SCOTT MILLER, CPA, ABV, CVA, PFS, CMAP, is President of Enterprise Services, Inc. (ESI), a nationally recognized firm in ESOP consulting and valuations, with over 500 clients. An entrepreneur with an extensive history of senior-level industry experience and significant equity ownership in his employers, Miller has authored four professional publications for AICPA on mergers and acquisitions, buying and selling business, ESOPs, and valuing ESOPs. Since founding ESI, Miller has worked with hundreds of businesses throughout the country on strategic transition planning and closing transactions.

• Acknowledgments xviiIntroduction The New Reality for Business Owners in 2012 1The Middle Market 2Not Another Mergers and Acquisitions Book 3Chapter Organization 4Chapter 1 Buyout Examples 7Case Study—SRC Holdings, Corporation 7Case Study—SSG Financial Services 11Case Study—Quality Assembly and Logistics, LLC 14Case Study—Jumbo Heater & Manufacturing Lessons Learned 18Summary 19Chapter 2 The Economy 21Brief Overview of the Current Recession 21Near Term Regulatory Environment—Tax Increases 25The Longer View 26Summary 27Chapter 3 Finance 29Community Banks 30Regional and National Money Center Banks 32Mezzanine Funds 33Private Equity 34Small Business Administration and Government Sources 35Seller Notes 36Summary 37Chapter 4 Valuations 39Purpose of the Valuation 40Determining the Transaction Consideration 41Standard of Value for Transactions 42Types of Buyers and Sellers 46Attributes of Ownership—Control and Minority Positions 47Lack of Marketability 49Additional Adjustments to Valuation 50Three Valuation Approaches: Income, Market, Asset 50Summary 61Chapter 5 Industries and Businesses 63Technology and Software 64Communications 65Energy 65Commodity Goods—Retail Food and Agriculture 65Healthcare 65Manufacturing 66Construction 66Main Street Businesses 66Discretionary Products and Services Industries 67Professional Services 67Summary 67Chapter 6 Professional Advisors 69Attorneys 69Certified Public Accountant 70Financial Advisors 71Investment Bankers 72Behavioral Science 73Key Employees 75Board Members or Advisory Members 76Family 76Summary 77Chapter 7 Documents and Due Diligence 79Due Diligence for the Seller 79Due Diligence for the Buyer 83Common Documents and Key Covenants 86Summary 90Chapter 8 Short Course on Taxes 91Tax Issues for the Seller 91Tax Issues for the Buyer 98Summary 101Chapter 9 Buyouts—Non-Sponsored Management 103Advantages 104Cautions 105Valuation Insights 107Viewpoint of the Seller 109Viewpoint of the Buyer 111Professional Advisors 112Risk Environment 114Technical Matters 115Summary 125Chapter 10 Buyouts—Sponsored Management 127Advantages 128Valuation 131Viewpoint of the Seller 132Viewpoint of the Buyer 133Professional Advisors 137Risk Environment 138Technical Matters 142Summary 144Chapter 11 Buyouts—Sponsored 145Advantages 146Cautions 147Valuation 148Viewpoint of the Seller 150Viewpoint of the Buyer 151Professional Advisors 153Risk Environment 153Technical Matters 156Summary 157Chapter 12 Buyouts—Management and Employee Stock Ownership Plans and Trust 159Advantages 160Cautions 163Valuation Insights 165Viewpoint of the Seller 166Viewpoint of the Buyer 168Professional Advisors 169Risk Environment 171Technical Matters 180Summary 190Chapter 13 Buyouts—100% Employee Stock Ownership Plan and Trust 191Advantages 192Cautions 195Valuation Insights 197Viewpoint of the Seller 198Viewpoint of the Buyer 199Professional Advisors 201Risk Environment 202Technical Matters 210Summary 214Chapter 14 Buyouts—Professional Firms 215 Architectural and Engineering, Public Accounting, and Management Consulting Firms 215Architectural and Engineering Firms 218Public Accounting Firms 224Management Consulting Firms 230Summary 233Chapter 15 Buyouts Using Parallel Companies 235Advantages 236Cautions 237Valuation Insights 238Viewpoint of the Seller 239Viewpoint of the Buyer 239Professional Advisors 240Risk Environment 241Technical Matters 244Summary 244Chapter 16 Buyouts with Family and Management 2452010 Tax Law Update 245Advantages 246Cautions 248Valuation Insights 249Viewpoint of the Seller (Founding Generation) 250Viewpoint of the Buyer (Next Generation) 251Professional Advisors 253Risk Environment 254Technical Matters 256Summary 265Chapter 17 Buyouts with Employee Cooperatives 267Advantages 268Cautions 270Valuations 271Viewpoint of the Seller 271Viewpoint of the Buyer 272Professional Advisors 272Risk Environment 273Technical Matters 277Summary 281Chapter 18 Buyouts of the Smallest Companies 283Advantages 283Cautions 284Valuation 285Viewpoint of the Seller 286Viewpoint of the Buyer 287Professional Advisors 288Risk Environment 288Technical Matters 289Summary 291Chapter 19 Inside Buyouts Compared with Sale to Outsider 293Relative Negotiating Strength 293Where’s the Money? 294Asset or Stock Sale 296Contingency Payments 298The Day After 298Time Uncertain—Getting to the Close 299Investment Bankers and Intermediaries 299Common Third-Party Buyers 300Summary 302About the Website 305Index 307