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Buyouts: Success for Owners, Management, PEGs, ESOPs and Mergers and Acquisitions, + Website

Buyouts: Success for Owners, Management, PEGs, ESOPs and Mergers and Acquisitions, + Website

Scott D. Miller

ISBN: 978-1-119-20529-6 September 2015 352 Pages

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Description

The definitive guide to best practices for mastering techniques of the insider-led transition planning

A must have book for business owners, key employees, and their advisors who need to be aware of the full spectrum of succession options, Buyouts provides objectives, advice, steps, and a host of examples on the full spectrum of insider-led buyouts. A road map for CPAs, it presents the parameters for many of the major industry segments, techniques for managing risk, providing retention and performance incentives for key personnel and insights into getting deals financed.

  • Features advice and examples of insider led buyouts
  • Essential guidance on succession options for business owners, key employees, and their advisors
  • The 411 on selling your company for a fair price, maintaining control over the process, and realizing lifelong goals

Transition planning is becoming a hot business topic as millions of business owners head into retirement. The fact is that only a limited number of privately held companies will be successfully sold to third parties. A road map for CPAs, Buyouts presents the parameters for many of the major industry segments, techniques for managing risk, providing retention and performance incentives for key personnel, as well as insights into getting deals financed.

Acknowledgments xvii

Introduction The New Reality for Business Owners in 2012 1

The Middle Market 2

Not Another Mergers and Acquisitions Book 3

Chapter Organization 4

Chapter 1 Buyout Examples 7

Case Study—SRC Holdings, Corporation 7

Case Study—SSG Financial Services 11

Case Study—Quality Assembly and Logistics, LLC 14

Case Study—Jumbo Heater & Manufacturing Lessons Learned 18

Summary 19

Chapter 2 The Economy 21

Brief Overview of the Current Recession 21

Near Term Regulatory Environment—Tax Increases 25

The Longer View 26

Summary 27

Chapter 3 Finance 29

Community Banks 30

Regional and National Money Center Banks 32

Mezzanine Funds 33

Private Equity 34

Small Business Administration and Government Sources 35

Seller Notes 36

Summary 37

Chapter 4 Valuations 39

Purpose of the Valuation 40

Determining the Transaction Consideration 41

Standard of Value for Transactions 42

Types of Buyers and Sellers 46

Attributes of Ownership—Control and Minority Positions 47

Lack of Marketability 49

Additional Adjustments to Valuation 50

Three Valuation Approaches: Income, Market, Asset 50

Summary 61

Chapter 5 Industries and Businesses 63

Technology and Software 64

Communications 65

Energy 65

Commodity Goods—Retail Food and Agriculture 65

Healthcare 65

Manufacturing 66

Construction 66

Main Street Businesses 66

Discretionary Products and Services Industries 67

Professional Services 67

Summary 67

Chapter 6 Professional Advisors 69

Attorneys 69

Certified Public Accountant 70

Financial Advisors 71

Investment Bankers 72

Behavioral Science 73

Key Employees 75

Board Members or Advisory Members 76

Family 76

Summary 77

Chapter 7 Documents and Due Diligence 79

Due Diligence for the Seller 79

Due Diligence for the Buyer 83

Common Documents and Key Covenants 86

Summary 90

Chapter 8 Short Course on Taxes 91

Tax Issues for the Seller 91

Tax Issues for the Buyer 98

Summary 101

Chapter 9 Buyouts—Non-Sponsored Management 103

Advantages 104

Cautions 105

Valuation Insights 107

Viewpoint of the Seller 109

Viewpoint of the Buyer 111

Professional Advisors 112

Risk Environment 114

Technical Matters 115

Summary 125

Chapter 10 Buyouts—Sponsored Management 127

Advantages 128

Valuation 131

Viewpoint of the Seller 132

Viewpoint of the Buyer 133

Professional Advisors 137

Risk Environment 138

Technical Matters 142

Summary 144

Chapter 11 Buyouts—Sponsored 145

Advantages 146

Cautions 147

Valuation 148

Viewpoint of the Seller 150

Viewpoint of the Buyer 151

Professional Advisors 153

Risk Environment 153

Technical Matters 156

Summary 157

Chapter 12 Buyouts—Management and Employee Stock Ownership Plans and Trust 159

Advantages 160

Cautions 163

Valuation Insights 165

Viewpoint of the Seller 166

Viewpoint of the Buyer 168

Professional Advisors 169

Risk Environment 171

Technical Matters 180

Summary 190

Chapter 13 Buyouts—100% Employee Stock Ownership Plan and Trust 191

Advantages 192

Cautions 195

Valuation Insights 197

Viewpoint of the Seller 198

Viewpoint of the Buyer 199

Professional Advisors 201

Risk Environment 202

Technical Matters 210

Summary 214

Chapter 14 Buyouts—Professional Firms 215

Architectural and Engineering, Public Accounting, and Management Consulting Firms 215

Architectural and Engineering Firms 218

Public Accounting Firms 224

Management Consulting Firms 230

Summary 233

Chapter 15 Buyouts Using Parallel Companies 235

Advantages 236

Cautions 237

Valuation Insights 238

Viewpoint of the Seller 239

Viewpoint of the Buyer 239

Professional Advisors 240

Risk Environment 241

Technical Matters 244

Summary 244

Chapter 16 Buyouts with Family and Management 245

2010 Tax Law Update 245

Advantages 246

Cautions 248

Valuation Insights 249

Viewpoint of the Seller (Founding Generation) 250

Viewpoint of the Buyer (Next Generation) 251

Professional Advisors 253

Risk Environment 254

Technical Matters 256

Summary 265

Chapter 17 Buyouts with Employee Cooperatives 267

Advantages 268

Cautions 270

Valuations 271

Viewpoint of the Seller 271

Viewpoint of the Buyer 272

Professional Advisors 272

Risk Environment 273

Technical Matters 277

Summary 281

Chapter 18 Buyouts of the Smallest Companies 283

Advantages 283

Cautions 284

Valuation 285

Viewpoint of the Seller 286

Viewpoint of the Buyer 287

Professional Advisors 288

Risk Environment 288

Technical Matters 289

Summary 291

Chapter 19 Inside Buyouts Compared with Sale to Outsider 293

Relative Negotiating Strength 293

Where’s the Money? 294

Asset or Stock Sale 296

Contingency Payments 298

The Day After 298

Time Uncertain—Getting to the Close 299

Investment Bankers and Intermediaries 299

Common Third-Party Buyers 300

Summary 302

About the Website 305

Index 307