SOX costs have shifted private firms exit strategy, new study says
The costs of complying with the Sarbanes-Oxley Act of 2002 (SOX) for private firms that are still trying to find an efficient if not profitable exit strategy is the subject of a new study by Francesco Bova and Gordon Richardson (Univ. of Toronto), Miguel Minutti-Meza (Univ. of Miami), and Dushyantkumar Vyas (Univ. of Minnesota). Among [...]
You can’t do estate planning without sound business valuations
BV.com was talking to Bob Buchanan (PCE Valuations) who’s attended a bunch of estate tax planning meetings recently. “The change in the tax law does not impact the necessity of obtaining a well-reasoned, independent valuation,” says Buchanan. He also believes:
“Valuation of holding-type entities like LPs and LLCs is no longer simply an application of discounts based [...]
Pitchbook reports that PE to PE deals are dominating the market
Here’s an interesting factoid reported today by Pitchbook about the current market for buying and selling private firms–and, as we’ve all noticed, more and more of them are private equity firms buying from private equity firms:
Secondary transactions, or sales from one PE investor to another, have exploded this year. So far in 2010, there have been 121 [...]
Selling your company to management sounds like a good idea, but…
by Dave Kauppi, CBI, principal at MidMarket Capital Advisors, LLC
Many owners think that selling their company to their management team is a great way to reward loyal employees for years of service. This article discusses difficulties the owner’s exit planning team will have implementing a management buy-out and puts forth an alternative approach which accomplishes [...]
Key elements in prenuptual agreements to protect your company
A quick analysis today on Inc.com summarizes the following key elements in any pre-marital agreement to keep an existing business as separate property (with the note that states treat separate property differently):
The agreement must be in writing (No oral prenups)
It must be executed voluntarily and without coercion (having your fiancé sign a prenup the day [...]
Dreaming of an IPO? Perhaps “plan B” might be a better idea?
David Weild and Edward Kim (both from Grant Thornton) map the demise of the IPO market in their newly updated study “Market Structure is Causing the IPO Crisis.” Among their current findings:
The IPO crisis has worsened. “The first six months of 2009 represents the worst IPO market in 40 years.” During that time, only 12 companies [...]
Are you going to offer stock options to key employees? You’ll need a valuation under 409A regs
Neil Beaton, National Valuation Partner for Grant Thornton and a great friend to BV.com, reminds our readers that stock options require annual business valuations. He was quoted on this subject last week by Business Week: “In 2004 legislation was passed that resulted in IRS code section 409A, which governs deferred compensation. Most stock [...]
Be careful about valuation clauses in your buy-sell; a court may decide it’s all you have!
Earlier this year, when reviewing the shareholder’s request for a statutory buy-out under Texas law, the bankruptcy court concluded that it had three options to value his 8% interest: 1) the shareholder’s expert valuation; 2) book value; or 3) the buy-sell provision in the company’s shareholders’ agreement.
The shareholder’s expert used a capitalization of income approach [...]
Having trouble selling your minority shares? Try these new “secondary markets”
Adam Oliveri, Managing Director for SecondMarket, told commercial lawyers at the ABA Business Law Sections annual meeting in Denver last weekend that “the public capital markets are broken.” This comes as no surprise to BV.com readers!
SecondMarket is one of the new centralized sales platforms for illiquid assets, and here’s some evidence from Oliveri regarding [...]
A simple question that some owners chose not to answer
When thinking of succession planning, there are many standard questions–do the kids want the business? Am I taking enough out of the business for retirement? Do I want to keep working? What do my partners think?
But, BV.com’s interviews show that a surprising number of owners don’t, won’t, or can’t answer the simple valuation question; [...]
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