Not Just For Big Companies Recently, I was asked to speak to a group of CEOs of mid-sized companies regarding EBITDA and its importance to them as business owners. Several questions from the group centered on what I will loosely call “tax avoidance” and “tax deferral” practices commonly employed by owners of privately held companies. The questions focused upon the impact of these practices on the value of a business. The common theme from the audience was, “buyers understand owners do not wan... Read Full Story

Another look at “Valuation: Getting the Right Price When Selling Your Business”, an article by Gary Parker. I think Gary has done an excellent job of summarizing the valuation process. However, I feel that he and many others that have written about “valuing” your company have made the explanation too complicated or mysterious. This writing is an attempt to simplify the explanation of this process and to provide a conclusion that hopefully gives potential clients more comfort that professiona... Read Full Story

Middle Market investment banking activities felt the effects of the financial crisis.  M&A deal volume for the middle market fell 39 percent in 2008 compared to 2007 and has fallen even further into 2009.  The harsh credit markets have left their mark on the middle market.  The average deal value in Q1 2009 was $64.1 million, down from $93.4 million in the fourth quarter of 2007.  The decrease in average deal size can be accredited to conservative valuations due to the added risk and limi... Read Full Story

For companies with valuations less than $100 million, deal volume for the first half of 2009 was down 58% compared to 2008 as reported by the Alliance of Merger & Acquisition Advisors (AM&AA). Those numbers don’t sound like good news for company owners who are ready to sell their companies, but that’s past.  The question is, what is coming? While the history is dark, the silver lining is in the external market factors, like these: Strengthening public stock market values are waking u... Read Full Story

It comes as no surprise that some early stage companies get started with a bang because they are flush with capital from family, friends and early stage angel investors.  The excitement is palpable when some of this money has created “buzz” – articles in major newspapers and technical blogs, or TV coverage – all expounding on their products or services and how they will change our world.  By now, the management team, punch drunk on the good publicity, is convinced they are on the right track ... Read Full Story

Mistakes to Avoid In yet another demonstration of India’s growing buying power, the Tata Group acquired Jaguar and Land Rover from Ford Motors at a cost of USD 2.3 billion. The deal was ranked as one of the record breaking deals by corporate India. Acquisitions, outbound or not, have one common feature. The buyer pays the target firm a premium above its current market value. Underlying this willingness to pay a premium is the belief that the target would be worth more if it were owned b... Read Full Story

Case Study Situation: Twenty years following the launch of ConArt, a manufacturer and erector of precast architectural and structural components, Mr. Lyle found himself seeking to sell his company during the height of one of the country’s worst economic and construction industry downturns in recent history. Solution: Faced with an unusually difficult engagement, CFA prepared a detailed [...] Read Full Story

In the current market, we are faced with companies and governments requiring the expansion or renovation of their capital intensive assets in various related infrastructure market segments.  Whether expanding manufacturing facilities, implementing new infrastructure capacity or leveraging existing assets for expansion into different regions or market niches, innovative financing is often at the core of long-term projects to transform a company’s strategy.  The ability to transform and execute... Read Full Story

If You Want Funding This Year Several CFO’s have recently asked me “When will the capital markets “return to normal?”  My answer is:  Not this year.  Therefore, if you are a C-level executive that wants to obtain funding for your company, you might consider leveraging your company’s top-line gross revenues with a new form of financing structure from Entrex, Inc., based in Chicago, and Bank of New York/Mellon, and made available to you through your corporate finance investmen... Read Full Story

When stock consideration is involved in a merger or acquisition, the type A reorganization is a popular way to structure the transaction for income tax planning and compliance purposes.  Relative to the other reorganization choices described in the Internal Revenue Code, the type A provides flexibility that is not found in the other types of reorganizations.  The principal benefit of having a transaction meet the requirements of a type A reorganization is the deferral of income taxes.  If the... Read Full Story