In The News

January 4, 2022

Abbott, Stringham & Lynch Announces Partner Promotions for 2022

Campbell, CA (January 4, 2022) – Abbott, Stringham & Lynch (ASL), one of the largest local CPA firms in Silicon Valley, is proud to announce that Angel Nevis, CPA, has been promoted to Principal, Tax and Advisory; Jacen Dickman, CPA, has been promoted to Principal, Tax and Advisory; Jeff Faust, CVA, has been promoted to Principal, Valuation Services; and Mike Morales, CPA, has been promoted to Principal, Tax and Advisory, all effective January 1, 2022.

In making the announcement, Abbott, Stringham & Lynch’s Managing Partner, Carol Wagner, said “ASL is excited to add these professionals to our partner group. Their leadership and client service exemplify the core values of ASL.” (more…)

Categories: Press Release

Tags: Angel Nevis, Jacen Dickman, Jeff Faust, Mike Morales, Partner Promotions,

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…)

Categories: COVID-19, Valuation Services

Tags: Business owners, Business Valuation, Coronavirus, COVID-19, Jeff Faust,

By Jeff Faust

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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…)

Categories: Valuation Services, Winter 2020

Tags: 409A valuations, Jeff Faust, U.K. Share Schemes, U.S. Stock Option Plans,

By Jeff Faust

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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…)

Categories: Valuation Services

Tags: 409A Valuation, ASL Valuation, Jeff Faust, Preferred Stock, Secondary Transactions,

By Jeff Faust

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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…)

Categories: Summer 2019, Valuation Services

Tags: 409A Valuation, Jeff Faust, Secondary Transactions, VC-backed companies,

May 21, 2019

Recent IRS Pushback on Valuation Discounts for Estates

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

Recently, the IRS began pushing back on discounts used within estate and gift valuations, specifically the discount for lack of control (DLOC) and the discount for lack of marketability (DLOM), calling for lower discounts to be applied. Valuation discounts have always been critical in estate and gift valuations because they measure the restrictions on the ownership interest being valued. These discounts also can be used as a planning tool to help lower overall estate and gift taxes. As a result, the IRS reviews these discounts carefully and can push back on them. The DLOC is typically applied when the non-controlling interest is being valued and the DLOM is applied to account for the limited liquidity of the ownership interest. (more…)

Categories: Spring 2019, Valuation Services

Tags: Discount for lack of control, Discount for lack of marketability, Estate and Gift Valuations, Jeff Faust, Valuation Discounts,

August 29, 2018

409A Valuations... What’s the Issue?

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

First, a little background, 409A is an IRS Code section that requires companies to grant stock options at Fair Market Value (FMV), meaning no discounts anymore. In order for a company to prove they granted stock options at FMV, they’ll need to follow the valuation rules surrounding 409A. (more…)

Categories: Valuation Services

Tags: 409A Valuation, Fair Market Value, Jeff Faust, Stock Options,

August 2, 2018

Tax Act Effect on Valuation

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

With the signing of the Tax Cuts and Jobs Act (TCJA) in December 2017, valuation analysts have been tasked with incorporating the changes to the tax law into their analysis. Changes, such as the lowering of corporate tax rates and restrictions on interest deductibility, must be factored into valuation analysis to capture the effects of the TCJA on company value. When valuing a US company, valuation analysts must now consider the following: (more…)

Categories: Summer 2018, Tax Reform, Valuation Services

Tags: Jeff Faust, Tax Act, TCJA, valuation,

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…)

Categories: Spring 2018, Valuation Services

Tags: Employee Stock Ownership Plan, ESOP, Jeff Faust, tax-deductible, Valuation services,