Prioritizing client education to empower decision makers throughout their transaction

Privately owned businesses that hold debt and operating leases should prepare for significant changes to their financial statements in 2020. Loan agreements often include financial ratio covenants that must be maintained by the borrower to be compliant. New lease accounting standards have changed how operating leases are treated in financial statements, which may have a material impact on financial ratios.

Watch time: 7 minutes

A letter of intent (LOI) is often among the first documents negotiated in an M&A deal, and for good reason. The LOI declares a commitment between the buyer and the seller to enter a transaction, and it outlines the key terms of the transaction agreement. By defining binding and nonbinding terms of the agreement, the LOI provides protection to all parties involved.

Watch time: 8 minutes

When you decide to sell your business, you and the buyer will need to agree on a way to structure the sale — either as an asset sale or a stock sale. But because you’ll have competing interests, what’s good for the buyer may not necessarily work for you. Understanding the differences in how asset and stock sales are structured is key to ensuring you benefit optimally from the transaction.

As a business owner, you know debt can provide an effective, low-cost solution to financing business operations. The tax deductions allowed on interest expense are an added benefit, lowering the capital cost even further. Adding debt to your capital structure also boosts your return on equity. There are different types of debt, and each has its pros and cons. Additionally, each type of debt has different rights in the business’s capital structure and serves diverse purposes. Here, we’ll look at two common types of debt financing.

Watch time: 6 minutes

An employee stock ownership plan (ESOP) is both a retirement benefit plan for employees and a tax-advantaged way for business owners to sell all or part of a business. More specifically, for the employee, an ESOP is much like a 401(k) plan because it is a defined contribution plan sanctioned under ERISA.

Strategic buyers are often willing to pay more than what financial buyers will pay due to the synergies generated in the transaction. Synergies are often a contributing factor driving strategic buyers to make acquisitions. As a business owner, it is important to understand how strategic buyers analyze synergies and how that impacts what they are willing to pay.

One of the most important steps in a sell-side transaction process is for potential buyers to meet the sellers and visit the business in person. It is hard to imagine someone buying a new home without seeing it in person; similarly, any serious buyer will need to meet the management team and see the facilities before acquiring the business.

Watch time: 9 minutes

The purpose of the ESOP transaction process is to analyze the needs of the shareholders, the company, and the employees to create an ESOP that meets the desires of all parties. The ESOP transaction process is broken into two phases for the shareholders: 1.) Discovery and 2.) Implementation.

Watch time: 18 minutes

In this video we explain why CPA's, attorneys and wealth managers should offer this dynamic succession strategy to their clients. More specifically, we discuss what an ESOP is, what kind of companies are best suited to an ESOP structure, and the role of various advisors in the ESOP transaction process, both before and post transaction.

Once you have identified a buyer and determined the purchase price for your company, it is time to negotiate the terms and conditions of the sale. These items are outlined in the purchase agreement, the primary legal document in any sale process.