Business Valuation, Public Policy, Tax

Nothing New Under the Sun: Stealth Estate Tax Proposal Returns

Gregory Pearl

A well-known proverb originally derived from the Bible is “There is nothing new under the sun”. Back in 2016 and 2018, I alerted clients as to attempts by the Obama administration to increase taxes by eliminating commonly two commonly used discounts in business valuation: Discount for Lack of Control (DLOC or Minority Interest Discount) and the Discount for Lack of Marketability (DLOM).  Eliminating these discounts What made that attempt particularly noxious is that it was effectively a tax increase without congressional approval.   Congress was not likely to approve such a change and the administration wanted to bypass it.  Further, for…

Continue Reading→

Exit Planning

Succession Planning is a Process

Gregory Pearl

There is one thing that the owner of a privately held business can do to increase the value of the said business. Have a management team that can run the business without him/her. To be truly saleable, the business needs to be more than just the owner. Succession of the business leader also becomes important when retirements, death, or other potentially disruptive events occur.  Replacement managers must be ready to step in when needed. Here is a succession process that works. Identify the critical, most important positions that must be filled. You will need to identify all of the critical…

Continue Reading→

Alternative Investments, Business Valuation, Buying & Selling a Company

M&A Trends as of Feb 2021, for Q4 2020

Gregory Pearl

Alteris LLC tracks Mergers & Acquisitions (M&A) valuation and other trends/metrics from its various partners and research sources.  We will periodically report on what we find here.  For more detailed information on valuations and M&A trends contact us directly. Please note that this information is a summary, generalized for many different types of companies of various sizes. This data is collected from various sources and includes proprietary deal information from over 200 PEGs (Private Equity Groups) on $10-250mm sponsored transactions, with an average TEV near $50mm. The information available as of February 2021 show that valuations on private middle-market transactions…

Continue Reading→

Alternative Investments, Decision Making

Technology Trends in the Investment Management Industry

Gregory Pearl

Alteris LLC tracks trends in our client’s industries.  We work with firms in the Investment Management or Asset Management industry and therefore track trends there. Many firms in the Investment/Asset Management industry are experiencing substantial pressure on their margins and profitability. A factor pressuring cost reductions is consolidation among firms in the investment/asset management industry.  This started before the pandemic and continues.   Some industry observers expect that up to 20% of the mutual fund firms that are independent today will be acquired or go out of business in the next five years.   This consolidation will largely impact smaller firms. The…

Continue Reading→

Decision Making

Survivor Bias is Everywhere

Gregory Pearl

Survivorship Bias is one of the most deceptive and common traps in decision making. It’s normal to examine the life stories of very successful people.  Not only is it interesting by itself, but maybe we think that there is something to learn about success from them. If they are successful, maybe we can imitate them? The concept of survivorship bias is easy to understand but maybe not intuitive.  Still, when a person does understand, it seems to be almost everywhere.  That’s because it is. There are so many examples. It’s very common in advertising.  Weight loss programs and diets feature…

Continue Reading→

Buying & Selling a Company

Middle Market M&A Trends: Lending

Gregory Pearl

Alteris periodically reports on M&A valuation metrics in the middle market.  We are sometimes asked to expand on what’s behind the numbers. Especially given all the uncertainty during the pandemic. The last two posts were about Deal Structuring and Due Diligence trends.   This post is about trends in business lending. There is no doubt: lenders are cautious regarding new lending and in underwriting new acquisitions.  Instead, lenders are now focusing on the quality and liquidity of their existing loans.  It’s a defensive mindset. In particular, lenders are now very reticent about making loans to companies that are pandemic impacted. For…

Continue Reading→

Buying & Selling a Company

Middle Market M&A Trends: Due Diligence

Gregory Pearl

Alteris periodically reports on M&A valuation metrics in the middle market. We are sometimes asked to expand on what’s behind the numbers. Especially given all the uncertainty during the pandemic. The last post was about Deal Structuring trends.  This post is about Due Diligence. In middle market M&A – as in all market segments – the time to close a deal time has been substantially extended. Increased levels of due diligence is being conducted especially regarding items that could be impacted by COVID-19.  Businesses are attempting to minimize the impact of the virus as it relates to operations and the…

Continue Reading→