Best Practices

Transaction Tips: The 5 C’s of a Successful CIM


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 [...]

Transaction Tips: The 5 C’s of a Successful CIM2021-05-10T15:25:20-04:00

Good Governance Is Good Business, Especially for Family-Owned Enterprises


Family businesses are the heartbeat of the US economy. Their contribution to the nation’s GDP, job creation and employment are unmatched. Indeed, 35% of the Fortune 500 companies are family businesses, but those companies have beat the odds. According to the Family Firms Institute, 70% of family business will not survive to the second generation and 90% will not make it to the third. Many of those family businesses have proven successful and are sold, merged with another company, or undertake an IPO. Some, however, just fail. The reasons family businesses are sold vary from lack of interest by subsequent [...]

Good Governance Is Good Business, Especially for Family-Owned Enterprises2021-03-29T15:21:56-04:00

Home Office Deduction Rules


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 [...]

Home Office Deduction Rules2021-01-06T10:07:40-05:00

The Case for Moving Forward With M&A


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 [...]

The Case for Moving Forward With M&A2020-09-30T10:22:10-04:00

Three Types of Procrastination and How They Affect Your Work


There are three different types of procrastination that we see today.  First is classic procrastination which is the act of consciously delaying what we know we should be doing:   I come home from the office at night and I have a stack of bills on the kitchen counter that need to be paid. I’m tired and exhausted. Rather than paying the bills, I’m going to sit on the couch and zone out and watch Sports Center.  That’s the classic form of procrastination we are familiar with.  There is also another type of procrastination which I’ve coined a phrase for, instead of [...]

Three Types of Procrastination and How They Affect Your Work2020-09-01T17:05:16-04:00

Is Your Company Failing? You May Not Need Bankruptcy Law


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 11, Chapter 7, Chapter 13, Subchapter V, Section 363, and on and on. The process looks expensive and time-consuming, and the chance of emerging with a going concern seems slim. The Uniform Commercial Code, which traces its origins to 1892, just might be the answer. It’s [...]

Is Your Company Failing? You May Not Need Bankruptcy Law2020-09-01T16:51:03-04:00

The Impact of a PPP Loan on Recasting


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 [...]

The Impact of a PPP Loan on Recasting2020-08-05T18:17:26-04:00

Diving into Diligence


“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, [...]

Diving into Diligence2020-06-30T13:57:49-04:00

Why Now is the Time to Buy a Business


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 [...]

Why Now is the Time to Buy a Business2020-06-30T13:43:42-04:00

Revenue Recognition and Private Equity: Are You Paying Attention? Part II


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 [...]

Revenue Recognition and Private Equity: Are You Paying Attention? Part II2020-06-02T15:50:25-04:00