When preparing to sell a business, a mistake you will want to avoid is failing to pay enough attention to the variety of legal issues involved in a business sale transaction. The wrong legal mistake can stop a sale in its tracks. Worse, it could cost a small fortune to unravel. Thus, it is critically important to carefully analyze all relevant legal angles to the sale of your business. This post will look at some of the key legal points sellers should consider long before putting their business on the market. Mistake #1: Neglecting to Have a Non-Disclosure Agreement A critically important step [...]
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So far Sarah Pinkowski has created 31 blog entries.
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 forgiven, it should be handled for income reporting as follows: Financial Statements (specifically the Income Statement) – The forgiven loan amount is an elimination of an obligation to pay a debt. An appropriate reporting of this elimination is for it to be presented as [...]
Lisa Riley Lisa Riley is the founder and president of Delta Business Advisors. Lisa has worked in the industry since 2011 and is the incoming chair of the International Business Brokers Association (IBBA). She is also the past chair of the Arizona Business Brokers Association (AZBBA) and spearheads the quarterly IBBA/M&A Source Market Pulse Survey. Lisa holds several certifications, including IBBA’s Certified Business Intermediary and Coles College of Business‘ Certified Mergers & Acquisitions Professional. She also has been awarded the prestigious Tom West Award and several awards for outstanding producer from IBBA and AZBBA. Lisa’s educational achievements include [...]
“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 sometimes at the same time. On the buy- and sell-side of a transaction, owner-operators, lenders, investors, and, at times, regulators will request that FDD or QoE is performed so that relevant stakeholders can gain assurance and mitigate their risk. From an owner’s perspective, [...]
Many small businesses have closed, severely reduced output, or are slowly reopening during the COVID-19 pandemic. So why would a business buyer consider moving forward with a transaction in such a dismal environment? This is why: Business Owners are Motivated to Sell A large percentage of small business owners are Baby Boomers that have survived 9/11 and the Great Recession. These owners are near retirement, yet they have been on the fence about selling and have had a difficult time walking away from the steady profits they have received from the recent strong economy. Now, COVID-19 is changing their outlook and many are ready [...]
Alex Mazer is a Vice President with Big Shoulders Capital and its affiliate, PPL Group, a private firm that provides liquidity solutions for commercial and industrial companies in turnaround/transition. Primary services include industrial asset disposition/liquidations, quick and creative asset-based debt refinancing, and equity investments in small and middle-market operating companies. Prior to joining them, Alex founded and managed The BirdDog Group, a national liquidation firm specializing in asset disposition of consumer goods and retail inventories for lenders, manufacturers, and importers. Outside of the U.S., Alex has lived and worked in Hong Kong and Beijing. He completed his MBA at Northwestern’s [...]
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 affected M&A, there were no underlying market conditions facilitating this slowdown. The switch was turned off as the result of a global health crisis. So, what happens next? Will the post-pandemic M&A markets revert to pre-pandemic activity levels? Will companies continue to be bought and [...]
In our previous article, we broke down one of the most considerably penetrating compliance changes in over a decade (Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09)) and its significant impact on private equity groups. Between May 2014 and today, amendments and implementation guidance for both companies and practitioners have been released; meaning, PEGs should prepare to be well versed on the standard and how it will impact portfolio companies, recent acquisitions, acquisition targets, and even exit strategies. The following is part two in a two-part article series. PRE-TRANSACTION CONSIDERATIONS Are you currently evaluating potential [...]
Doing business with a single-family office (SFO) is not an easy proposition, even finding contact information for an office principal can be a daunting feat. There is a tension in how you think about family offices. Like Willie Sutton remarked about banks, you cannot disregard them entirely simply because “that's where the money is.” But at the same time, their reclusive and nebulous nature makes dealing with them even more challenging. What I would like to do today is review the family office marketplace in aggregate, and then offer you a framework for how to think about the various types [...]
Back in May of 2014, FASB issued one of the most considerably penetrating compliance changes in over a decade (Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09)). Between May 2014 and today, amendments and implementation guidance for both companies and practitioners have been released with Topic 606 effective for private companies beginning on or after January 1, 2019, trailing public companies by a year. Before your eyes glaze over from the technical talk, you may be wondering why an accounting standard update from almost six years ago is relevant to your private equity firm. As [...]