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November 14, 2023

Hot Topic in Valuation - Inflation Reduction Act Impact on Business Valuation

By ASL Business Valuation Group

The Inflation Reduction Act provided the Internal Revenue Service (IRS) with $79.4 billion in additional funding to transform tax administration and services. Earlier this year, the IRS released its 2023 to 2031 Strategic Operating Plan that sets forth a framework for using this funding. One of the IRS’s goals is to improve the audit procedures and possibly select more valuation cases for examination. (more…)

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Categories: Fall 2023, Valuation Services
Tags: Business Valuation, Inflation Reduction Act,
April 8, 2020

Business Valuation and COVID-19: What Are Business Owners Thinking?

By Jeff Faust, CVA, Director of Valuation Services
ASL Business Valuation Services

There is quite a bit of uncertainty with businesses given the global coronavirus pandemic.  This uncertainly also means that a company’s value has been impacted since uncertainly creates risk and increased risk lowers value.  What is this doing to a business owner?  What are they thinking and how are they navigating through all of this? (more…)

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Categories: COVID-19, Valuation Services
Tags: Business owners, Business Valuation, Coronavirus, COVID-19, Jeff Faust,
By Jeff Faust
•
February 11, 2020

U.K. Share Schemes vs. U.S. Stock Option Plans

ASL’s Valuation Team recently prepared 409A valuations of VC funded biotech companies located in the U.K. We would like to share some insight into U.K. share schemes and compare them to U.S. stock option plans. To start with, in the U.S., they are called plans whereas in the U.K., they are called schemes. (more…)

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Categories: Valuation Services, Winter 2020
Tags: 409A valuations, Jeff Faust, U.K. Share Schemes, U.S. Stock Option Plans,
By Jeff Faust
•
November 6, 2019

Secondary Transactions and 409A Valuations – Part 2: FF Preferred Stock

In Part 1 of this series (Secondary Transactions and 409A Valuations – Part 1: The Potential Impact), we discussed secondary transactions and their impact on 409A Valuations.  To recap, the liquidity that some founders and early employees receive from their company or outside investors, considered secondary transactions, can sometimes re-establish the price per share for stock option grant (409A) purposes at the same price as the secondary transaction.  Secondary transactions are often done in conjunction with a funding round so they are often at the same price as the round’s preferred stock.  If common stock was sold in the secondary transaction, future option grants may have to be granted at this higher price, which is not ideal for new employees receiving options based on the latest preferred stock price. (more…)

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Categories: Valuation Services
Tags: 409A Valuation, ASL Valuation, Jeff Faust, Preferred Stock, Secondary Transactions,
By Jeff Faust
•
August 6, 2019

Secondary Transactions and 409A Valuations - Part 1: The Potential Impact

As VC-backed companies mature, they may not be ready for an IPO or a sale, but private secondary transactions on common stock are a way to get some liquidity for the founders prior to an exit.

Any secondary transaction with the Company’s common stock should be carefully evaluated to determine the relevance and the potential impact on the common stock price for 409A Valuation purposes.  The AICPA guide: Valuation of Privately-Held-Company Equity Securities Issued as Compensation establishes a clear set of rules regarding this issue. (more…)

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Categories: Summer 2019, Valuation Services
Tags: 409A Valuation, Jeff Faust, Secondary Transactions, VC-backed companies,
May 15, 2018

The Benefits of Establishing an ESOP

By Jeff Faust, CVA, Director of Valuation Services
ASL Business Valuation Services

Company owners face many decisions when it comes time to transition responsibilities and ultimately ownership to the next generation. For those owners who wish to sell their shares gradually and transition out of their responsibilities over a period of years, an Employee Stock Ownership Plan (ESOP) might be the right fit. An ESOP is a qualified defined contribution employee benefit plan that primarily holds the employer company’s stock. An ESOP functions similarly to a stock bonus plan that provides a retirement benefit to employees in the form of the company’s stock. As a “qualified” plan, an ESOP is established by the employer for the benefit of the company’s employees and qualifies for certain tax benefits, both for the company and the selling owners. (more…)

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Categories: Spring 2018, Valuation Services
Tags: Employee Stock Ownership Plan, ESOP, Jeff Faust, tax-deductible, Valuation services,
November 16, 2017

IRS Proposed 2704 Regulations Have Been Withdrawn

By Jeff Faust, CVA, Director of Valuation Services
ASL Business Valuation Services

Earlier this year we wrote about the looming regulations affecting valuation discounts under the IRS Proposed Section 2704 Regulations. The proposed regulations would have curbed valuation discounts, resulting in increased estate taxes on the deaths of owners of family businesses.

The Treasury, after extensive deliberation in furtherance of the policies stated in Executive Order 13789, decided to withdraw these regulations entirely for the following reasons: (more…)

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Categories: Updates & Alerts, Valuation Services
Tags: 2704 Regulations, Family-Owned Businesses, Jeff Faust, San Jose Valuations, Valuation services,

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