THE EMPLOYEE STOCK OWNERSHIP PLAN

Abstract

The market approach values a corporation by reference to market-derived pricing multiples extractedfrom actual sales of comparative companies or securities. The most common market approachbusiness/stock valuation methods are (1) the guideline merged and acquired company method and (2)the guideline publicity traded company method.All business/stock valuations are based on hypothetical sales transactions. In the market approach,there is a hypothetical sale of the corporate stock. The fact the company does not actually sell itsstock does not invalidate the use of the market approach. Likewise, the fact that the company does notactually sell its assets does not invalidate the use of the asset-based approach. In a hypothetical saleof the corporate asset, a hypothetical BIG tax liability would be paid.

Keywords

• price
• gains tax
• securities
• transactions
• stock
• investment