Every business with more than one owner needs a buy-sell agreement to handle both expected and unexpected ownership changes. When creating or updating yours, be sure you’re prepared for the valuation issues that will come into play.
Business Valuation + Due Diligence
You’ve no doubt heard the old business cliché “cash is king.” And it’s true: A company in a strong cash position stands a much better chance of obtaining the financing it needs, attracting outside investors or simply executing its own strategic plans.
From hurricanes and floods to ice storms and wildfires, 2017 is shaping up to be one of the worst years on record for natural disasters in the United States.
How does a bank gauge your creditworthiness? Educate yourself here, to understand the risk metrics so your next loan request is successful.
Planning to Purchase or Start a Dental Practice? Here Are 12 Key Steps in Your Due Diligence Journey
If your goal is to be an owner of a dental practice, due diligence is not optional. Mistakes or oversights when purchasing, starting or investing in a practice can be costly, both financially and emotionally. This article gives a high-level view of how to create your path to the satisfaction and benefits of ownership.
For some business owners, succession planning is a complex and delicate matter involving family members and a long, gradual transition out of the company. Others simply sell the business and move on. There are many variations in between, of course, but if you’re leaning toward a business sale, here are seven ways to prepare:
Despite uncertainty about tax reform, last year was an impressive year for sales of private businesses — and that momentum is expected to pick up additional speed in 2018.
After your company makes, or is in the process of making an acquisition, it is important to understand the purchase accounting. You know about fair value, and you have studied ASC 805 – Business Combinations in detail, but what’s next? Let us help answer a few questions to help save you time and cost.
Assets typically found within the fixed asset category include machinery, equipment, and leasehold improvements. There are two choices for determining the fair value to be assigned to the fixed assets: (1) Hire a third party that specializes in the valuation of fixed assets; or (2) Provide your own estimation of fair value. Which option is best depends on a number of important factors.
If you're looking to buy or acquire a business, chances are you know about due diligence. Or at least have heard it is a good idea. But there lies the challenge - how do you know that you have done enough to feel confident that a business you are buying is a good investment or will provide you the earning potential you think it will?
This article discusses the testing of long-lived assets for impairment under ASC 360-10. It should be noted that there are significant differences between the tests required for indefinite lived assets under ASC 350-30, long-lived assets under ASC 360-10, and goodwill under ASC 350-20. Performing these tests in the proper order is critical to concluding the correct amounts of impairment (if any).
For purposes of ASC 805, items within inventory need to be stated at fair value. Fair value is often greater than their book value as book value only includes historical costs and ignores the required return accruing to inventory as it progress through the value creation process. The process of stepping up inventory to fair value often results in a greater amount of COGS in the first post transaction period and can drastically lower the expected profit of the business on a GAAP basis. Management should be aware of this and its possible effects on earn...
In 2014 the Private Company Council and FASB approved new accounting alternatives for goodwill and intangible assets that can be elected by most private companies. The accounting alternatives were designed to lower the complexity and cost associated with meeting the current standards.
This article assumes use of the Black-Scholes formula (a closed-form model); as this is the method most private companies’ use. We will explain where the typical inputs for each of these six factors are found and in certain cases, how they can be modified to fit the facts and circumstances of a specific situation.
Early in my career I was often asked to assist auditors with reviewing in-house valuations of intangible assets acquired in business combinations. I often responded to these requests with a large sigh. Having been through this process before I knew many CFOs and controllers believed they could put together an intangible valuation. After all, many CFOs … Continued
FASB approved new accounting alternatives for goodwill and intangible assets that can be elected by most privately held businesses. This article highlights (1) some of the changes allowed under the accounting alternatives, (2) areas in which companies may find cost savings, and (3) some of the potential issues with electing the alternatives.
After a lackluster 2012, domestic M&A activity is on the rise. Small business deal volume was up 62% in the second quarter of 2013 compared to the same period for 2012, according to BizBuySell.com Insight Report, which analyzes private business transactions in more than 70 major U.S. markets.
Strange as it may sound, different appraisers valuing the same company’s cash flow — a key component of business value — can come up with different numbers. This doesn’t mean that one expert is wrong, but instead that the process of valuing cash flow requires valuators to make highly subjective decisions