In many mergers and acquisitions (M&A) transactions, the target company has one set of financial information for “book accounting” purposes (or book basis) and another for “tax accounting” purposes (or tax basis). At times, the two sets of books exhibit temporary differences that result in what are called deferred income taxes. In this article, I will explain the sources of deferred income taxes, perform some deferred income tax calculations, and explain how they are relevant to M&A valuations / transactions. [Read more…]
Picture this. Your work has closed due to the governor’s new restrictions. You’ve been instructed to quarantine, and as your whole city is closed except a few mega-corporations, you don’t have much of an option. But as your day disappears to yet another series on Netflix, you suddenly get an idea. What if I start my own business? You begin to research. Hey Google, what are small business ideas during the pandemic?
One of the most common challenges in mergers and acquisitions is getting a seller to understand the transaction from the perspective of the business buyer. Sellers may spend 20 or more years building their business and likely understand every detail of how to make their business successful. However, it may be difficult for a seller to understand “value” from a potential buyer’s perspective. It’s important that sellers work with an experienced M&A professional to understand this perspective and have realistic expectations for the value of their company. [Read more…]
Solomon, the author of the book of Ecclesiastes of the Bible, took a direct and realistic look at human life. Much of what he spoke about concerned money and business. And it stands to reason: he was the wealthiest man that ever lived. Modern scholars estimate that at the height of his career, Solomon was worth more than all the billionaires in the world today, who have a combined net worth of about 8 trillion dollars.
Yes, Solomon was crazy rich. [Read more…]
In the world of business, our attention is often focused on sales numbers, growth charts, and bottom lines. Dedicating time to these numbers is not optional. Cash is the blood of your business, and without it, you won’t be around for long. But have you thought about the other essential functions of your business? One of these functions is empathy. As your heart pumps blood to the rest of your body, empathy builds the relationships in your business. Empathy in business is vital and should be viewed as a powerful muscle in your business model. [Read more…]