Articles

Resolving business failures cheaply and rapidly has never been more important, with Covid-19 and the recession about to push record numbers of companies under. But consider what a small-business owner faces: Your company is on the brink, you can’t pay your employees or suppliers, and now you’re expected to master the complex vocabulary of federal bankruptcy law. There’s Chapter […]

A key point regarding a PPP Loan is that it is a loan. When the Borrower receives the loan, the proceeds should be recorded on the Balance Sheet as a Note Payable which is a liability. The loan proceeds should not be posted on the Income Statement as income.   If the loan ends up being […]

“Financial Due Diligence” (FDD) and “Quality of Earnings” (QoE) are often bandied around during a transaction —sometimes used interchangeably— but what’s the difference? In this post, I explore the key differences between typical FDD and QoE, including when each term applies and what they tell us.  Being Diligent  FDD and QoE are both exercises in diligence, but they serve different purposes – and […]

Most people engaged in the business of mergers & acquisitions were flush with deal flow and new business opportunities prior to the COVID-19 shutdown. However, as the pandemic struck, the switch was turned off and M&A activity went dark virtually overnight. It’s no secret that M&A is cyclical. But, unlike prior economic downturns that have […]

Though search funds still make up a relatively small percentage of lower middle market investors, this investment model continues to gain prominence. In December 2019, I had the pleasure of attending the HBS Entrepreneurship Through Acquisition (ETA) conference for my third consecutive year. It’s been incredible to see firsthand the search fund community gaining prominence. […]

Growth by acquisition can be a risky proposition, but it carries less risk when compared with organic growth. In theory, you are paying market value for a book of business that will immediately begin generating cash flow. If the valuation is reasonable, then the deal should be appealing to shareholders. In contrast, organic growth or […]

How to protect your client’s business value from unplanned, chance events. As we all know, there are rarely good surprises in business. Record concurrent years of positive economic growth are behind us, with an unclear future. Risk exposures beyond our control loom daily — tariffs, trade wars, industry slowdowns, recession, partisan politics or international crisis. […]

A Business Valuation is Not Just In the Numbers Leadership & Culture The culture of an enterprise may be hard to measure, but it nevertheless very important to the worth and value of a business.  Employee retention and turnover is one important variable that appraisers will want to understand, as well as some of the […]

A Business Valuation is Not Just In the Numbers As a professional business appraiser, we are called to provide our best estimate of fair value.  On its face, it would seem relatively straightforward to assume that most of it has to do with the financial well-being of the company, which it does.  However, it is […]

On September 11th, a subcommittee of the House Financial Services Committee (HFSC) held a public hearing on various bills, including HR 609, The Small Business Mergers, Acquisitions, Sales and Brokerage Simplification Act of 2019. In its memo announcing this hearing, the Financial Services Committee staff summarized HR 609 as follows: This bill would codify an SEC no-action letter […]