When ownership disputes leads to business valuations

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 …

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My kids don’t want to take over the family business! Now what?

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 …

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Are sellers of privately held companies leaving money on the table?

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 …

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Working Capital: What is it and how does it affect a transaction?

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 …

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Business valuation during a pandemic

One of the first things we must understand is the effect of the valuation date on a valuation. A valuation is performed as of a date in time. That date is often determined by the circumstances which have led to the need for a valuation. For instance, a valuation for estate tax filing is the …

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Gifting your business as part of your succession plan

You have built your small business on your hard work and sweat. You may even have your son/daughter/niece/nephew or other family members working with you in the company. Now you are ready to move on, or at least slow down. You may start planning on gifting your business to someone else. Often times a small …

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Tax implications of stock vs. asset sale

As professional tax advisers we are often asked to comment on the tax implications our clients will face if their business is sold. From an income tax perspective, the buyer and seller are typically faced with structuring the deal as a stock sale versus an asset sale. These two strategies can result in significant tax …

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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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Top 5 red flags of earnings management

Earnings management (“EM”) is the practice of earnings smoothing. Research shows there are three reasons why managers engage in EM. They include: optimal contract design, signaling and rational expectations. One example of an optimal contract design is when management’s compensation is tied to the earnings of the firm. Risk-averse managers will engage in EM to …

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6 Steps to know when you want to sell your business

If you’re a business owner and preparing to sell soon, these six steps will prepare you for an orderly and well-orchestrated process: Identify your personal and business goals. For most business owners, much of their personal wealth is in their business. Therefore, it is important to integrate your personal and business goals. Start by speaking …

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