SELLING PRIVATELY HELD BUSINESSES


–SINCE 1982–

Articles & News

Tax Strategies for Business Owners

The 2013 tax year will be a Brave New World for many closely-held business owners. A number of tax rates are increasing, depreciation incentives are ending, and then there’s the Affordable Care Act (ACA). Business owners face many new tax challenges in 2013. Business owners will want to identify how these many changes will affect both their business and personal taxes. New tax rate increases in 2013 The legislation early this year that added a new top bracket for higher-income individuals was well-publicized, but 2013 has a whole array of tax rate increases applying at varying income levels: New ACA

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Commercial Real Estate Financing Options for Owner-Users

Although we will occasionally complete a transaction without any type of leverage, the majority of our transactions involve some type of bank financing. In larger transactions involving strategic acquisitions and Private Equity Groups, the acquiring entity usually has financing relationships in place. However, for transactions under $5,000,000 involving individual acquirers or smaller companies, we usually see financing involving an SBA guaranteed loan of one form or another. The SBA guarantee not only provides down side risk to the lender, it enables the borrower to get into a transaction with a lower down payment and a longer amortization period to pay

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Year-End Tax Planning With a Potential Sale Looming

The end of the calendar is typically one of the busiest periods in the M&A industry. There are usually tax and other considerations, in completing a transaction at year end or the beginning of the new year. This year is no exception and, in fact, we are busier than usual as 2015 has just surpassed 2007 as the most active year for M&A activity, and we anticipate that this trend will carry over into 2016. Last month, I attended an industry conference which was attended by several dozen Private Equity Groups looking for acquisitions and, based on my conversations with

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New Year’s Resolutions for Business Owners Contemplating a Sale

January is customarily the month noted for people making resolutions. If you are a business owner and contemplating the sale of your business within the next three years, let me suggest a few resolutions that might assist you with making your business more valuable and attractive to the marketplace. 1.  Start running your business like a business; not your personal checkbook. No one likes to pay taxes, but profits are important to buyers and lenders to prove that the business will be able to pay back debt and generate an appropriate income to sustain the buyer. The more income that you

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Combined Business and Real Estate Sales

When we are dealing with a business owner that owns the real estate that the business occupies, we are often asked about the best way to treat this underlying real estate. Unless there is a particular circumstance that clearly dictates the decision, our response is almost always to be flexible and be prepared to keep or sell the real estate to maximize the marketability of the business. In most situations, it is more difficult to sell the business than the real estate and the business owner has some options to achieve the desired outcome. For combined transactions of $5,000,000 or

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For Sellers – Going to Market Without a Price

Although we value every business, we may have a conversation with our sell side clients about the advisability of going to market without a price, which is confusing to some buyers and some sellers.  With the goal of eliminating some of that confusion, we believe it is appropriate to explain the thought process we go through when advising our clients. In most cases, the decision is fairly simple, as in discerning black from white.  It is the middle portion of the spectrum, with the multiple shades of gray, where the decision becomes more challenging.  For smaller, less complex businesses with

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Why it is Important to Pay Attention to Your Balance Sheet When Selling Your Business

I am currently involved with one of our associates in negotiating the sale of one our client’s companies. It is a desirable, growing business that attracted five offers from a diverse group of acquirers. Three of them are strategic industry buyers, one is a strategic buyer from a complementary industry, and one high net worth individual. Like many lower middle market transactions, the transaction was structured as an asset acquisition, rather than a stock sale. To facilitate a presentation to our client, my team prepared a spread sheet, comparing the proposals on an “apples to apples” basis. On their face, most of the

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Understanding the Difference Between a Stock Sale and An Asset Sale

There are two primary ways to structure the sale of a business; an asset sale or a stock sale. Although, many potential business buyers and sellers do not have a good understanding of the differences between a stock and an asset sale, the format of the structure can have significant tax and liability ramifications. In a stock sale, the buyer buys all or a portion of the outstanding stock of the target business. As a result of the transaction, the buyer receives all of assets, including cash, of the selling company. The buyer also gets all of the liabilities, known and

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Going to Market Without a Price

As is typical at this time of year, we are seeing a significant amount of transaction activity.  Not only are we receiving year-end financial data from existing clients, but potential clients are providing information relative to valuation in anticipation of going to market.  Because valuations are front and center covering a significant portion of the surface area of my desk, I thought that an appropriate topic for this month’s article should at least be somewhat tangential to valuations. Although we value every business that we represent, we may have a conversation with our sell side clients about the advisability of going to market

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Having Your “Legal Ducks” in a Row Before Sale

By Kevin M. Forbush, J.D., CPA, Forbush Legal Offices, P.C. In many endeavors in life, good outcomes depend on good planning.  From securing a happy family vacation to ensuring you have enough money for retirement, good planning is key.  Not surprisingly, the same is true for a successful, profitable business sale – planning is key.  Remember, proaction is always better than reaction. Though most agree in principle that planning is important, many business owners often fail to plan for the sale of their businesses.  Not surprisingly, these people then end up not being able to sell, sell for much less than

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