Buying and Selling

Success to Significance: Starting a New Future after the Business Exit


Success to Significance: Starting a New Future after the Business Exit By Laura Malone, CAP®, CEPA, VP-Corporate/Complex Giving American Endowment Foundation The scenario may be familiar. A business owner arrives at their financial advisor’s office looking to exit their business, but unsure how to get the most financial benefit from that exit. A topic that both the business owner and financial advisor often miss out on is an understanding of how a charitable plan can help the owner build something of significance beyond their business while enjoying tax savings and preserving their wealth. What many financial advisors don’t realize about their [...]

Success to Significance: Starting a New Future after the Business Exit2019-08-29T11:01:03-04:00

IC-DISC an Underused Tax Saving Strategy for U.S. Exporters


Is your client’s company one of the many in the United States that is experiencing a rapid increase of exported goods? Exporting creates an opportunity to use a tax savings strategy by creating an Interest Charge – Domestic International Sales Corporation (IC-DISC). Not just for large C-Corporations, an IC-DISC applies to small/medium pass-through entities as well. If your client’s company’s export revenue averages $1 million per year and/or is projected to be growing in the future, they should explore how an IC-DISC can result in a significantly lower tax bill for your client’s organization. What is an IC-DISC? An IC-DISC is a [...]

IC-DISC an Underused Tax Saving Strategy for U.S. Exporters2019-07-31T10:20:39-04:00

Secrets of Market Multiples in Valuation


Secrets of Market Multiples in Valuation Ever wondered why two seemingly similar companies sell at significantly different multiples? What are buyers considering in ostensibly comparable companies that cause sale price differences? Let's discuss five key secrets of market multiples: 1. Revenue/Earnings Growth Potential Buyers are willing to pay more for companies with high growth potential than companies perceived as having low growth potential. The reasons are those high-growth-potential companies: • create exceptional customer value; • exploit high-growth market segments; • are innovative; • have a strong brand identity; • create service differentiation; and • invest in the development and delivery of [...]

Secrets of Market Multiples in Valuation2019-07-01T14:28:04-04:00

Why “One (Buyer) Is the Loneliest Number”


Why “One (Buyer) Is the Loneliest Number” You own a successful business that you’ve grown through the years.   You’ve just recently thought about selling.  Lo and behold, another business in your industry approaches you to see if you’d like to sell.  What great timing and what an opportunity, right?  Wrong!  If you are serious about selling your business, you need to go to market and not settle for one buyer. If you focus on just one buyer, you’ll be going down a path with no leverage. Here are 4 reasons why you do not want to talk to only one buyer [...]

Why “One (Buyer) Is the Loneliest Number”2019-07-01T14:15:26-04:00

5 Value Creation Techniques in Roll-Ups


Takeaway: A seller who is looking for capital and expertise to continue growing the business may want to consider being part of a roll-up. Creating value when acquiring and combining companies is not easy. In theory, the sum of the parts will be more valuable than each part individually. However, there needs to be some cohesion to a roll-up. Alternatively, you end up with a disjointed company that does not command a valuation premium, but rather should be discounted to its peers. How do financial buyers generate additional value when they combine companies? Here are some value creation techniques used in roll-ups. As a seller, you [...]

5 Value Creation Techniques in Roll-Ups2019-06-05T09:53:09-04:00

Exits Are Inevitable; Failure Is Not


Takeaway: We all have to exit our companies someday, but whether we do it well or poorly can be decided by some good planning. We understand that business owners are so busy addressing today’s economic challenges that they can overlook the critical task of exit planning. We also understand that, at some point, all owners exit their businesses. When that day arrives, owners want to exit on their terms, the most important of which are financial independenceand choosing the person or entity that will receive or buy the business. Designing a Good Exit Plan Designing a comprehensive exit plan — which is both based on your [...]

Exits Are Inevitable; Failure Is Not2019-06-05T08:54:08-04:00

When Distress Means Opportunity


When Distress Means Opportunity: The Value of Article 9 Re-organizations for Private Equity Investors and the impact to Seller Subordinated Debt.   As a private equity investor group, subordinate debt is the single greatest challenge to the efficiency of any model -- whether that model involves investing in equity, debt or assets. Add business distress to that sub-debt complexity and executing a purchase/exit can become difficult and time-consuming at best. Unless you know how to apply Article 9 of the UCC code. Simply put, subordinate creditors create obstacles to closing, they pose risk, and they drain time and money, negatively impacting [...]

When Distress Means Opportunity2019-04-29T09:29:39-04:00

Wayfair – Where Are We Now?


Wayfair – Where Are We Now? Since the U.S. Supreme Court decision in South Dakota v. Wayfair last June, there have been numerous questions raised regarding how this decision will impact businesses. The U.S. Supreme Court ruled that taxpayers no longer need an in-state physical presence to create sales tax nexus. States can now require an out-of-state seller to collect sales or use tax on sales to customers in that state, even though the seller lacks an in-state physical presence. Essentially, having in-state customers can be sufficient to trigger economic nexus. For additional background information, specifics of the case and the [...]

Wayfair – Where Are We Now?2019-04-29T09:00:21-04:00

Can Your Clients Sell their C Corp Stock Tax Free?


Can Your Clients Sell their C Corp Stock Tax Free? by Al Statz In some cases yes.  Congress has long recognized that small businesses investment is an important driver of the U.S. economy.  Back in 1993, to incentivize investors, they developed a rule that eliminates federal income tax on some (later revised to all) of the gain on the sale of certain C Corporation stock issued after August 10, 1993.  As M&A advisors we should try to point out potential tax breaks to clients and in this article I’ll discuss Qualified Small Business Stock (or “QSBS”) from a business sale perspective. QSBS Requirements [...]

Can Your Clients Sell their C Corp Stock Tax Free?2019-04-03T14:40:12-04:00

Understanding Return on Equity for Privately Owned Businesses


Understanding Return on Equity for Privately Owned Businesses I am a big fan of Robert Slee, an investment banker, author, and investor in the middle market. His most well-known book is Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests, and his teachings are centered around the following key fundamentals issues plaguing the lower middle market: Value creation occurs when returns on equity are greater than the cost of equity; 70% or so of private business owners are not increasing the market value of their firms; and Most business owners are not generating returns on equity investment greater than their company’s cost of equity capital. [...]

Understanding Return on Equity for Privately Owned Businesses2019-02-26T14:05:41-05:00