BlueWater Articles

Chart the Best Course Deciding To Keep or Sell a Family Business
After 20 years at the helm of the family business, Maite is considering selling the company next year. After all, her company has satisfactorily matured, and she believes the time may be right to put it on the market. But questions plague her. How can she be sure it’s the right thing to do — for her, for family members active and inactive in the business, and for loyal non-family employees? The answer, of course, depends on numerous factors, including the company’s value and current market conditions. This article discusses pertinent considerations for those selling a family business. (continued)

Taxing Considerations for Business Sellers
When selling a business, tax considerations play an important role in maximizing the cash return to sellers and shareholders. To minimize the tax bite, sellers must understand the legal implications of the terms and conditions at the start of the sale process. Tax laws and IRS rules and regulations are extremely complex. Of course, savvy sellers will seek sound tax advice throughout the divestiture process to minimize taxes and maximize take-home cash. The article explains the rudiments of how tax laws can affect those selling a business.(continued)

Selling Your Business? Learn To Think Like a Buyer
Clients build their businesses with love and care. Optimally, a client’s business grows larger than its owners could ever imagine, and it generates a nice profit that allows them and their families to live a comfortable life. Then the owner decides to sell, assuming there’s a buyer out there who will pay a fair price and nurture the company with equal attention. This article discusses the importance of thinking like a buyer and understanding how buyers evaluate a business.(continued)

Anatomy of a Letter of Intent
A letter of intent (LOI) is a documented handshake between a potential buyer and a potential seller that sets forth the principal points of the agreement. In this way, an LOI mitigates the risk that prolonged negotiations may not result in a closing. In addition, with transactions requiring financing, the buyer’s lender may require a signed LOI before issuing a commitment to finance the acquisition. This article discusses binding and nonbinding provisions.(continued)

Take Note of New Financial Reporting Standards
Combining two businesses is never simple. Myriad factors — many beyond anyone’s control — can affect each step along the way. The best-case scenario is an honest accounting of assets and fair third-party mediation throughout the merger process. Toward that end, the Financial Accounting Standards Board (FASB) rigorously deliberated accounting treatment of business unions. This article discusses the results of those deliberations: Statements of Financial Accounting Standards 141 and 142. (continued)

What’s an Investment Banker’s Role in a Business Sale?
Normally, “investment banker” conjures visions of Wall Street. Truth is, investment bankers also have a substantial presence on Main Street. As a matter of fact, they’re absolutely critical in middle-market company sales. Investment bankers can also immeasurably enhance the sale of privately held businesses — providing valuation counsel, identifying the best potential buyers, creating a competitive auction and negotiating deal terms. This article describes how investment bankers help obtain the highest dollar value for companies through a streamlined, efficient sales process. (continued)

Preparing for Tomorrow’s Graceful Exit Today
This article explains what an exit (that is, a sale to a strategic or financial buyer) involves as well as outlines a five-step program to help a company avoid obstacles along the way. Succession planning requires that owners clarify their vision, prepare an action plan, hammer out details with experienced tax advisors, and share knowledge with their management team. Exits are not the quick and easy “passing of the torch” the name implies. This article emphasizes the importance of owners planning their exit sooner rather than later, so they can better control the door they take. (continued)

ESOP’s Fables: Fiduciary Concerns in Change-of-Control Transactions
Several years ago, corporate transactions involving employee stock ownership plans (ESOPs) grew tremendously. Yet, just as ESOPs became an integral part of the leveraging of corporate America, they got slammed in by the same forces as domestic companies. Some ESOP companies prospered while others faded away, starved for more capital. Fiduciaries of many ESOPs that have some acquisition debt outstanding now need to consider new transactions. This article presents issues about the nature of the ESOP’s financial interest and ways it can or should be viewed under the Employee Retirement Income Security Act of 1974 (ERISA). (continued)

Institutional Capital: Money to Grow On
Small- and middle-market companies have many promising growth opportunities, despite the clouds hovering over today’s economy. Organizations can still find financing to fund expansion, a capital investment or an acquisition. But what’s a business owner to do once his or her company’s credit lines have run out? Institutional capital, which includes subordinated debt and preferred equity could be the answer. It can be used for making acquisitions, buying out partners or obtaining working capital. This article looks at this financing option for companies whose spirits are willing but those bank lines are exhausted.(continued)

Valuing Closely Held Companies
Changes in the U.S. equity capital markets during the past several years have caused significant shifts in shareholder value for both publicly and closely held companies. While shareholders of public companies can easily measure the magnitude of these changes, their impact on the value of closely held firms is less clear. The management teams of many closely held concerns have looked to the professional judgment of independent investment and financial advisors to establish their companies’ fair market values. This article discusses key factors these experts consider in their determinations, and then profiles three primary valuation methods: discounted cash flow, comparative company and comparative transaction analyses.(continued)