One of the most intimidating aspects of selling your business can be facing the barrage of questions during the various management presentations you’ll be doing for potential acquirers. Be prepared to be grilled on all facets of your operations.  Of course every meeting will be different, but here are some questions you can expect to be asked when you’re in the hot seat: Read more

You may be years away from selling your business, but it’s never too early to understand what the process involves.

If you have ever promised your child a treat in return for good behavior, you know all about negotiating leverage. When selling an attractive business, you also have leverage—but only up to the point where you sign a letter of intent (LOI), which almost always includes a “no shop” clause requiring you to terminate discussions with other potential buyers while your newfound “fiancé” does due diligence.

After you sign the LOI, however, Read more

The majority of businesses in America today started out as service companies.

If you want to own a web design firm, you don’t need a lot of money, just a technical knack. Enterprising professionals who know how to get the media’s attention can start their own pubic relations firms without much more than a mobile phone. No capital required.

But if you want to build a valuable company – one you can sell – you’ll want to Read more

Estate of Franklin Z. Adell v. Commissioner, T.C. Memo 2014-155, Filed August 4, 2014.

The Facts:

Mr. Franklin Z. Adell (“the decedent”) died on August 13, 2006. At the time of his death, among other assets, the decedent owned a 100% interest in STN.com (“STN”), a cable uplinking company created to provide services to one customer, a non-profit religious network called The Word Network (“The Word”). Mr. Kevin R. Adell, son of the decedent (“Mr. Adell”), and the decedent, created The Word in 1999 as a 24-hour station to broadcast urban religious ministries and gospel music. Mr. Adell called upon his personal relationships with religious leaders and churches to gain support and programming for The Word. The decedent was the president and a director of The Word, and Mr. Adell was the treasurer, secretary and a director. In addition, Mr. Adell served as the president of STN, however, he did not have an employment agreement or non-compete agreement with STN.

The Word entered into a services & facilities agreement with STN in 2000 which stated The Word would pay STN a monthly programming fee of “the lesser of actual cost or ninety-five percent of net programming revenue received by The Word in a one month period”. STN received at least 95% of revenue from The Word each month up to and after the decedent’s death, which was STNs primary source of income as The Word was their sole customer. STN’s expenses included rent payment to the decedent’s wholly-owned property holding company, compensation to its officers and employees and personal benefits to both the decedent and Mr. Adell, including paying for luxury cars, real estate and furnishings purchases, and personal litigation expenses, among other things. Read more

Here’s an interesting tidbit that was uncovered at last November’s 2013 AICPA Forensic & Valuation Services Conference. IRS audits can be triggered when the same firm does a client’s tax work and valuation work. It was indicated that IRS agents in some areas will pull an estate and gift tax return that is prepared by the same firm that prepares the attached valuation report. A poll of attendees at the conference indicated that approximately 60% of CPA firms that have qualified business appraisers on staff regularly provided both valuation work and tax work to the same client. Thus, to help mitigate client risk, advisors may want to make sure that the client hires a qualified business appraiser that does not work for the CPA firm that is preparing the gift tax or estate tax return.

John G. Mack, ASA, MCBA, ABAR – Nationwide Valuations – (303) 496.0643 (direct) (303) 586.4554 (fax)
john@nationwidevaluations.com – www.nationwidevaluations.com