609-664-7955 gcaruso@artofbv.com

As a trustee of an ESOP company, it is important to understand the primary drivers of value. We call them People, Processes, Profits. While simple, if you always keep these factors in mind, it will help you make informed decisions on correctly pricing annual shares. Some details about these simple factors that can help you determine how your ESOP company should be priced include:

People – basically the business and the people that run it.  Does the sum of the parts create resiliency or is the ESOP-owned company brittle? Here are a few more items to consider when valuing your people.

  • Business Model: Look at the company’s business model to determine whether it is focused on producing a few products or services or has a more complex business model with multiple products, services, and business lines.
  • Market Position: Evaluate the company’s market position to determine whether it is a market leader or a follower. Is your company a market leader in a specific niche? Is your company focused on disrupting existing markets or creating new ones?
  • Management: Assess the company’s management team to see if it has a track record of successfully managing a simple or complex business model. Winners tend to solve problems and win. Other companies never quite reach their potential.
  • Staff:  Many businesses rely on highly trained technical staff.  Whether they are licensed mechanics, highly trained programmers,  or professional personnel, having a well-trained cohesive team to implement processes is essential.


  • Does the Company have well defined processes and procedures for all necessary components of the business? This applies from initial lead generation right though final invoice collection and after-the-sale (or perhaps making the next sale) customer care.
  • Does the Company have the Processes in place to prepare projections and goals? (This is like playing chess and thinking 3 or 5 moves ahead.)
  • Do they have regular management meetings and regular staff meetings where goals are reviewed, bottlenecks are resolved, and people are listened to?

“A company has excellent processes when Average People get extraordinary results Every Time.”


  • Does the Company consistently make money, or are there frequently reasons why goals were not met? 
  • Are gross profits (including reasonable allocations of soft costs) estimated on jobs, product lines, services?  Can more of those goods or services be sold?

In summary, as a trustee of an ESOP company, it is important to understand the company’s People which encompasses the business model, market position, and management; it’s Processes including goal setting and review; and Profits to determine its share value. A highly resilient, consistently profitable business has high value. This can help you make informed decisions that are in the best interest of the plan participants and beneficiaries.