Merger and acquisition activity in the first half of 2018 in the United States was the highest it has ever been according to data from Thomson Reuters as reported by Axios in this article. Although there are a number of factors that contributed to this M&A boom, the impact of the TCJA has provided an acquisition-friendly tax landscape for businesses to operate. On top of the highly publicized drop in the corporate tax rate to 21%, subtle changes to the bonus depreciation rules could be an even bigger driver of merger and acquisition activity.
Michael Tota, CPA
My wife and I were talking at the dinner table last night about how much the cost of one year of college tuition would be in the year 2036. The year 2036 holds a special place in our heart, as it is the year that our three-month old son will (potentially) be leaving the nest for four (or more) years at an educational institution to prepare him for the “real world.” The numbers we were throwing around were so large they seemed laughable, but they may become reality in eighteen short years. Although the potential cost of college seems daunting for almost everyone, there is some help available for parents (or grandparents, aunts, uncles, or really anyone) that want to set aside money to be used for future education expenses. Some of that helps comes by the way of a 529 Plan.
So you have hired a valuation professional to put a price tag on your business. Although you trust the valuation analyst, you may ask yourself how it is possible for anybody to put a dollar value on the blood, sweat, and tears that went in to starting and building your company? With all the information and complexities of your business, where does the analyst even begin? Business Valuation can sometimes be as much art as science, however, there are three primary methods that are generally used in the valuation world. A brief overview of each method is included below, to give you an idea of how a valuation professional will begin to determine value.
The phrase “net operating loss” may bring about feelings of despair to a business person. It may be the case that a business actually lost money in a given year and the owner reported a negative taxable income number on his/her tax return. Net operating losses (NOLs) for tax purposes do not always mean negative business results. In some cases, NOLs arise from accelerated tax deductions through depreciation, resulting in positive cash flow for the business, but a negative bottom line for tax purposes. Regardless of how an NOL was generated, the rules governing their use are changing as a result of the TCJA. We explore a few of the issues at play in this article:
As consumers, we are constantly tasked with assigning value to different products/services we encounter on a daily basis. Generally, we have a good sense of how valuable an item is and can make a purchasing decision without much effort. Think about going grocery shopping, we quickly assign value to the food on the shelves and make a decision to put the item in our cart, or not.