Frequently Asked Questions

Employee Ownership FAQs

Common questions about employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and other forms of employee ownership, from the basics to technical topics.

This FAQ is written primarily for business owners, managers, and advisors involved in setting up or running an employee ownership plan. If you're an employee at an ESOP company looking to understand your own benefits and rights, see our articles on Working at an ESOP Company and The Rights of ESOP Participants.

NCEO employee ownership FAQ hero (keyboard)

What is the discount for lack of marketability?

Owners of shares in closely held firms cannot sell their shares as easily as owners of publicly traded ones. Because of that, their shares are worth less. Marketability discounts vary considerably, but typically range from 5% to 10% in ESOP transactions assuming the company is able to meet its obligation to purchase shares from departing employees.

Link to this FAQ Topic: ESOP Valuation