Repurchase Liability Studies

The purpose of a Repurchase Liability Study ("RLS") is to project your emerging liability resulting from the company's legal obligation to repurchase stock distributed by the ESOP to participants due to death, disability, retirement, termination, or as a result of diversification as required by law and permitted under the terms of the ESOP.

The repurchase obligation is the liability your company incurs as a result of the requirement that it repurchase shares of stock distributed by the ESOP subject to the "put options" required by law. The ESOP can also satisfy this repurchase obligation through cash distributions. The ESOP repurchase obligation represents a claim on future cash flows of the company. Just like other claims on future cash, the ESOP repurchase obligation needs to be quantified and included as part of the company's cash projections. Our act of quantifying your ESOP repurchase obligation is an ESOP repurchase liability study.

RLS Direct™ gives you the needed information to identify the components of your repurchase obligation. Key components include: plan information, loan information, actuarial assumptions and projections, participant data analysis, stock appreciation analysis, stock market value analysis, employer contribution analysis, repurchase liability analysis, cash flow analysis, and payout method analysis. We also consult with you as to certain critical assumptions including turnover, disability and mortality rates.