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M&A risks

A valuator can help evaluate whether a deal makes sense

Mergers and acquisitions often make sense on paper. A buyer may pursue a transaction to increase market share, compensate for operational weaknesses or acquire talented workers in a scarce labor market. But despite the best-laid plans, many mergers and acquisitions fail to increase shareholder value. This article discusses the factors that may cause such a transaction to fall short of expectations, and how a valuator can help businesses avoid potential problems.

Truth or fiction?

The small stock premium debate

Many experts consider small companies riskier investments than their larger counterparts. For instance, compared with large conglomerates, small businesses are more likely to suffer from key person and concentration risks. To accommodate these risks, investors generally demand a higher return for purchasing stock in small businesses. But the IRS is increasingly challenging the small stock premium. This article highlights the importance of a thorough valuation report in demonstrating the validity of the small stock premium.

Business valuation designations

This article provides a chart designed to help familiarize readers with the most common business valuation designations to enable them to better select qualified experts to assist them with their valuation needs.

Noncompetes can create nasty tax surprises

Noncompete and other employment agreements are designed to prevent shareholders or partners from taking clients with them when they leave a company. But if these contractual obligations remain in place when a company liquidates or an owner cashes out, they may lead to tax deficiencies for both the company and the individual owners. This article analyzes some recent Tax Court cases to illustrate the possible tax implications of these agreements and how owners can protect themselves.

Industry consolidation and value

Industry consolidation may significantly affect a company’s value. This brief article lists some of these possible effects, including enhanced liquidity, greater uncertainty and inflated pricing multiples.