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November 07, 2023

Business Vantage Point Blog

Below is a recap of recent posts to the Stradley Ronon Business Vantage Point blog. Articles on timely topics impacting ownership, operation and financing of businesses across industries written by our trusted advisers are posted regularly on the site. If you haven’t yet subscribed, please click here to ensure you don’t miss any upcoming articles.


Loan Workout Strategies: What Can Companies Expect?
The market has seen a steady rise in the number of troubled commercial loans over the last few months. Consequently, companies and their financial officers who previously had minimal experience with loan workouts are faced with varying proposals from their lenders on how to restructure credit facilities and operations. Many companies will go through this process and emerge better disciplined and more focused on their core businesses, while others won’t survive. Whether a company survives and thrives may depend entirely on how well its executives understand the options and strategies available to them. Read More...

Tax-Free Equity Rollovers: A Powerful Tool for M&A Transactions
In acquisition transactions, consideration is often composed of a combination of cash and equity from the buyer. Equity consideration is attractive for a number of reasons, including aligning the interests of both buyer and seller post-closing and giving the seller some tax deferral and the potential for additional upside as the business continues to succeed. Structuring the transaction to include a partial tax-free equity component, or “rollover,” is a crucial element in facilitating these transactions, potentially offering substantial tax benefits to the seller. This strategic maneuver allows the seller to avoid triggering immediate federal income tax liabilities on receipt of the equity consideration, ensuring the seller retains a larger portion of its cash proceeds from the sale. In this post, we will discuss common federal income tax considerations for achieving a tax-free equity rollover applicable to U.S. buyers and sellers. Additional federal income tax considerations would apply to non-U.S. parties, which are beyond the scope of this discussion and will only be briefly highlighted at the end. Read More...

Benefits of a Sell-Side Quality of Earnings Report
In merger and acquisition transactions, a quality of earnings (QofE) analysis is an important piece of financial accounting due diligence. A reputable independent accounting or other advisory firm that has an extensive background in conducting financial due diligence and expertise in the target company’s industry should be used to prepare the QofE report, which involves several stages, including data collection, analysis and reporting. The analysts will review the company’s financial statements and other documents, conduct interviews with key personnel, and analyze relevant industry data. In order to complete the QofE report, the financial statements, general ledger, tax returns, management reports, certain sales and vendor contracts, and other documents and records pertaining to the company’s financial performance will be examined. The data will then be analyzed to identify the financial strengths and weaknesses of the company. The QofE report will provide a complete picture of the company’s financial health and will also identify potential risks and uncertainties. Read More...

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

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