The presence of personal goodwill in a business transaction is important. Personal goodwill can provide tax-efficient opportunities in a merger and acquisition transaction by alleviating corporate tax upon the sale. Read More
The U.S. Department of Labor has a 2014 initiative to closely examine and scrutinize ESOP valuations. The U.S. government is increasing their scrutiny of business valuations of ESOPs (Employee Stock Ownership Plan) within sponsoring companies as a result of the inflated values and per share discrepancies in values in recent years. The Labor Department is currently involved in 15+ lawsuits, most of them involving business valuations as the central issue in dispute. The claims include deliberate inflation of values harming the ESOP Plan and the participating members of the plan. Read More
In the past, most companies focused on their tangible assets such as buildings, equipment, receivables, inventory, etc., as composing the value of the business. Not much attention was paid to intangible assets. In recent years, this has changed and companies realize that their most important assets consist of their intangible assets such as brands, technology, patents, trademarks, proprietary processes, etc. Some leading corporate brands today include such companies as Apple, Google, Disney, Coca Cola and Nike to name a few and they are aware of and focus intricately on their brands. Read More
There are times in litigation matters, when a company or an investor in a company may be required to have a business valuation performed. Read More
Do you know the value of the Intangible Assets in your company? What are Intangible Assets? There are two types of intangible assets: Read More
Is your company in acquisition mode? If your company is in the process of acquiring other companies for complementary products or services or for strategic reasons, such as a strong customer base or to eliminate a competitor, then you should have the company to be acquired valued or have a quality of earnings analysis performed to ensure that your company is not overpaying for the business.
In recent years, companies have been entering into acquisitions without proper due diligence or obtaining an independent valuation of the business and after the fact they learned that the business was not worth the premium paid for the business.
Are you a business owner thinking about selling your business? If you are a business owner contemplating or in the process of selling a business, do you know the real value of the company? Most owners of companies believe that the value of their company consists of the fixed and tangible assets.
For many companies, the largest asset in the company is the intangible asset value. This value may consist of discrete intangible assets in the form of intellectual property (IP), proprietary processes, patents, copyrights, trademarks, brands, etc. Or the value may entail the non-discrete intangible assets in the form of professional or personal goodwill value that is generated by the company’s human capital. Many companies do not include intangible asset value in the purchase price when they list the business.
Before listing the business for sale and definitely prior to entering into a letter of intent to sell the business, have a business valuation performed on the business to understand the components that make up the value in the business. This will aid the business owner to better negotiate with potential buyers and have compelling support for the listing price. In other words, negotiate from a position of strength.
Don’t be a seller who leaves millions of dollars on the table because you didn’t understand the real value of your business.
Employee stock incentive programs, that directly connect compensation to the growth of a company, as motivation benefits for employees, pose significant complexity, especially for privately held companies.
Did you know that the Internal Revenue Code §409A mandates that if stock or stock options are issued with a strike price less than the Fair Market Value (FMV) of the stock at the time it is issued, then the employees will be subject to income tax on the deferred compensation, and the company will be subject to complicated accounting rules and tax consequences.
A company may avoid these tax consequences by complying with IRC 409A, which requires that a business valuation be performed within 12 months (or more frequently) of issuing the stock and/or stock options.
The Wall Street Journal raised awareness this past week on the fact that the Department of Labor (DOL) is increasing scrutiny on Employee Stock Ownership Plans and the ways that these companies have been valued. In the past, a few valuation companies have inflated per share values to meet business owners requests at the expense of the employees who owned shares as part of the employee stock ownership plan. Read More
Avenue M presented to a Bar Association on general valuation issues. Listen to a short segment from the presentation. Read More