Search Results for: READY

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Is Your Business Ready for Sale?

First in a Series on This Important Question

“Is Your Business Ready for Sale?” is one of the most pressing question facing business owners today. And the question is important for advisers to businesses, since we are instrumental in asking hard questions and, indeed, have the responsibility for asking hard questions of our private company clients. At the outset of a new series of posts, let me say categorically, I am not, not, not suggesting that your business should be up for sale. Bear with me while we focus on the actual question of “Is Your Business Ready for Sale?”

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Is Your Business READY for Sale?

Is your business ready for sale? This is an important question for business owners and shareholders. Why? Companies that are READY for sale are more valuable than similar companies that are not. You also never know when you might be approached by an enthusiastic, or better yet, a motivated purchaser. If that day comes unexpectedly, you definitely want to be READY for sale. A company that is READY for sale is also ready to engage in leveraged repurchase transactions that provide liquidity for some owners and enhanced returns for others. A company that is READY for sale is capable of engaging in a leveraged dividend recapitalization, as well, to provide liquidity and diversification opportunities for all shareholders. And, a company that is READY for sale is also just more fun to work in. This post goes into depth about the components of R-E-A-D-Y.

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Mercer’s Musings #5: Pre-IPO Studies/Discounts and Marketability Discounts

My musings on the use of restricted stock discounts to estimate marketability discounts (or DLOMs) have led me to the conclusion: Restricted stock studies/discounts cannot be used to estimate DLOMs in any credible, standards-compliant manner. This fifth post in the musings series takes a look at the usefulness of pre-IPO discounts in estimating marketability discounts.

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Silicon Valley Bank’s Failure: Lessons for Private Business Owners and Directors

The failure of Silicon Valley Bank will be talked about for years. What really happened? What caused SVB to fail? Was it just the long-term Treasury securities that everyone has talked about? Well, no. SVB was on a self-imposed path to destruction that had been waiting for an adverse change in the economy or a rising interest rate environment to kick it into oblivion.

There are, indeed, lessons for family business directors from the failure of Silicon Valley Bank. In this week’s post, I discuss four.

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Fair Market Value and the Nonexistent Marketability Discount for Controlling Interests

This post provides a discussion of several implications of the definition of the standard of value known as fair market value. We focus first on the definition of fair market value. Next, we examine the hypothetical negotiations conducted by hypothetical buyers and sellers in fair market value determinations and the implications of those negotiations.

We then look at the implications for the so-called “marketability discount for controlling interests.” We look at this “discount” from the vantage points of the definition of fair market value, the integrated theory of business valuation, and recurring and incorrect rationales for the discount.

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December 15, 2019 to December 14, 2022: Three Years of Walking

Three years ago, on December 15, 2019, I began a journey and did not know where it would lead.  I began walking daily at the rate of at least five miles per day.  December 14, 2022, marks the end of three years.  December 15, 2022, will be the three-year anniversary. Over this period of time, walking has progressed from something I wanted to do to something that I just do.

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Beway and Giaimo: Is New York Headed in the Right Direction?

In the final post in this series, we examine the actual marketability discounts concluded in statutory fair value matters since about 1985.  The analysis will differentiate between appellate-level and trial court cases that stand and were not appealed.  The results will likely be surprising for those interested in statutory fair value in New York.

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Deja Vu #5: The Maher Restricted Stock Study (1976)

In this “deja vu” series about the “old and tired” restricted stock studies, we are working our way through the leading early studies. We have already examined the SEC Institutional Investor Study, the Gelman Study, the Trout Study, and the Moroney Study. In this post, we examine the Maher Study. The story does not get better with repetition. So read on.

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Deja Vu #1: SEC Rule 144 (Pre-1997) as Background for Restricted Stock Discounts

Deja vu is a feeling of already having experienced a present situation.  In my initial review of “Valuing a Business, Sixth Edition” (VAB6) by Shannon Pratt/American Society of Appraisers I was reminded that I had reviewed a significant number of the studies summarized in its Chapter 19 back in 1997, when my book, Quantifying Marketability Discounts, was published. In this and a few future posts, I’ll share what I believe is the most complete analysis of the historical restricted stock studies that are still relied upon by many business appraisers.