In addition to helping maximize the purchase price, we pay close attention to the detailed terms in a transaction. Middle-market deals include many elements that can significantly impact value and our approach includes negotiating all these details to maximize the overall value:
- Tax structuring (asset / stock / hybrid)
- Included vs. excluded assets and liabilities
- Allocation of purchase price
- Working capital targets
- Sales and use tax avoidance
- Tax matters representations and covenants
- Indemnity caps and baskets negotiation
- Earnout definitions and calculations
- Income and expense cutoff
- Rolled-equity valuation
- Tax-free rolled equity
- Escrow and holdback provisions
- Post-closing working capital reconciliations
- Taxation of installment payments
BiggsKofford offers market value studies to estimate the value of your business. This process includes anonymously contacting active buyers in the market to identify value drivers specific to your industry. We then calculate a value based on current operations and estimate what real buyers in the market might pay for your business today. A market value study can provide useful information to a business owner for a number of reasons:
- Determine if your business is worth enough in the real market to consider a sale
- Learn ways to improve the value of your business in the eyes of real buyers actively acquiring companies like yours
- Understand the net (after tax) proceeds that might result from completing a real transaction
- Use the market value study to establish a competitive offer for a business acquisition
Reduction in tax consequences for a transaction is most often determined during the negotiation stage of a deal, through proper structuring techniques. We begin by assessing your current tax structure and basis to determine the ideal selling structure (asset / stock / hybrid, allocation of purchase price, structure of consideration, deferral techniques, and other tax mitigation strategies). We assist in negotiating the best structure to optimize your net (after tax) outcome, balanced with the offer price and other terms.
We assist buyers with detailed due diligence to confirm the financial performance and address other risks associated with a private company acquisition. We identify specific procedures to address the assessed risks. A typical due diligence process includes a quality-of-earnings analysis, company trend analysis, potential legal issues analysis, physical asset and inventory counts, etc.
Responding to a purchaser’s due diligence and quality-of-earnings requests can be complicated and time-consuming. We assist sellers by coordinating responses to document requests and inquiries in a manner that preserves the negotiated value and terms. Our team coordinates due diligence responses to avoid conflicting information that could otherwise allow a purchaser to propose price reductions or altered terms. We accomplish this through a dual-level diligence response to include a seller-only “sandbox” for gathering due diligence response items. After our review of materials, we then upload, organize and maintain a cloud storage data room with restricted access provided to the purchaser, outside due diligence teams, and legal counsel. This ensures the purchaser is only provided information that has been reviewed for conformance with all other historical data.