Our nation will soon observe Memorial Day – a day of remembrance for those who have died in our nation’s service. First observed on 30 May 1868, when flowers were placed on the graves of Union and Confederate soldiers at Arlington National Cemetery, Memorial Day is now celebrated on the last Monday in May (passed by Congress with the National Holiday Act of 1971). As we commemorate those who have given their “last full measure of devotion and duty”, let’s also recognize and express our appreciation to all who have served and are serving to protect our country and our way of life.

As a business owner, one of the most difficult and emotional decisions you’ll make is the decision to sell all or part of your business. The process is complex, can be messy, and is certain to include some unexpected challenges.  More likely than not, buyers will be better equipped and will be veterans of this process. You’ve got some catching up to do in preparing to win. Read more »

Trying to read the markets to determine when is the best time to sell your company, or buy one for that matter, can be confusing.  Q4 of 2012 showed the strongest M&A activity in 4 years. Q1 of 2013 was much weaker than anticipated.  Low interest rates should make it attractive for Buyers to finance their acquisitions, but it may also be interpreted as an economy not quite out of the IC unit yet. The historically high levels of cash in the balance sheets of corporate America and at Private Equity’s disposal suggest that sellers should be having a field day sorting potential buyers for their companies; however, the same data could be seen as unequivocal sign of inflation in the horizon.  The stock market appears to be back on record-breaking mode… not unlike what happened in 2000 and 2008.

I am not a pessimist, quite the contrary! I do believe we are past the bump and well into a period of responsible expansion. My point here is that data can be read and interpreted in different ways and that many variables, often subjective, will affect how one views his/her options.

Selling your company is a business decision surrounded by emotions. If, over the past year or two you have taken the steps to prepare yourself and your company for that moment, and now you feel that your time is right, then embrace your decision and go to market with confidence. You will be successful. Read more »

Whether you are looking to sell a business, acquire a business, or recapitalize or refinance your business, it is imperative you build a first-class team of advisors to assist you in the process. A critical player on your deal team is your attorney. Hiring the proper attorney for your transaction, and utilizing his/her services and advice properly, can be the difference between a successful and unsuccessful transaction.

Based on CFA’s 57+ years of transaction history, we have extensive experience working with all types of attorneys. Furthermore, through my own participation as the only non-lawyer in the International Business Law Consortium (www.iblc.com), I have been afforded a unique perspective into how attorneys and their firms are best selected and utilized in a variety of transaction types. In today’s article, we examine the Five Biggest Mistakes Clients Make When Hiring An Attorney; in my next article, we will examine the biggest mistakes clients make when utilizing their attorney for their transactions. Read more »

I recently read Nassim Taleb’s new book Anti-Fragile. Taleb is the brilliant thinker and writer who also wrote the best-selling book The Black Swan a few years ago. Taleb’s books have stimulated my thinking about our business and the company owners we talk with.

Taleb is a former successful hedge fund analyst and trader. While on Wall Street he developed innovative models around risk management. His models demonstrate that down side risk cannot be predicted by normal bell curve distribution but rather have more of a “long tail” distribution. In colloquial terms he popularized the term “Black Swan” events to illustrate his ideas about risk and risk management.

Much like in nature, when due to a freakish genetic mutation, a rare black swan is born; in Talab’s world Black Swans are hugely disruptive events that seem to come out of nowhere. They are not predicable, and while they are rare, they WILL occur. Read more »

Someone wants to buy your company – they even made an offer.  That’s great news!  Time to celebrate, right?  The answer is “maybe.”  Maybe that’s great.  But maybe not.

The fact is that entertaining an offer from just one buyer is probably one of the worst things that could happen.  Especially an offer that is unsolicited.  It’s true that sometimes you can improve the offer  just by bringing in a professional on your side, because the buyer often takes it more seriously.  However, with just one offer you have zero leverage, no other options, you don’t control the timing, you don’t have a team ready, and you aren’t prepared for a transaction. 

How did this happen?  In most cases it is because the business owner wasn’t looking to sell, didn’t have a reason to sell, or the business wasn’t “on the market.”  Then, why take the buyer’s call in the first place?  Could be curiosity, or the idea that “if the right offer comes along, then I’d sell.”  Really? Read more »

“This year will be my best ever. I want to wait until that’s done, then I’ll sell my company.” (a former client, spoken in early 2008).

As you can imagine, the “Great Recession” overran all of his hopes and financial plans several months after my client spoke these words. By January of 2009, when he expected to report his “best year ever”, GDP had dropped 5% and Standard & Poor’s index dropped 46%, his” best year ever” didn’t happen and his outlook for the next five years was down substantially.

I had lunch with that former client in 2011, and he was still waiting for his company to be worth what it was when he said those words.  He was 64 when he decided to wait just 12 months.  Five years later, he’s now 69 and still has most of his net worth in one, smaller, basket.  Things are finally looking up now, and I hope that he’ll be able to sell his company sometime soon. Read more »

As April 15^th approaches, tax insights take a front and center position on many blogs… and ours is no exception.  In our first quarterly Client Newsletter of 2013, David DuWaldt provides an insightful narrative about The American Taxpayer Relief Act of 2012 and how last minute negotiations averted the “fiscal cliff”.  I invite you to read David’s article here.

March Madness is upon us, and that means high-energy college basketball is everywhere.  The competition is fierce and features lots of rivalries. Games are intense: carefully-developed strategies and plays either unfold with precision or come flying apart on the court.  Players have to make split-second decisions and deal with how the set-up looks in the moment, not how it looked in practice.  If you are a business owner you have a good appreciation for that kind of competition and pressure—even if you’ve never picked up a basketball.  We can learn a thing or two from college ball if we think about the tension between planning and execution, between how we plan our business future and how we implement that plan on “game day”—which for most of us is every day.

One of the great books on college basketball is “A Sense of Where You Are” by John McPhee.  Published in 1965, it’s a profile of Bill Bradley and his incredible NCAA career at Princeton University.  It’s an in-depth look at Bradley, his gifts, his team and coaches, and their game style.  Bradley was a gold medalist in the ’64 Olympics and in his senior year led Princeton to Ivy and Eastern championships and a third-place finish in the NCAA.  His performance still shines in NCAA tournament history books, with a second in points-scored in 5 games (177) and a fifth in all-time points-per-game (35.4).  Did I forget to mention that he was also a Rhodes Scholar, played pro with the Knicks (including for 2 NBA championships), and was later a Senator and Presidential candidate?  Not bad.  Read more »

Corporate Finance Associates, an international investment banking services firm providing merger and acquisition, business valuation, capital resource and financial advisory services, announced that it was the exclusive advisor to Ergo-Mechanical Industrial in its majority sale to Arch Equity Partners.

Ergo-Mechanical Industrial (EMI) operates two subsidiaries Ergonomic Material Handling Systems (EMH) and Tennessee Valley Industrial (TVI) that engineer, design, integrate and install a wide variety of custom material handling and ergonomic equipment for Fortune 500 OEMs.

EMH is a full systems integrator specializing in the design, installation, project management, and overall integration of custom material handling and ergonomic equipment for OEMs. EMH operates out of its Decatur, IL facility with equipment such as operator lift platforms, conveyors, overhead rail, assist arms, pallet changers, dollies, and other custom equipment.

TVI specializes in mechanical installation and turnkey projects. Based in Georgetown, Kentucky, TVI’s project experience includes the installation of roller, belt, slat, power and free chain and electrified monorail systems. In addition, TVI performs rigging and installation of machine centers, overhead steel, demolition, relocation services, equipment refurbishing, painting and scheduled maintenance.

In most cases, EMH provides the design and products, while TVI provides the critical project management and installation that are a core requirement of its customers. Customers include Toyota, Nissan, Honda, Caterpillar, and John Deere.

“From the first meeting it was evident that EMI’s dynamic management team and the principals of Arch Equity shared the same vision for the company’s future. The tremendous growth opportunities on EMI’s horizon coupled with Arch Equity’s access to capital made this a clear match,” said Anthony Contaldo, Director of Corporate Finance Associates’ Chicago Office.

St. Louis, Missouri based Arch Equity Partners was formed in 2008 as a private equity firm that concentrates on investments for companies in the lower middle market. The private equity group actively partners with management teams to ensure they have a meaningful ownership position, targeting management team ownership of 15-25%.

As part of the health care legislation that passed back in 2010, certain provisions were included which impose additional Medicare taxes on certain types of income. Beginning in 2013, salaries, wages and self-employment income above $200,000 will be subject to an additional .9% Medicare tax. In the case of married individuals filing jointly, the wage or self-employment income level is $250,000, and for married individuals filing separately, the wage or self-employment income level is $125,000. Also beginning in 2013, certain unearned income of individuals will be subject to a new 3.8% Medicare contribution tax when modified adjusted gross income (“MAGI”) exceeds $200,000. In the case of married individuals filing jointly, the MAGI level is $250,000, and for married individuals filing separately, the MAGI level is $125,000. 

The new Medicare contribution tax on unearned income also applies to trusts and estates with adjusted gross income (“AGI”) above the dollar amount in which the highest tax bracket applies for that tax year. For 2013, the AGI threshold is $11,950 so income above this level could be subject to the Medicare contribution tax. Bear in mind that income distributed to beneficiaries is usually a deduction to the trust or estate for purposes of deriving AGI. However, capital gains are generally treated as part of principal rather than income depending on how it is defined in the trust instrument and applicable state law. In such a case, the capital gains could be subject to the Medicare contribution tax for a trust or an estate (unless it is the final return for an estate since gains are passed through to the beneficiaries on a final return).  Read more »