Articles

White papers pertinent to our industry,
and hopefully yours.

Voting Rights for Business Owners



Individuals and legal entities that own interest in businesses find it relatively easy to separate the various rights that ownership in an entity represents. One example of such a division is the transfer of voting rights in common stock from the individual owner of the common stock to another party. This can be done by a proxy. Or, the voting rights for the owner/partners may be allocated in a limited partnership agreement. Notwithstanding the legal mechanism for a division of a voting right, when a party is relieved of such...

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A BRIEF HISTORY OF THE MEASUREMENT RULES REGARDING GOODWILL



1. THE TAX RULES: The tax rules did not allow amortization (i.e. the ratable expensing/deducting) of Goodwill until 1993 (actually, after 8/10/93). With minor exception due to transition tax laws in 1993, if a taxpayer made an acquisition prior to 1993 that gave rise to Goodwill, the Goodwill was not deductible and was forever left on the Balance Sheet, for tax purposes. Starting in 1993, the Internal Revenue allowed Goodwill that arose from an acquisition to be amortized (expensed/deducted) ratably over 15 years on a tax return; at the same...

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Business Valuators Get Help from the Accountants in Valuing Private Company Debt Obligations



The Hancock Firm regularly values debt issued by privately-held companies and other commitments or contingencies involving the private company. When the subject company has financial statements that have been reported upon by independent accountants or auditors, substantive insights into the obligations or alleged obligations may be ascertained. For example, take the following edited excerpt from a  report issued by The Hancock Firm. In a writing dated August 31, 2008, XYZ, Inc. granted to EFG, Inc. the right to contingent financial awards. The right is non-interest bearing. The term of the writing...

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