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Six Reasons NOT to Skim
August 9, 2017 / in Business Strategy, Exit Planning, Sell a Business / by Don Ross
Pulling unreported cash receipts out of a business is indefensible and unwise under any circumstances, but particularly if the owner expects to exit in the next 3-5 years. All of us during our childhood were offered the parental edict: “Don’t do it, you are only hurting yourself.” So “why”, you may ask . . . now that you are a grown adult, “should I not skim?” Many reasons immediately come to mind and I am certain …
Proposed IRC Section 2704 Regulations – What’s all the fuss about?
August 3, 2017 / in Business Valuation / by Bob Altieri
Long-awaited proposed regulations under section 2704 of the Internal Revenue Code, released on August 2, 2016, would make sweeping and very significant changes to the valuation of interests in many family-controlled entities for estate, gift, and generation-skipping transfer tax purposes. For decades, the IRS definition of Fair Market Value (FMV), which is based on the concept of the hypothetical financial buyer, are typically completed on a control basis (more than 50%, but usually 100%), as …
Show Me the Money: Financing Strategies for Small Business Acquisitions
July 21, 2017 / in Acquire a Business / by Adam Wiskind
Of the many considerations when purchasing a small business, one of the most important is how to finance it. Even if you have all of the cash you need to buy a business, as a smart investor you will consider whether you are better off borrowing some of the money or bringing in an equity partner to spread the risk. Each source of business acquisition financing has its benefits and drawbacks. Before you identify a business that meets …
Exit Strategies Advises RST in Strategic Sale to Subsite Electronics
July 6, 2017 / in News, Sell a Business / by Al Statz
Exit Strategies Group, Inc. (ESGI) is pleased to announce the acquisition of its client, robotic inspection equipment manufacturer RS Technical Services, Inc. (RST), by Subsite Electronics, a Charles Machine Works company. Exit Strategies served as exclusive M&A advisor to RST. Acquired by: Since 1984, R.S. Technical Services, Inc. (rstechserv.com) has been a leader in the design and manufacture of robotic video inspection equipment used to monitor and repair municipal water and wastewater collection and conveyance …
Buy Low, Sell High
June 13, 2017 / in Exit Planning, Sell a Business / by Exit Strategies
Timing is everything. Almost everyone is familiar with the world’s greatest tip to stock investors, “buy low, sell high.” These simple words of wisdom are equally useful to private business owners; however, sage advice is not always easy to follow in the same moment you’re reaping the benefits of high profitability. With the current bull market in its eighth year, the lower middle market is economically healthy across many industries. I talk to business owners …
Goethe on Exit Planning
June 2, 2017 / in Business Strategy, Exit Planning / by Al Statz
Early this morning at my Rotary meeting I heard a quote that struck a chord with me. Our speaker, Stephan Stubbins, recounted the story of how he co-founded a successful theater company that helped save one of our local state parks. Once Stephan and his partners quit their jobs and fully committed themselves to starting a theater company, things started to happen for them. The quote he shared is by Johann Wolfgang von Goethe ( 1749 – 1832) the prolific German …
Which Business Valuation Will Facilitate Negotiation?
May 22, 2017 / in Business Valuation, Exit Planning / by Exit Strategies
You are getting ready to sell your business so you must ask yourself some questions: When do I want to exit? Who are the most likely buyers? Is my business adequately prepared to sell? How does it compare to other like businesses? And of course, what’s my business worth? All business valuation relies on some prediction of the future. Business appraisers apply a variety of adjustments to financial statements, theoretical constructs and historical data to …
Hidden Problems with the Price Formula in Your Buy-Sell Agreement, and Solutions
May 12, 2017 / in Buy-Sell Agreements / by Al Statz
It is tempting to select a formula approach to pricing shares when business partners come and go. After all, a formula is easy for everyone to understand, and in theory at least, inexpensive to apply. If you’re satisfied with getting to a price, any price, then congratulations – job done. But the goal is to arrive at a price that is fair to all concerned. This article discusses some of the unforeseen problems with buy-sell …
Why Start-Up when you can Acquire a Business?
May 8, 2017 / in Acquire a Business / by Adam Wiskind
The successful start-up entrepreneur has been glamorized in the media through reality shows like Shark Tank and wide spread accounts of people that have become fabulously wealthy growing a business that started with a kernel of an idea. However it’s no secret that the rate of start-up failure is notoriously high, according to the bureau of labor statistics about 50% fail within the first five years. With odds like that it is no surprise that …
Make No Mistake: The IRS is Serious About Qualified Appraisals and Appraisers
May 3, 2017 / in Business Valuation, Exit Planning / by Al Statz
The IRS and the Tax Courts are serious about requiring taxpayers to properly determine the value of non-cash estate assets, gifts and charitable contributions. To avoid having the value of an inherited, gifted or donated privately-held business interest challenged or rejected by the IRS, obtain a qualified business appraisal (valuation) from a qualified business appraiser. The IRS defines a qualified appraisal as one that: is performed in accordance with generally accepted appraisal standards; meets the relevant requirements of …
Exit Strategies Group, Inc. is a leading provider of business sales and acquisitions, business valuations, and exit planning services for family owned and closely-held companies since 2002.
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