MCDONALD HOPKINS LLC
CLEVELAND, OH

The core strength of McDonald Hopkins is our 140 attorneys who work individually and together as part of specialized teams to help you strategically plan for an increasingly competitive future. Each has the expertise and knowledge to offer you the strongest legal options for your business, the skills and talent to guide you through whatever challenges you face, and the experience and understanding to provide you meaningful advice and recommendations.   that is clear, creative, complete and cost-effective. But, it should come from attorneys who want to know your business and understand your goals. Your needs are as unique as you are, which is why we focus on customized, responsive client service. As a McDonald Hopkins client, your challenges become our challenges; your issues become our issues. We are invested in and care about your success – both in and out of the courtroom.   business objectives, we can deliver real value in the form of insightful legal solutions and customized business counseling. We have a more than 85-year history of guiding clients in various industries through the most difficult times. And, we’re proud that our clients are intensely loyal and confident in us. Just like your business, our firm has a practical and entrepreneurial spirit. We understand that you have to look at a company as a whole before zeroing on a single solution.   to keep our clients ahead of their challenges and informed on the latest legal development affecting their business, we’ve earned a reputation as a proactive and innovative business advisory and advocacy law firm. Our advice is never offered in a vacuum, but as part of a coordinated effort that takes account of all your goals and objectives. We view ourselves as part of your team and continually strive to achieve the best possible results for you and your business. On Sept. 21, 2017, First Bankers Trust Services, Inc. entered into a settlement agreement with the Department of Labor regarding its handling of the purchase of Maran, Inc. by the Maran, Inc. ESOP, for which First Bankers was the trustee. While the settlement agreement is similar in many respects to the agreement that GreatBanc Trust Company entered into in 2014 with the Department of Labor with respect to its handling of the purchase of Sierra Aluminum Company stock by the ESOP sponsored by Sierra, it includes some material additions. The company projections used in the valuations. . The valuation must be based on audited unqualified financial statements for the preceding five years. If any financial statements are unaudited or qualified, the trustee must determine and document whether it is prudent to rely on such statements. Further, under the First Bankers settlement, the trustee can approve a transaction even though it is relying on qualified or unaudited financials only if the stock purchase agreement requires the selling or purchasing shareholders who are officers, managers, or members of the board of directors to compensate the ESOP for any losses, etc. related to financial statements that did not accurately reflect the plan sponsor’s financial condition. . The trustee must critically review company financials and projections and determine if it is reasonable to rely on them. Under the First Bankers settlement, the trustee must also ensure that the valuation advisor receives the following information:  Any prior attempts to purchase or sell stock within the proceeding two years.  Any management letters provided to the plan sponsor by its accountants within the past five years.  Any information related to the valuation of the plan sponsor provided to the IRS within the past five years. . The trustee must document that it has critically assess the valuation report, and must take specific steps in doing so. It must also document the individuals responsible for the proposed transaction and their material points with respect to it. Some employers may be wondering, “Can we continue to use the valuation firm the ESOP has been using?” “Should we and the trustee be doing periodic due diligence on the firms?” “How does this affect our internal (non-commercial) trustees?” “Will these agreements change what the trustee wants from the employer?”  The answers to each of these questions vary, but ESOP companies should keep in mind that all ESOP trustees, including internal trustees, will most likely be looking to meet these requirements. This means that your ESOP trustee will need to consider whether the valuation expert that you wish to use may have a conflict of interest depending on work it has done previously or may be doing for the company or the other non-ESOP shareholders.  In addition, it is appropriate to review the expert’s credentials periodically and to assess the expert valuation methodology. Of course, making that assessment will most likely require outside expertise. It’s also possible that the ESOP trustee and its valuation advisor will be asking for more information from the employer – some of which may never have been requested before. All of this may require additional time, resources and patience from ESOP companies. While all the extra effort may seem to be a waste of time, it is actually time and effort well spent to be able to demonstrate that all parties – the trustee, the valuation firm, the employer and the ESOP – are fulfilling their ERISA duties. With the foresight to keep our clients ahead of their challenges and informed on the latest legal development affecting their business, McDonald Hopkins has earned a reputation as a proactive and innovative business advisory and advocacy law firm. Welcome to your McDonald Hopkins user profile page As part of the McDonald Hopkins online experience, we’ve created a way for you to bookmark alerts, news, blog posts, videos, attorneys and events – just by clicking the MH bookmark icon you’ve seen around our site. And we’ve created this page for you to view all your favorite content in one place. While you can still favorite and come back to content without registering for our site, we highly encourage you to create a user account to take full advantage of the opportunity to engage and interact with McDonald Hopkins.