefits
Refinancing existing loans or releveraging
Funding alternatives – should funds be accumulated in advance, and if so, should they be held in the company or in the ESOP?
These issues can be examined as a natural extension of an ESOP repurchase obligation study or sustainability analysis, or they can be explored in a separate project. Having worked with hundreds of ESOPs, we have a deep understanding of the available tools and techniques and a unique ability to quantify the implications of different strategies. The result is an objective analysis to help you make educated decisions.
See how Principal® could help you reach your unique goals.
Email: esopinfo@principal.com
Telephone: 833-201-0141