Navigating Liquidity, Valuation, and Risk When exits slow down, everything else starts to feel tighter. That is where many sponsors are today. In this article, the authors discuss the reasons for the longer exits and ramifications. Private equity runs on exits. When exits slow down, everything else starts to feel tighter: fund timelines, liquidity planning, and even conversations with investors. That is whe ...

When You are Retained by Counsel for the Out-Spouse Valuing private equity and hedge fund general partner interests is a complex matter. Valuing them in a divorce proceeding can be an even more complex matter. The focus of this article is to share the challenges valuators may face when engaged to value general partner interest in private equity and hedge fund businesses in divorce matters when NOT engaged b ...

Third Quarter 2022 2021 was a significant year for business owners who chose to exit via a sale of their privately held businesses. The government’s response to the COVID-19 pandemic pumped billions of dollars into the economy, helping to drive a robust mergers and acquisitions market led by aging baby boomers preparing to retire and concerned about the prospect that the Biden administration was potentially ...

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 ...

Analysis of Deal Stats Pre- and Post-COVID-19 This article will review PE activity generally, and in the healthcare industry, during the COVID-19 pandemic, and discuss what is expected for the remainder of 2021, as the economy evolves in response to a post-pandemic America. The involvement of private equity (PE) in the healthcare industry in the first quarter of 2021 disappointed investors after the number ...

How to Avoid Romance of the Deal through Cold-Hearted Diligence This paper attempts to address these issues while presenting summary critical considerations that can and do mitigate the likelihood of unintended consequences and deals that fail to deliver. Specifically, it will speak to how advisors and buyers can verify and substantiate the most critical and yet intangible value drivers in a deal. Recently, ...

Private Equity’s Fast and Furious Entry into Healthcare (Part III of III) The third of this three-part series examines why private equity and venture capital firms are targeting the healthcare industry and the issues that they encounter managing their healthcare portfolio. Private equity (PE) and venture capital (VC) firms are attracted by the potential for growth that exists in the healthcare industry; how ...

Introduction: The Fundamentals of Private Equity (Part I of III) Why is private equity becoming increasingly involved in the business of healthcare? How will their involvement affect the delivery of services? This first installment of a three-part series will describe the fundamentals of the private equity industry, in general, and set forth a common terminology that will be utilized throughout the series. ...

to Valuation of a Healthcare Practice or Entity A valuation consultant must understand the type of healthcare entity he or she is valuing, the opportunities and risks as discussed above, the potential buyers, the marketplace, and typical valuation multiples for specific types of deals. Extensive research into these areas will lead to a significantly better and more informed valuation. The author discusses t ...

Delay at Your Peril In this article, the author, a business broker, shares his views on how the coming retirement of business owners will impact business owners themselves and what business owners should consider when meeting with a prospective business broker. ...

The first three quarters of 2017 were active for U.S. markets.  Major indices were characterized by low volatility and upward momentum against a backdrop of tightening monetary policy and strong economic indicators.  Private equity saw steady deal flow despite challenging market conditions, and record levels of venture capital deployment were seen amidst declining deal volume as capital continued to gravita ...

In Mercer Capital’s most recent issue of Portfolio Valuation: Private Equity and Venture Capital Marks and Trends, they provide a brief digest and commentary of some of the most relevant market trends influencing the fair value of private equity and venture capital portfolio investments.  Key highlights are covered in their Third Quarter 2017 newsletter. To read the full article in Mercer Capital's Financia ...

With the second quarter of 2017 in the books, we ran the numbers and sifted through the data to recap all the key info on global PE activity during 2Q.  Powered by the PitchBook Platform, our quarter-end datagraphic looks at fundraising (which had a huge quarter), deal and exit activity, top investors and more. To read the full article in PitchBook, click: A Visual Recap of Global PE Activity in 2Q 2017. ...

In our most recent issue of Portfolio Valuation: Private Equity and Venture Capital Marks and Trends, we provide a brief digest and commentary of some of the most relevant market trends influencing the fair value of private equity and venture capital portfolio investments.  In this blog, there are key highlights covered in our Second Quarter 2017 newsletter. To read the full article in Mercer Capital's Fina ...

What risk assets are not near record valuations, aside from assets in a few sectors such as energy and retail?  Investing when multiple expansion occurs over a holding period is a great thing, but multiples cannot expand forever; they also can contract.  Jeff Davis, managing director of Mercer Capital’s Financial Institutions Group, explains. To read the full article in Mercer Capital's Financial Reporting ...

Transaction Structure Considerations on Target Company Value Valuation analysts do not have to be investment bankers to value an M&A candidate, but they do need to understand taxable and non-taxable stock acquisitions. This discussion summarizes some of the tax benefits—and some of the tax complexities—associated with a taxable stock purchase deal structure. Although the analyst is not expected to be th ...

IRS Wins, Business Founders and their Families Lose Is cheap debt good for closely held families? Are closely held business overleveraged? Are FLP discounts about to come to an end? Why aren’t business founders and their families doing more to counter the proposed regulations that would target family business transfers? What should valuation professionals do in this environment? Dr. Sheeler answers these qu ...

Part 1 of this series offered an overview of observed transaction premium data (from the 2016 Mergerstat Review) for acquisitions of public companies.  That post also deliberated on one of five common avenues to incremental economic benefits that motivate market participants to transact.  Part 2 walks through the four remaining variations on the incremental economic benefits theme, and offers some concludin ...

The International Private Equity and Venture Capital Valuation (IPEV) Guidelines were developed in 2005 to set out recommendations on best practices in the valuation of private equity investments.  Karolina Calhoun, senior financial analyst with Mercer Capital, looks at the draft amendments to the existing guidelines published in October 2015. To read more about the results of this report in the Mercer Capi ...

If It’s Ready Scott Bulloch, an exit planning professional and advisor, shares his views on why now companies with EBITDA of $1,000,000 or more are attractive to private equity. While there are companies that will meet the minimal thresholds, not all are ready. Is your company or that of your client’s ready for private equity? ...