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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Governing agreements and holding company valuation

One of the first items we ask for when engaged to value a holding company interest is the governing agreement of that entity. This could be either an Operating or Partnership Agreement (with all amendments). Sometimes we are asked why we need the governing agreement to prepare a valuation. In the valuation of holding company …

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Succession planning v exit planning: what’s the difference?

For business owners preparing for the next chapter in the business cycle, the terminology used by consultants can be a little confusing. Most owners believe that succession planning and exit planning are the same, but they are not. We offer the following descriptions of each term to assist those of you who are looking to …

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Merger and acquisition activity and tax reform

One of the three major changes included in the Tax Cuts and Jobs Act of 2017 (TCJA) that impacts multinational companies (MNC) is the ability to repatriate cash from overseas. The TCJA makes it easier for MNCs to get cash earned abroad back to the United States. A sudden increase in cash on an MNC …

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Tax reform and the impact on divorce

With the passage of the Tax Cuts and Jobs Act (TCJA) in December 2017, most people have heard about the changes in tax brackets, the elimination of exemptions, the reduced tax rate for corporations and the qualified business deduction for certain passthrough entities. For those in the midst of divorce, or contemplating a divorce, the …

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