Can you, and should you, apply a discount for lack of control when valuing a majority interest? Well, with almost everything valuation related, it depends. A recent tax court case (Estate of Warne v. Commissioner) allowed a small discount for lack of control discount for majority interests in several Limited Liability Companies (LLCs). Don’t miss: …
Question: Have you heard of EBITDA multiple erosion? EBITDA multiple erosion is the process where the buyer has exclusivity with the seller (after the letter of intent is signed) and begins the financial due diligence process. All the negotiation power moves from the seller to the buyer during this period and this is when the …
Employee Stock Ownership Plans (ESOP) are qualified retirement programs available to corporations with tax advantages to both the employees, the company and the owner/former owner. ESOPs are formed with the creation of an ESOP trust which buys the stock, in part or in whole, from a shareholder or shareholders of the corporation. The selling shareholder …
Ownership disputes occur among owners of any type of company – corporations, limited liability companies, partnerships, or any other legal business entity. They appear in one of two forms: Dissenting Shareholder Actions – This type of dispute arises when minority owners believe that they are receiving less than fair consideration to which they believe they …
Sometimes, the family business will not pass to the next generation, even though the kids currently work in the business. There are many reasons why the kids do not want to take over the business. Reasons range from their current lifestyle is pretty good so they do not want to spend day and night being …
By way of background, when a buyer purchases an existing business, in most cases it is in the form of an asset purchase—or stated another way, the buyer sets up a vanilla shell legal entity and purchases all the assets of the selling business and then records the assets at fair value on the newly …
The National Center on Elder Abuse has identified seven different types of elder abuse. These include physical abuse, emotional abuse, sexual abuse, financial/material exploitation, neglect, abandonment and self-neglect While I think we can all agree that physical, sexual, or emotional abuse of anyone, especially the elderly is horrific, any form of abuse can be devastating …
In simplest terms, working capital is the difference between current assets and current liabilities that are recorded on a company’s balance sheet. It provides an indication of the short-term solvency of the enterprise and includes assets such as cash, accounts receivable, inventory and prepaid assets also known as operating current assets. Alternatively, enterprises also record …
I have had the good fortune of having the opportunity to write articles for numerous local and national accounting and financial publications. In addition, I have authored many blogs which have appeared on my firm’s website. Every so often, I am requested to produce a copy of one of my articles to an opposing party’s …
As a business valuation professional and CPA, I am often my family and friends’ first phone call regarding all sorts of financial questions and concerns. However, the most common question I come by is “How do you value a business?” The answer is far simpler than the application, but it is similar to how a …
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