Best Practices

Many M&A Source members join the organization after being business brokers. The desire to move upmarket and work on bigger deals is natural and it happens regularly. M&A advisors bridge the gap between small businesses and large corporations, focusing on the lower middle market. I believe that the major factor that determines whether a deal is business brokerage or M&A depends on who is the most logical, highest value buyer. If it is an industry buyer or a PEG, it is an M&A deal. After selling my business in 2002 I went back to graduate school for an MBA and started [...]

Your business has no doubt been under a lot of economic pressure over the last 15 months or so. That pressure may stem from too much or too little demand for your products or services. A lot of either type of pressure can make it very tempting to sell your business now, but selling your business under economic pressure is ill-advised unless you absolutely have no choice. Economic buoyancy provides the best return on the investment of your hard work, imagination, dedication, and, of course, capital. Economic pressure is more than just the relative health of the economy, as other factors [...]

By Cheryl Aschenbrener, National Leader and Partner, Transaction Advisory Services Original Content To say that 2020 was an unusual year is an understatement. Especially within the transaction world, where it left more questions than answers, like: How do buyers and sellers treat 2020 numbers in the valuation process? In more normal times, an appraiser would look at a prospective seller’s prior three years of operating income, maybe longer depending on the economic cycle. There would be adjusted EBITDA times X calculations with the aim of bridging past to future—painting an accurate picture of a company’s earning ability and risk going [...]

The Confidential Information Memorandum, or CIM, is widely used as a marketing tool when raising debt or equity capital, selling healthy or distressed businesses or refinancing existing debt. A CIM is like the big brother to a one-page investor summary, or the more commonly used term, teaser. Colloquially, a CIM is also often referred to as a book for the simple fact that it can be voluminous, detailed, dense and descriptive. Well-prepared CIMs used in successful transactions tend to share some key characteristics. By establishing the purpose of a CIM and identifying best practices for creating one, you can better [...]

The IRS reminded taxpayers of the home office deduction rules during Small Business Week and urged individuals to consider taking the home office deduction if they qualify.   Who qualifies for the deduction?  The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy.  However, the Tax Cuts and Jobs Act suspended the business use of home deduction from 2018 to 2025 for employees.  Hence, employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home.   What is [...]

With travel restrictions, portfolio companies in crisis mode, and a very skittish global economy, now is certainly not the time for investors and acquirers to focus on M&A. …or is it? While the idea of doing deals right now might seem daunting, not to mention logistically challenging (how exactly do you conduct on-site diligence in a shutdown?), there’s an argument to be made for M&A to keep moving forward, despite the circumstances. Data from the global financial crisis (GFC) of 2007-2009 “shows that companies that made significant acquisitions during an economic downturn outperform those that did not,” argues a recent article [...]

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 [...]