The December 1, 2008 Employee Ownership Update is online and discusses the following:

• Inc. Magazine Site Provides Useful Tool for Comparing Financial Numbers
• British Retailer Woolworth's May Be Employee Ownership Candidate
• ESOP Valuations and the Downturn
• Political Prospects for Employee Ownership
  

The Update discusses how ESOP valuations could decline even if a company is having a good year, as valuation firms may be dropping their multiples to reflect the current economic conditions:

Closely held ESOP companies will face the probability of declining stock value even if their business is holding up. ESOP valuation specialists tell us that the multiples they use to value businesses will drop to reflect the declining multiples paid for companies in general. While each industry will face a different scenario, that could mean a reduction of 25% or more in the multiples. Helping employees understand why their stock value is going down even when the company is making money is a critical task for ESOP companies.

It explores the possibility that the incoming Congress and Administration will take the position that ESOPs are Too Concentrated in Employer Stock and require them to diversify their assets. The Update reiterates that ESOP companies are more likely to have diversified retirement plans:

The data on ESOPs make it very clear that companies with ESOPs actually are more likely to have diversified retirement plans than comparable companies are likely to have any kind of retirement plans. ESOP participants have about three times the account balances of comparable employees in comparable non-ESOP companies, and the diversified portion of this is about the same as the total retirement benefits of comparable employees. In other words, the ESOP is gravy. While that gravy is undiversified, 100% an undiversified holding is better than a 100% diversified holding of zero. ESOPs also are more egalitarian in their allocation patterns than 401(k) plans because they are not based on employee deferrals, which tend to skew company matches towards higher-paid people. Getting these arguments in front of Congress will be essential in 2009.

The Update also shares the Inc. Profitability Report, a web tool that shares compiled financial data on privately held companies and allows companies to find out what their numbers should be based on industry averages.