Key Actions to Undertake to Increase the Price of a Company This article provides a brief overview covering what the author—a middle market investment banker—believes is the most worthwhile and impactful actions that anyone contemplating the sale of their business can take right now to set themselves up for success in a future transaction process. The author recommends that prospective sellers and their adv ...

Six Months In Special Purpose Acquisition Companies (SPAC) have been a prime focus of the SEC over the last six months. On April 12, 2021, the SEC issued “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies” to highlight potential accounting implications and provide guidance on making the determination between classifying the warrants issue ...

Questions from the NACVA Conference Regarding Discounting Lost Earnings for Self-Employed Individuals In June 2021, the author of this article made a virtual presentation at the NACVA and the CTI’s Business Valuation & Financial Litigation Hybrid & Virtual Super Conference. The presentation was “Estimating Economic Loss of the Self-Employed: Lost Profits or Lost Earning Capacity”. One of the attende ...

Post Closing Task List This article provides readers with a checklist used at a business transaction that just closed. The list was adapted from e-mails sent by the author to clients immediately after the closing. The list includes what they can and should do following the closing and is a way to further involve oneself in post-closing activities. The list collects all the different things (personal, invest ...

And S Corporation Acquisitions Analysts should be aware that one transaction tax structure that is particularly popular regarding private equity firm acquisitions is an Internal Revenue Code Section 368(a)(1)(F) reorganization of the private S corporation. The article discusses several of the reasons why owners may want to sell—and why private equity firms may want to buy—an S corporation target company. Th ...

A Data Analytics Approach The valuation of minerals and renewables falls outside the usual guidelines of real property appraisal, where real property broadly defined includes land, everything permanently attached to it, at, above, and below the earth’s surface and all the interests, benefits, and rights inherent in the ownership collectively referred to as “the bundle of sticks”. This is because most apprai ...

Communicating Value “Comparing apples to oranges” refers to contrasting two or more items that are similar, but that have important differences. While apples and oranges are both fruits, they have different flavors, colors, textures, etc. In a business valuation, comparing enterprise value to equity value is like comparing apples to oranges. Both measure the value of a business, but the results can differ s ...

Diversify the Revenue Sources Valuation consultants usually have training and experience with the process of normalizing owner compensation. They may also have access to compensation comparability data, which is a collection of actual amounts paid by other employers which can be sorted. Therefore, valuation specialists may already have what they need to begin adding compensation consulting services to their ...

When Guideline Companies are Not Very Good? When given a choice, do you prefer to minimize errors of commission or omission? The answer will likely influence your view as to whether the market approach should be used when valuing a company with guideline companies that are not very good. Someone who seeks to minimize errors of commission will likely exclude the market approach due to the difficulties in exe ...

Probability and Scenario Analysis In this article, the author explores considerations in valuing SPAC founders’ equity for these purposes. Marcum LLP has been active in assisting sponsors of special purpose acquisition companies (SPAC) with registration and other aspects of initial public offering (IPO). Where appropriate and permissible under the relevant independence rules, we have also assisted our non-a ...

The two most widely approaches used by valuators to determine a discount for lack of marketability (DLOM) are restricted stock studies and IPO studies. The restricted stock studies compare transaction prices in restricted shares with contemporaneous trading prices for unrestricted shares. The pre-IPO studies, on the other hand, according to the author, lead to conclusions that are unsound in theory and in p ...

The Ratios and Use of Comparative Analysis Accounts receivable are such an important asset class that company management will be anxious to convert these to cash as soon as possible so that the company is not “overinvested” in its accounts receivable. Accounts receivable ratios are essential analytical and planning tools. There are various analytical tools that can be used by management to compare performan ...

Not Just for the End of Your Career What is the value of an independent insurance company? In this article, the author shares the reasons—other than for transactional reasons—for knowing the value of an independent insurance agency. Over the past several years, I have worked with many agency owners across the country helping them understand the value of their agencies. It is some of the most rewarding work ...

Healthcare Valuation 2021 Update The COVID-19 pandemic has impacted nearly all businesses and is poised to continue to do so through at least the end of 2021. In healthcare, there has been additional issues due to the industry’s unique position at the crossroads of the front line of care and policy response. As of January 19, 2021, important updates have gone into effect concerning the two most significant ...

After the COVID-19 Pandemic The COVID-19 pandemic put a strain on the U.S. and global economies as well as individual lives throughout the world. As much as most people would like to put 2020 behind us, experts will have to continue to review financial returns from 2020 in the historical data for businesses claiming to have been injured by wrongful acts in 2021 and the future. As much as an expert would lik ...

Implementing the Practicability Exception under ASC 2016-01 An adverse economic consequence of COVID-19 that has made headlines is the significant impairment charges business entities have taken related to their non-financial assets, such as intangible assets and goodwill. Less notable has been the pandemic’s similar effect on an entity’s financial assets, including equity securities without readily determi ...

No Tulip Bulbs Here! What is a non-fungible token (NFT)? How are NFTs valued? This article discusses NFTs and the valuation challenges these present. What is a non-fungible token (NFT)? Recently, the media has seemed to catch on to the new(ish) invention—NFTs. Even the recent episode of Saturday Night Live (SNL) has featured an entertaining segment explaining the nature of NFTs to the rhythmic beat of an Em ...

Benefit Valuation Adjustment The so-called tax amortization benefit (TAB) adjustment represents the present value of the federal income tax savings resulting from the tax amortization of an acquired intangible asset over a statutory period. Internal Revenue Code Section 197 allows the cost of certain acquired intangible assets to be amortized for federal income tax purposes. However, not all acquired intang ...

for SBA Lending Programs Despite the pandemic, the number of small businesses started continues to increase. This article discusses the various Small Business Administration (SBA) programs and the value of serving these lenders. “Success is a full-time job.” Grant Cardone Any entrepreneur or a small business owner would agree that running a successful small business is a full-time job. To run it well requir ...

Operating v. Non-Operating Assets With the growth of the digital economy, new types of assets have emerged that may be subject to property division in divorce. An increasingly common example is credit card reward points. No one may actually “own” these points, since the written agreements for rewards programs commonly state that points are not the cardholder’s property, have no cash value, and cannot be tra ...