The M&A Source Podcast

Whether you’re a seasoned advisor or just making the leap from main street to the lower middle market, this episode highlights why M&A Source is the room to be in—and how you can make the most of every minute there.

Access Show Resources: https://snip.ly/MASPodcastResources Connect with Us: https://snip.ly/mas_interact27 In this episode, David introduces a recent M&A deal that was delayed due to issues with stock certificates and ownership records. He sets up the episode topic on the importance of stock certificates in business sales. Overview of Stock Certificates The host defines stock certificates, explains their purpose, and outlines the main types (common, preferred, restricted, founders, cancelled). He emphasizes their critical role in documenting ownership. Types of Stock Certificates in Detail A detailed breakdown of each stock certificate type, including who typically receives them, their purpose, and pros/cons: Reconstructing Ownership History The host explains how to piece together a company's equity history when records are incomplete, including examining tax filings, cap tables, emails, and other documents. Due Diligence and Post-Closing Issues Discussion of potential problems that can arise during due diligence or after a deal closes if stock certificate records are not properly maintained. Conclusion The host summarizes key takeaways and encourages listeners to pay close attention to stock certificate issues in M&A deals. Questions/Answers Q: What is a stock certificate? A: A stock certificate is a physical or electronic document that represents ownership of shares in a company. It usually includes the shareholder's name, number of shares, class of stock, issue date, and signatures of corporate officers. Q: What are the main types of stock certificates? A: The main types are common stock, preferred stock, restricted stock, founder shares, and cancelled certificates. Q: Why issue restricted stock? A: Restricted stock is issued to incentivize long-term commitment and align the interests of key employees or executives with the business. It often comes with a vesting schedule. Q: What should you do if there is no stock ledger? A: You need to become a detective and reconstruct one by examining tax filings, cap tables, emails, board minutes, founder documents, and banking/legal correspondence. Q: What kinds of issues can arise during due diligence related to stock certificates? A: Issues can include undocumented liquidation preferences, missing board authorizations for share issuances, and unexpected vesting accelerations upon sale. These can lead to deal delays or restructuring demands.

Connect With Us: https://snip.ly/mas_interact26 Episode Summary: In this episode of the M&A Source Podcast, host Dave Dejewski dives into the critical topic of lease analysis. Whether you’re a buyer, seller, advisor, or lender, understanding the nuances of lease agreements is essential for transaction success. Dave explores why lease analysis matters, the key elements to evaluate, the stakeholders who benefit from the insights, and how a comprehensive review can impact the outcome of a deal. Tune in for actionable insights that can save your next transaction from potential pitfalls. What We Cover in This Episode: Key Quotes: Resources Mentioned: Download our free checklist to guide your lease analysis.Connect with the host here.Connect with Us: M&A Source PodcastM&A SourceCall to Action: If you found this episode valuable, share it with your colleagues or clients who might benefit from these insights. Don’t forget to subscribe to the M&A Source Podcast for more expert advice and actionable tips. Leave us a review on your favorite podcast platform to let us know what topics you’d like to hear next! Episode Disclaimer: The content of this podcast is for informational purposes only and should not be considered legal or financial advice. Always consult with a qualified professional regarding lease agreements or business transactions.

Interact with the show: https://snip.ly/mas_interact25 In this episode of the M&A Source podcast, Dave Dejewski continues a series on essential tax code provisions for mergers and acquisitions, discussing five additional provisions that can significantly impact tax outcomes for buyers, sellers, and their advisors. Topic DiscussedThe exchange is a podcast discussing 10 tax code provisions that are relevant for mergers and acquisitions (M&A) transactions. It is divided into two parts, with Part 1 covering the first 5 provisions and Part 2 covering the remaining 5 provisions. Part 2 covers the following tax code provisions: 1. Section 368 - Tax-Free Reorganizations This provision allows for tax-deferred treatment of certain corporate reorganizations, such as mergers and acquisitions, to encourage business continuity, growth, and realignment without triggering immediate tax liabilities. It requires continuity of interest and continuity of business enterprise. 2. Section 409A - Deferred Compensation This provision establishes strict rules for when income can be deferred and when it must be paid, preventing abuse and ensuring fairness in the tax system. It imposes penalties for non-compliance and encourages proper planning and transparency in deferred compensation plans. 3. Section 1031 - Like-Kind Exchanges This provision allows for the deferral of capital gains taxes when exchanging real properties for similar properties, stimulating growth in real estate-heavy businesses. 4. Section 721 - Contributions to Partnerships This provision promotes the creation and growth of partnerships by allowing individuals or entities to contribute property to a partnership without triggering immediate tax consequences, facilitating partnership formation and encouraging joint ventures and investments. 5. Section 453 and 453A - Installment Sales Section 453 allows sellers to report capital gains income over time through the installment sale method, aligning tax payments with the receipt of sale proceeds and providing tax deferral. Section 453A imposes an interest charge on large installment sales over $5 million to limit the tax benefits of deferring large amounts of tax. Key Takeaways These final five of ten tax provisions cover a wide range of areas, including tax-free reorganizations, deferred compensation, like-kind exchanges, partnership contributions, and installment sales. The episode highlights the importance of understanding these provisions and leveraging them to minimize tax liabilities, encourage business continuity, and facilitate growth and realignment. It also emphasizes the need for proper planning, transparency, and compliance to avoid penalties and ensure that the intended tax benefits are realized. Overall, this episode provides valuable insights into the tax considerations and strategies that should be taken into account when structuring M&A deals, making it a valuable resource for advisors, business owners, and investors involved in such transactions. LEGAL DISCLAIMER: This resource is intended for educational purposes only and does not constitute legal, financial, or tax advice. The information provided herein should not be relied upon for any specific business or financial decision without first consulting appropriate professional counsel. Readers are encouraged to seek advice from qualified attorneys, accountants, or other professionals to address their unique circumstances. Neither the authors nor the publisher assumes any responsibility for actions taken based on the information provided in this resource.

Interact with the show: https://snip.ly/mas_interact24 The episode discusses 10 key tax code provisions relevant to mergers and acquisitions (M&A) transactions. It is divided into multiple parts, with Part 1 covering the following provisions: 1. Section 338 - Election for Treating Stock Purchases as Asset Purchases This provision allows buyers to treat a stock purchase as if they are purchasing the underlying assets of the business, enabling them to step up the basis of the acquired assets to their fair market value for tax purposes. 2. Section 1202 - Qualified Small Business Stock Exclusions This provision allows investors to exclude capital gains taxes on the sale of stock in qualified small businesses, subject to certain eligibility criteria. 3. Section 197 - Amortization of Goodwill and Intangibles This provision provides uniform rules for the amortization of intangible assets, such as goodwill, franchise rights, patents, and trademarks, over a 15-year period. 4. Section 280G - Golden Parachute Payments This provision addresses excessive compensation packages (golden parachutes) paid to executives and key employees during a change of control event, such as a merger or acquisition. 5. Section 382 - Limitation on Net Operating Losses This provision limits the amount of net operating losses that a company can use after an ownership change to prevent companies from acquiring loss corporations solely for tax benefits. 5 Best Quotes1. "Section 338 allows buyers to treat a stock purchase as if they're purchasing the underlying assets of the business. And that means for tax purposes, the buyer can step up the basis of the acquired assets to their fair market value as opposed to the book value, which can result in greater depreciation, amortization deductions over time." 2. "Section 1202 is a powerful tool for investors and business owners who want to maximize their returns by excluding capital gains taxes on the sale of stock in small businesses." 3. "Section 197 was introduced to basically provide some uniform rules around amortization of intangible assets intangible assets, what are they it's goodwill, it's franchise rights, it's patents, it's trademarks." 4. "Section 280G of the US tax code was created to address this golden parachute concept. Golden parachute are these large compensation packages there's severance payments that are paid to executives and they're paid out to key employees when there's a change of control event so a merger or an acquisition is considered a change of control event." 5. "Section 382, it curbs this practice by limiting the amount of net operating losses that a company can use after the acquisition and that's based on the company's value at the time of the ownership change and this prevents companies from using net operating losses as a tax sheltering tool." Lessons LearnedThis episode provides a high level overview of several key tax code provisions that can significantly impact the structuring and tax implications of M&A transactions. It highlights the importance of understanding these provisions and working closely with legal and financial advisors to ensure that deals are structured efficiently and in compliance with tax regulations. The detailed explanations, examples, and practical considerations offered in the show are valuable for M&A advisors, business owners, and investors involved in buying or selling businesses. LEGAL DISCLAIMER: This resource is intended for educational purposes only and does not constitute legal, financial, or tax advice. The information provided herein should not be relied upon for any specific business or financial decision without first consulting appropriate professional counsel. Readers are encouraged to seek advice from qualified attorneys, accountants, or other professionals to address their unique circumstances. Neither the authors nor the publisher assumes any responsibility for actions taken based on the information provided in this...

The M&A Source fall conference is a premier event for M&A professionals, focusing on larger deals in the lower mid-market. Hosted by Dave Dejewski, this podcast episode features an in-depth interview with Kathlene Thiel, the conference committee chair, who provides a comprehensive overview of the event. The conference aims to offer a balanced mix of learning, networking, and deal-making opportunities, with a focus on educational sessions, expert panels, and a deal market. Kathlene shares insights into the agenda, which includes keynotes by Dr. Tom Deans, sessions on due diligence, deal sourcing, and professional ethics, and the evolving content tailored to investor buyers and larger deals. Networking is highlighted as the conference's most significant benefit, allowing attendees to connect with private equity groups and industry veterans. Although sessions won't be recorded, attendees will receive presentation materials. Listeners also get practical tips on maximizing the conference experience, including bringing deal teasers and engaging with M&A Source committees for ongoing involvement. This episode emphasizes the conference as a valuable platform for professional growth and relationship-building within the M&A community.

Links:https://podcast.masource.org https://masource.orgSummary of this EpisodeTopic DiscussedIntroduction to US GAAP and its importance for companies expanding into the US marketThe discussion began with an introduction to US GAAP (Generally Accepted Accounting Principles) and its significance for companies looking to expand into the US market. Katrina Nachi, a cross-border accounting advisor, highlighted that companies often face challenges when entering the US market due to differences in accounting standards and regulations. Understanding and complying with US GAAP is crucial for companies seeking US investors, acquiring US companies, or planning an IPO in the US. Key differences between US GAAP, UK GAAP, and IFRSKatrina explained the key differences between US GAAP, UK GAAP, and IFRS (International Financial Reporting Standards). While IFRS and US GAAP are becoming more aligned, there are still nuances, particularly in areas such as revenue recognition, capitalization of costs, and share-based compensation. UK GAAP, on the other hand, has more significant differences from US GAAP, especially in terms of what can be capitalized. The process of converting from UK GAAP to US GAAPKatrina outlined a three-phase process for converting from UK GAAP to US GAAP: 1. Qualitative assessment: Identifying differences in accounting policies and creating a matrix comparing current policies under UK GAAP with suggested US GAAP policies. 2. Quantitative assessment: Adjusting calculations and schedules to reflect US GAAP requirements and quantifying conversion adjustments. 3. Financial statement preparation: Preparing financial statements and footnote disclosures under US GAAP, incorporating conversion adjustments. Compliance requirements and auditing considerations for US GAAPThe discussion covered the additional compliance requirements and auditing considerations when adopting US GAAP. Companies may need to undergo a US GAAP audit, which typically involves a lower materiality threshold and more thorough walkthroughs and control testing. The timing of audits and potential overlap with local audits were also discussed. Preparing for fundraising rounds with US investorsKatrina emphasized the importance of being proactive in preparing for fundraising rounds with US investors. Presenting a qualitative assessment of US GAAP differences and potential conversion adjustments can demonstrate an understanding of the requirements and facilitate due diligence processes. This can potentially broaden the range of investors available to the company. Challenges and common issues faced during the conversion processSeveral challenges and common issues were discussed, including: - Lack of documentation and messy calculations under current GAAP, making the conversion process more difficult. - Determining the appropriate retrospective period for conversion, which may depend on the intended use of the financial statements. - Ensuring knowledge transfer and ongoing support for the local finance team to maintain US GAAP reporting after the conversion. Strategies for effective knowledge transfer and ongoing US GAAP supportKatrina highlighted the importance of effective knowledge transfer and ongoing support for the local finance team. She suggested exploring options such as working with a fractional Chief Accounting Officer or leveraging external advisors for specific transactions or new accounting standards. This approach can provide access to US GAAP expertise while enabling the local team to maintain day-to-day reporting. ActionsFor companies considering US expansion or fundraising with US investors: For companies undergoing a US GAAP conversion: For companies operating in regulated industries (e.g., fintech): InsightsProblem: Lack of understanding and documentation of current accounting policies under local GAAP, making the conversion process more challenging. Solution: Proactively document and maintain clear accounting policies and procedures...

Interact with the show: https://snip.ly/mas_interact21 Share your origin story In this episode of the M&A Source podcast, Dave Dejewski dives deep into essential business performance metrics that significantly impact business valuation and success. Dave discusses key metrics such as EBITDA, employee activity ratios, and cash flow ratios, providing insights into their importance and how to leverage them for better client guidance. He shares practical examples from client experiences and offers a comprehensive worksheet of various metrics for M&A professionals. The episode discusses the importance of understanding and analyzing key business performance metrics in the M&A process, emphasizing on metrics like sales per employee, employee turnover rate, and operating cash flow, and offers a comprehensive worksheet with various valuation ratios and metrics to better guide clients and position oneself as an expert. David emphasizes the value of presenting oneself as an expert by having in-depth knowledge of these metrics and being able to have meaningful conversations with sellers and buyers. By analyzing these metrics, M&A advisors can drive improvements, increase the value of the businesses they represent, and remove friction from the transaction process. The offer of a worksheet with 56 different valuation ratios, sector-specific ratios, profitability ratios, operational metrics, and more is a valuable resource for M&A professionals to incorporate into their practice and better serve our clients.

Visit us at https://podcast.masource.org In this episode, Shelia Darby, Managing Director of Bizworth, discusses the importance of accurate business valuations in M&A transactions, the different valuation methodologies, challenges in valuations, best practices and ethical considerations, and the value of partnering with valuation professionals. Resources Discussed in this Episode https://pages.stern.nyu.edu/~adamodar/https://businessreferenceguide.com/https://verticaliq.com/https://www.bvresources.com/products/dealstatshttps://bizcomps.com/https://www.valusource.com/https://peercomps.gvalue.com/https://pitchbook.com/https://masource.org/resources/legal-updates/ Topic DiscussedStructure and Summary This episode features an interview with Shelia Darby, Managing Director of Bizworth, who has over 25 years of experience in business valuations. The discussion covers the following key sections: Introduction and Background Shelia shares her background, starting in the corporate world at companies like Enron and transitioning to the middle market and Main Street valuations. She discusses her certifications and the importance of continuous learning. Importance of Accurate Business Valuations Shelia explains why accurate business valuations are critical for both buyers and sellers in M&A transactions, helping to close more deals and avoid leaving money on the table. Valuation Methodologies The three main valuation approaches are discussed: asset approach, market approach, and income approach. Shelia dives into the details of each approach, common methods used, and when to apply them. Special Circumstances and Challenges Various special circumstances and challenges in business valuations are explored, including non-operating assets, intangible assets, regulatory impacts, distressed businesses, and rapid growth or volatile businesses. Best Practices and Ethical Considerations Shelia shares best practices for valuations, emphasizing transparency, honesty, and using reputable sources. She also discusses ethical considerations, drawing from her experience on the Ethics Oversight Board of NACVA. About Bizworth Shelia provides information about her company, Bizworth, and the valuation services they offer to support M&A advisors and business brokers. Questions/AnswersThroughout the interview, several questions were asked and answered: Q: How did you get into the business of valuations, and what drew you to it as a career? A: Shelia started in the corporate world at companies like Enron, working in valuation groups. She transitioned to Main Street and middle market valuations in 2014, finding it more appealing. Q: Why is an accurate business valuation critical for both the seller and the buyer in the M&A process? A: Accurate valuations help close more deals, avoid leaving money on the table, and identify gaps early on. Q: What are the different valuation methodologies, and what should M&A advisors consider when looking at them? A: The three main approaches are asset, market, and income. Sheila explains each approach, common methods, and when to use them. Q: What are some common challenges you come across when valuing businesses, particularly in the small and medium enterprise area? A: Common challenges include non-operating assets, intangible assets, regulatory impacts, distressed businesses, and rapid growth or volatile businesses. Q: What are your thoughts on best practices and ethical considerations in valuations? A: Best practices include transparency, honesty, and using reputable sources. Ethical considerations involve operating with integrity, avoiding conflicts of interest, and staying in your lane. 5 Best QuotesValuable QuotesHere are five valuable quotes from the interview: "If you don't get a proper accurate valuation, you're leaving money on the table. First of all, you're not closing as many deals as you can, right you're not identifying as early on as possible if there's gaps." "Honesty is the best...

In this enlightening episode of the M&A Source Podcast, we dive deep into the world of taxes, a topic often deemed tedious but undeniably crucial within the mergers and acquisitions sector. Our distinguished guest, Roman Basi, an attorney, CPA, and multifaceted professional, unveils the intricate dance between tax legislation and M&A activities. With expertise spanning several states and a multitude of professional licenses, Roman brings a wealth of knowledge and practical insights to our listeners. From the significant implications of capital gains tax adjustments and corporate tax changes to the nuances of depreciation, amortization rule changes, and international tax policies, this episode covers the vast landscape of tax considerations that M&A advisors and business owners must navigate. Roman's unique blend of legal, financial, and real estate expertise, combined with personal anecdotes and a passion for education, makes for an engaging discussion that not only enlightens but also empowers our audience with actionable knowledge. Join us as we explore the critical impact of taxes on the outcome of M&A transactions, learn from Roman's vast experience in the field, and discover how to leverage tax strategies for successful business deals. Whether you're an M&A professional, business owner, or simply intrigued by the complexities of tax laws, this episode is packed with valuable insights and stories that illuminate the often-overlooked aspects of taxes in the business world.

Register and find the agenda here: https://snip.ly/2024_MA_conference Visit Show Notes here: https://podcast.masource.org/spring-2024-conference-overview/ Visit MASource.org In this short community update, hear from Kathlene Theil, our 2024 Conference Chair as she explains our agenda and what you can expect from this Spring conference.

Visit the show notes at https://podcast.masource.org Visit M&A Source at https://masource.org In today's episode of the M&A Source Podcast, we discuss the myriad benefits that M&A Source offers to its members with Russell Cohen, an M&A advisor and board member for M&A Source. Russel is also the chairman for the membership benefits committee. Russell and David cover a wide range of topics, from exclusive discounts on essential services like insurance and data room solutions to access to valuable tools that are crucial for any successful M&A advisor. Russell shares his personal experiences and success stories, highlighting how these benefits have positively impacted his professional journey. We also touch on the importance of the M and A Source community in fostering connections and sharing knowledge within the M&A world. Whether you're an experienced advisor or just starting, this episode is a treasure trove of information on how being a part of M&A Source can elevate your practice in the competitive world of mergers and acquisitions. Resources Mentioned in the Show: https://masource.org/membership/benefits/https://verticaliq.com/https://privateequityinfo.com/https://vaultrooms.com/https://dealrelations.com/https://www.thedigitalwow.com/masourcehttp://www.valuecraftz.com/https://clientsio.com/https://www.sourcescrub.com/

Welcome to our latest episode of the M&A Source Podcast. In this episode, we dive deep into the world of Purchase Agreements with our esteemed guest, Matt Bowles, an attorney at Hogan Lovells. Here's what you'll discover in this insightful discussion: Join us in this enlightening conversation and enhance your understanding of the critical role of purchase agreements in M&A transactions. Whether you're a business owner, intermediary, or legal professional, this episode offers valuable insights for all. Additional Resources: Matt Bowles' LinkedIn ProfileHogan Lovells WebsiteM&A Source WebsiteConnect with Us: https://masource.orgLinkedInTwitterFacebookSubscribe to our podcast Don't forget to leave us a review if you found this episode valuable!

In this episode of the M&A Source Podcast, host Dave Dejewski is joined by Ryan Hurst, an expert in financial consulting, to discuss the complexities and significance of working capital in mergers and acquisitions. Key Highlights: Ryan Hurst's Background: Ryan shares his journey from growing up in a family-owned business to his current role in financial consulting, focusing on helping business owners broaden their perspectives on their companies' potential. Understanding Working Capital: The episode delves into the multifaceted nature of working capital in M&A transactions. Ryan explains the varying interpretations across different sectors like accounting, valuation, and transaction advisory. Real-World Scenarios: Ryan provides three compelling case studies, each highlighting different aspects and challenges of working capital in M&A: Advice for M&A Intermediaries: The importance of early preparation, understanding working capital, building trust, and staying informed about industry trends is emphasized. Connecting with Ryan Hurst: Listeners interested in Ryan’s expertise can reach him through RKL’s website, LinkedIn, or his email. See his bio and contact info here. --- *This podcast is brought to you by M&A Source, a nonprofit organization dedicated to the professional development of mergers and acquisitions intermediaries. For more information, visit [M&A Source](www.masource.org).*

Scott Mashuda, a founding Partner of River’s Edge Alliance Group and M&A Source’s Chairman-elect, discusses his background and what he’s excited about for M&A Source in 2023.

Rich Jones (Zabel Companies) and Bob McCormack (Murphy McCormack Capital Advisors) Discuss Building Trust between Entrepreneurs and Equity Partners

Bob McCormack of Murphy McCormack Capital Advisors interviews Rich Jones of Zabel Companies to discuss Zabel's history and background and their approach to partnering with lower middle market companies to drive long-term, sustainable growth. In the interview, they discuss how building a trust-based relationship between buyer and seller can minimize deal distractions and identify the right partner to both support growth and preserve a company's legacy.

Lamar Stanley of Lead Capital Partners chats with Joel Redmond and Kalimah White of Key Private Bank about techniques that they use in their business advisory practice to help business owners reduce tax exposure in transactions.

Lamar Stanley of Lead Capital Partners chats with Joel Redmond and Kalimah White of Key Private Bank about techniques that they use in their business advisory practice to help business owners reduce taxes when selling their business. In the interview they discuss the four cornerstones of tax reduction when selling a business, the stages of a transition as it relates to tax planning, and specific ways that intermediaries can assist clients in preparing for a transaction.

Lamar Stanley of Lead Capital Partners chats with John Wahl of Live Oak Bank about what makes Live Oak different and how they structure lower middle market deals. In the interview they discuss the history of Live Oak, and John’s work in SBA lending, combination financing, and many other structures.