The Future Will Probably Include Not Only More ESOPs, But More High-Percentage (70-100%) ESOPs. Here’s Why What will happen with Employee Stock Ownership Plans and Trusts over the next few decades? Many authorities estimate that as many as one out of every two businesses will change hands over that time period as baby boomers enter retirement age and look to transition their long held businesses. Where does that leave these owners? Craig Olinger takes a look at how it all may play out.
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There are Lots of Exit Options Owners Can Plan for, but Putting Together a Plan is Essential Business owners need to plan the sort of exit they hope for early on and treat exit options explicitly as part of their initial business plan. Whether owners are looking to sell outright, be acquired by another company, go public, choose simply to liquidate, or let the business run dry matters. Here’s why.
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Choosing Board Members for a Family Business Can be a Delicate Process, but with Proper Due Diligence, a Perfect Fit Can be Achieved. Mario Vicari and Tyler Ridgeway cover some of the key points in choosing board members for a family business, covering topics from how a board should be structured, how board members should be qualified and compensated, and what work should be expected from them.
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Good Values are Sometimes Overlooked. How Can Private Equity Investors Best Assess Company Viability? With nearly $1 trillion in dry powder, the private equity market is becoming steadily more competitive. EBITDA multiples are rising, PE firms are holding their portfolio companies longer, and pension funds are starting to make direct investments. So how do smart investors in private equity compete? Axial Markets talks to John McNamara, founder of LongueVue Capital, to find out how LongueVue find companies that are good values but often overlooked. LongueVue specializes in “opportunistic, situation-driven, value” by regularly looking at companies that don’t have perfect financials but…
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40 Percent of the U.S. GDP is in Privately Held Businesses. Here’s What You Need to Understand and Operate in This Market. Performing business valuation and mergers and acquisition work requires understanding a number of core discipline areas. With the expanded understanding of middle market finance, it is helpful to have a roadmap to complete any successful transaction or engagement.
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When Planning a Business Sale, Be Sure to Consider Personal Goals, Consistency, Salability, and Tax Implications Solid exit planning ensures that a business will realize top value when the owners are ready to move on. How can business owners determine which strategies to focus on today to best build long-term growth? It may depend on which exit option the owner ends up pursuing. Here are nine options to consider, and a four-step process to put in place.
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Most Business Owners Understand Interim Cash Flows. But Terminal Cash Flow May Be Most Important: More Detail on Standards of Value. Lucas M. Parris at Mercer Capital has authored a white paper at Mercer Capital that posted last month titled Understand the Value of an Insurance Brokerage that guides consultants through the process of selling out, selling in [transferring ownership to heirs], putting together buy-sell agreements, valuations for financial reporting and other ownership transfer scenarios.
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Keys to Exit Excellence: Act Now, Begin the Grooming Process, Proactively Identify Potential Acquirers, and Create Value in Your Practice Donald J. Korn writes in The Journal of Accountancy that it’s critical to be proactive in building an exit plan. Here he talks to a number of experts on the topic—including NACVA member Marty Abo, who recently was featured in Smart CEO Magazine—and collects tips on best practices:
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Successful Exit Key to Current Performance—and Future Sponsorship Opportunities Chris Manderson at PE Hub writes that in the private equity world today, sponsors’ track records in successfully exiting investments are a major factor in fundraising. If sponsors cannot exit previous investments and provide returns, they will find it much more difficult to raise subsequent funds:
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Why Choosing Good Counsel to Help with Exit Planning Can Be the Most Important Decision a Business Owner Makes Venture Resources believes many business owners don’t fully appreciate the complexities and factors that are present in the deal structuring and business selling process, including understanding how to project the company’s future, applying alternate deal structures, and maximizing current business potential. Here are some tips.
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Study: More Deals Occur in Countries That Follow Similar Financial-Reporting Standards At CFO.com Kathleen Hoffelder reports that dissimilar national accounting standards and the lack of adherence to international financial reporting rules seem to be a major deterrent to companies eyeing targets beyond their borders, according to a recent academic study. Moreover, cross-border acquisitions by companies of target firms in countries with similar accounting strictures tend to relieve CFOs and other senior executives of financial and administrative burdens, says Shawn Huang, assistant professor at the University of Arkansas and one of the survey’s authors, along with Jere Francis, a professor at…
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The U.S. Must Cut $800 or $900 billion From Our Annual Government Spending to Maintain Mid-term Economic Solvency. And That’s Just the Beginning. Flooding the system with trillions of dollars and deficits has bought the U.S. economic stagnation, writes Rob Slee in an August 20, 2012 post at MidasNation. “What a lost opportunity. One thing we learned in MidasNation over the past few years is that when owners ignore the exponentially changing market and put their heads even deeper in the sand, only bad things result. Further, incremental actions will not change the equation for the better either.…
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Acquiring Companies Need to Conduct a Brand Valuation Post-Acquisition to Comply with IFRS. Here’s Why it Makes Sense to Do it Before the Acquisition. As all companies complying with IFRS must carry out a brand valuation post acquisition for compliance, there’s a strong argument for carrying out the necessary due diligence and valuation beforehand, explains the marketing director of Intangible Business, in a piece first published in Finance Week. Valuing brands pre-acquisition helps management determine how much to pay, it can help finance the deal, prepare the team for integration and identify opportunities for the brand. Seeing as…
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Beyond Deal Price, Consider Deal Structure, Earnouts, and Appropriate Standard of Value When one company is acquiring another, the deal price is often the primary factor considered. Too many times, however, critical issues are overlooked, explains Sean R. Saari, CPA/ABV, CVA, MBA. Smart Business spoke with Saari about five questions any business valuation any acquirer needs to consider:
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Plan for Death, Disability, and a Partner Wanting Out. Here’s Why. John P. Napolitano, CEO of U.S. Wealth Management in Braintree, Mass., and 2012 president of the Financial Planning Association of Massachusetts, explains why it’s critical to think about the future, even if you’re overwhelmed with work today:
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This Long Term Plan Is of Particular Use to Owners of Illiquid Privately Held Companies Consultants can help business owners planning a sale by helping them understand how a charitable remainder trust might help. These trusts can significantly reduce owed taxes and ensure owners receive regular income in return for donating cash, securities, or real estate to a charity. It’s of particular use for owners of illiquid privately held companies. Here’s how it works.
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Shared Values and Employee Practices Drive Increased Productivity, Loyalty, and Best Customer Service The shared values and practices of employees in a company have real value that can be just as critical to a company’s success as its physical assets and market potential. Employees who passionately enjoy their work tend to be more productive, have increased employer loyalty, and offer better customer service. Over time, these factors can build or destroy a company. Here’s how.
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Intangible Assets, Switching Costs, Network Economies, and Cost Advantage Provide a Critical Edge Ron Stacey contends the answer is not a dominant market share, efficiency, or even a talented management team. Companies with lasting advantage tend to be strengthened by intangible assets, switching costs, network economies, and cost advantage. Find out why.
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Of an Estimated $72B Raised by U.S. Buyout Sponsors Through Mid-Year, 43% Has Gone to Mega-Funds PE Hub opines that while many LPs claim they favor small- to mid-sized business investments, that this year the numbers are beginning to tell a different story. There is increased investment in buyout funds doing deals of $1 billion or more in size. It may be that mega-funds while less are simply the only place public pensions and other big institutions can deploy the large slugs of the capital needed to keep their GP stables a manageable size:
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It’s Prime Time for Estate Planning Market volatility may be tough on the nerves, opines the Wall Street Journal, but it could be a boon for wealthy families looking to shelter assets from taxes while helping their children. Here’s how to devise strategies on discounts, GRATs, and loans. Additional advice: take advantage of low interest rates and exploit the federal gift-tax exemption.