Demystifying Valuation, Economic Damages + Forensic Accounting

Have you thought about your succession plan and the options you have?

No matter how long you avoid the succession planning discussion, you will exit the company one way or another. The worst-case scenario is the company ends up in probate court as a part of your estate, while the best-case scenario is that you contemplate all your options and decide what works best for you and …

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Should a beneficiary blindly trust the trustee?

In a word – NO. But let’s look a little bit at the role of a trustee and the rights of a beneficiary. A trust is a legal agreement between two parties, a settlor (or grantor) and a trustee. Trusts are used to manage and protect the assets of the settlor. Trusts are used to …

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Buy-Sell agreement horror stories

When business entities are formed, they often execute agreements between the shareholders, partners or members that defines the price (or formula/methodology to determine the value) at which an owner is paid for his/her interest in the business in the event of death, disability, mental incapacity, divorce, bankruptcy, resignation or termination of employment and other triggering …

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Determining income in divorce proceedings

When couples get divorced in Maricopa County Arizona, each spouse is required to submit to the court a document called an Affidavit of Financial Information [“AFI”]. The document, which can be prepared by the parties or their legal representatives, is also known as Form DROSC13f-010119. The AFI is used to assist the court in creating …

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Your banker says you need a QoE, now what?

Sometimes, before your bank will finance an acquisition, they require a quality of earnings (“QoE”) report. You might be saying, what is a QoE report? A QoE report analyzes the earnings power of a business to determine how sustainable and accurate the business’ earnings are. Specifically, a QoE report digs into the seller’s financial information …

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ESOP case update

Last year I wrote an article that outlined several cases involving the Department of Labor and ESOP trustees. There have been some recent updates to these cases which again do not favor the trustees. Brundle v. Wilmington Trust In this case, Wilmington Trust (WT) was hired as an independent third-party trustee for a potential purchase …

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Incremental value process in mergers and acquisitions

Are you in the market to merge or acquire another company? Identifying four elements before the deal is complete can help make it a win-win for both parties. There are a handful of the problems that often arise in the mergers and acquisitions (“M&A”) process. To begin with, buyers tend to be overexuberant about the …

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Valuation case update: Estate of Streightoff vs Commissioner

In the case of Estate of Streightoff vs Commissioner, the IRS argued that the interest to be valued in a family limited partnership (FLP) was a limited partner interest, not an assignee interest. The Tax Court agreed with the IRS noting characteristics of the property transferred and admission requirements of the FLP. Case background Streightoff …

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Update on transaction multiples

You have probably heard valuation multiples being tossed around by owners and others regarding the value of businesses. The typical multiple referenced is a multiple of EBITDA which is defined as “Earnings Before Interest, Taxes, Depreciation and Amortization.” Owners sometimes overestimate the value of their business. Recent market data can be very instructive but must …

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