Confidentiality is not just a legal precaution in a business sale, it is a valuation issue. When a company is marketed through teasers, nondisclosure agreements, and staged disclosure, the seller is protecting customer relationships, employee retention, supplier confidence, and ultimately enterprise value. For privately held businesses, the quality of the sale process can influence buyer […]
For owners asking, “How long does it take to sell a business?” the valuation answer is usually, “It depends on where the business sits on the risk and quality spectrum.” In a lower-middle-market sale, the timeline is driven less by marketing speed and more by the quality of the company’s financial reporting, sustainability of earnings, […]
In buy-side and sell-side M&A, the transaction may be the same in structure, but the valuation assignment is not. A buy-side engagement focuses on what a business is worth to a specific acquirer, while a sell-side engagement focuses on positioning the company for the broadest market response and the strongest defensible value. For privately held […]
An LOI, or letter of intent, is one of the most important early documents in a privately held business sale because it sets the economic framework that usually drives valuation expectations, due diligence, and final deal terms. For business owners, the LOI is not just a procedural step. It can shape the purchase price, the […]
For privately held businesses, the M&A process is more than a legal path to closing, it is a valuation event that tests every assumption behind fair market value, purchase price, and deal structure. From preparation through due diligence and the final purchase agreement, each step can move value up or down depending on earnings quality, […]
Profits interests in LLCs are often described as a “tax concept,” but from a valuation standpoint they are really a question of threshold value, future appreciation, and what an investor is actually receiving at the time of grant. Unlike a straight equity interest tied to current net asset value, a properly structured profits interest is […]
For privately held companies that issue stock options or other equity awards, 409A and ASC 718 often arise together, but they serve different valuation purposes. A 409A valuation establishes the fair market value of common stock for tax compliance, while ASC 718 supports the measurement of stock-based compensation expense for financial reporting. For business owners, […]
Secondary sales can materially affect a private company’s 409A valuation when they are meaningful, arm’s length indicators of fair market value. For founders, executives, and investors, the key question is not whether a tender offer, transfer, or insider sale occurred, but whether the transaction provides reliable evidence about what a willing buyer and willing seller […]
A 409A valuation for a pre-revenue startup determines the fair market value of common stock when there is little or no operating history to support a traditional earnings-based appraisal. For U.S. founders, investors, and advisors, this matters because the company still must establish a defensible common share value for stock option grants, even before revenue […]
Section 409A is often discussed as a tax compliance issue, but for privately held business owners it also carries real valuation consequences. When equity compensation or deferred compensation is supported by a weak or unsupported appraisal, the IRS can challenge the valuation, which can trigger immediate income inclusion, a 20% additional federal tax, interest charges, […]