How to Grow Your Business By Making Acquisitions
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By making acquisitions, businesses can grow their overall critical mass and market position. The anatomy of an acquisition involves pre-acquisition planning and analysis, due diligence, deal negotiation, the acquisition closing, and post-acquisition integration. Mezzanine capital is a financing option for acquisitions that provides subordinated debt or preferred equity, allowing companies to increase leverage for an acquisition. Mezzanine financing involves higher costs but provides more flexibility than senior bank debt.
How to Grow Your Business By Making Acquisitions
- 1. How to Grow Your Business By Making Acquisitions June 27, 2012 Presented by:
- 2. Welcome • Jerry Kelsheimer – President, Fifth Third Bank
- 3. Agenda • Anatomy of an Acquisition • Buyside Merger & Acquisition Considerations and Market Overview • Mezzanine Capital Overview • Tax Merger & Acquisition Considerations • Q&A
- 4. Anatomy of an Acquisition Kenneth M. Haffey, CPA, CVA Skoda Minotti
- 5. Anatomy of an Acquisition Pre- Due Deal Post- Diligence Acquisition Acquisition Negotiation Acquisition
- 6. Pre-Acquisition • Assess acquisition strategy and alternative expansion options ̶ Evaluate acquisition capacity ̶ Corporate capabilities • Industry / market monitoring • Industrial / market segmentation analysis • Competition analysis • Assisting with debt and/or equity channels
- 7. Due Diligence • Quality of earnings • Review of accounting policies • Unrecorded liabilities • Working capital trends • Financial reporting review • Tax diligence • IT controls review • ERISA compliance review • HR regulatory review • Develop preliminary valuation model ̶ Pro-forma earnings and cash flow model ̶ Valuation and pricing ̶ Preliminary purchase price allocation
- 8. Deal Negotiation • Assist with negotiation • Review and consult on documentation • Purchase price adjustments • Financial and tax structuring
- 9. Acquisition • Purchase price allocation / purchase accounting • Intangible asset valuation
- 10. Post-Acquisition • Conduct final purchase price review • Provide full post-merger integration support • Integration plan management • Organization and operational structure design • Compensation structuring • Benefit plan audit • Technology planning
- 11. Buyside Merger & Acquisition Considerations and Market Update Jonathan L. Ives, CFA Fifth Third Bank
- 12. Status Quo versus Growth by Acquisitions Growth Through Status Quo Acquisition Benefits • Perceived low risk strategy • Build overall critical mass / increase market • No significant additional resources to execute position • Minimal impact on current management, • Capitalize on potential operating synergies employees and community • Enter market/product niches and new • Maintain current ownership levels and geographies operational control • Improve returns to equity holders • Could result in enhanced shareholder value • More sharply define strategic over time if forecasts are met or exceeded direction/position Company for a future sale/liquidity event Issues • Does not significantly mitigate fundamental • Exposed to execution and post-deal strategic, financial and market risks or issues integration risk • No growth / acceleration of value • Additional leverage could restrict organic • Could erode shareholder value over time growth • Competitors may gain market share through • Impact on key constituents - management, acquisition employees and community
- 13. Characteristics of a Successful Acquisition Program Exhaustive • Assess a large number of opportunities – research What targets exist and at what prices? Go direct • Approach targets directly with a consistent message, (Buy wholesale getting a seller to the table may take time not retail) ̶ Do not wait for an investment banker to send a book as part of an auction. • It is more advantageous to sell the non-financial benefits Don’t focus on price too early first and address the price once there is momentum. ̶ But, balance that with avoiding sellers with unrealistic price expectations. • Manage conversations with multiple potential targets. Cultivate alternatives ̶ Shift the balance of power between the acquirer and the target. ̶ The best acquisition campaigns ensure that the deal pipeline is always full.
- 14. Target Company List Creation and Contacting Targets • Develop acquisition strategy and criteria and establish research parameters. ̶ Identify market segments with greatest opportunity and create detailed acquisition criteria to focus and prioritize target research. ̶ Determine which company specific research is necessary to evaluate each target. • Develop target universe using research to identify targets that meet the targeted criteria. • Qualify selected targets and conduct more in-depth research on all qualified targets within the universe. ̶ Further prioritize and select a focused list of companies for approach.
- 15. Target Company List Creation and Contacting Targets (cont.) • Communicate directly with target decision-makers ̶ Highlight your company’s strengths, strategy, reasons for interest and plans for the target. ̶ Include target company research in the message to communicate understanding of their business. • Continue to pursue and communicate with senior people at the target in a confidential manner. ̶ Regularly share the successes your company (new customer wins, joint ventures, recent expansions, etc.)
- 16. Layers of the Capital Structure Layers of the Capital Structure Expressed in Terms of EBITDA Leverage Alternatives include: Sale of Equity in Common Stock Acquirer’s Business, (Majority Interest) Personal Capital Mezzanine Capital, (loan or equity) and companies with Preferred Stock & Common Friends & Family Equity (Minority Interest) (limited availability). EBITDA greater than $3, generally Subordinated Debt involves an equity Could be done as return component. Second Lien Debt unitranche Senior Debt – cash flow Senior Debt and collateral support. ABL structure may have advantages.
- 17. Acquisition Financing Alternatives – Senior Debt Revolving Credit Term Loan Security Ranking • Senior – secured and unsecured • Senior – secured and unsecured Tenor • Up to 5 years • 3-5 years Amortization • None • Customized amortization Pricing • Libor based grid • Libor based grid Optional • Pre-payable at par • Pre-payable at par Redemption Financial • Maintenance covenants • Maintenance covenants Covenants including: including: 1) Leverage ratio; 1) Leverage ratio; 2) Fixed Charge Coverage ratio 2) Fixed Charge Coverage ratio Reporting • Full quarterly and annual • Full quarterly and annual Covenants financial statements and financial statements and covenant compliance reports covenant compliance reports Timing • 4-6 weeks • 4-6 weeks
- 18. Acquisition Financing Alternatives – Mezzanine Capital Subordinated Debt Preferred Equity Security Ranking • Subordinated • Senior to common equity Tenor • 7-10 years • Redeemable / Putable Amortization • Interest only • None Pricing • 12-14% Cash and 2-4% PIK • 10% dividend, majority can be PIK Optional • Varies by issue • Callable by issuer after pre- Redemption determined time, typically at premium to par • May convert to common equity Financial • Maintenance covenants (typically • None Covenants less restrictive than bank) Reporting • Full quarterly and annual financial • Full quarterly and annual financial Covenants statements and covenant statements compliance reports • Additional board seats if dividend payments are missed Other • N/A • Will likely require board seat Considerations • Comprehensive pre-funding due diligence required Timing • 12-18 weeks • 12-18 weeks
- 19. Acquisition Financing Alternatives – Mezzanine and Private Equity Mezzanine Traditional LBO Growth-Oriented LBO Characteristics • Provides subordinated • Traditionally industry • Targets high-growth debt; often used to agnostic, may have industries, e.g. facilitate leveraged geographic focus technology, healthcare, transactions • Funds backed by alternative energy, etc. • Can also provide institutional investors preferred or minority common equity Benefits • Incremental capital for • Thousands of firms • Growth focus MBO/LBO transactions represent broad necessitates lower • Limited covenants investor base initial leverage levels • Less equity dilution • Focus on growth, rather than control equity than cost savings Considerations • Increases risk profile • Clearly defined • Higher selectivity • Expensive relative to investment parameters • May require greater senior debt • Higher relative equity rollover • Warrants result in leverage • Structure may involve common equity dilution • Second liquidity event preferred shares for required in 3 to 5 years investor
- 20. Acquisition Financing Alternatives – Additional Equity Sources Distressed / Special Family Office Situation Characteristics • Private company that • Investments in financially manages investments for a stressed companies single wealthy family • “Rescue financing” to companies undergoing operational or financial challenges Benefits • Operates as both limited and • Accustomed to complex general partner accounting situations • Less intrusive on operations • Offers sellers speed and • More flexible on deal size certainty Considerations • Higher selectivity • Much lower valuations • May perform poor in auction • Investor of last resort • Less urgency for exit
- 21. Historical M&A Market Volume Trends U.S. Middle Market M&A Volume ($100 to $500 million) U.S. Lower Middle Market M&A Volume (<$100 million) 200 1,200 180 1,100 160 1,000 140 900 120 100 800 80 700 60 600 40 500 20 0 400 061Q 063Q 071Q 073Q 081Q 083Q 091Q 093Q 101Q 103Q 111Q 113Q 121Q 061Q 063Q 071Q 073Q 081Q 083Q 091Q 093Q 101Q 103Q 111Q 113Q 121Q • Source: S&P Capital IQ • Note: M&A data excludes minority purchases, tender offers, spinoffs, exchange offers, repurchases, and withdrawn deals, as well as transactions with non disclosed values.
- 22. M&A Drivers and Outlook M&A Catalysts Sentiment M&A Market Commentary • The U.S. M&A market show signs of Economic Outlook / CEO Confidence +− strengthening but deal flow still limited • Mixed economic outlook and fears over return to recessionary conditions remain biggest obstacle to an acceleration of M&A activity Financing / Leverage + • Debt markets remain strong with greater leverage and favorable pricing ̶ Debt/EBITDA ratios for middle market sponsor Valuation / Seller Expectations +− transactions between 3-3.5x. • Strategics are well capitalized and beginning to ramp up M&A efforts to drive top line growth • Private equity firms have hundreds of billions Strategic Appetite + of un-invested capital on hand • Valuations can be a barrier however prices are rising as fundamentals have improved and Financial Sponsors + sellers are beginning to adjust value expectations to normalized purchase multiples
- 23. Mezzanine Capital Overview William Weil, CPA Fifth Third Securities
- 24. Market Comparison: Bank, Private and Public Markets • Companies looking to raise capital have three basic markets which to source such capital. Bank Loan Private Public Types of of Offerings Senior Debt, Mezzanine & Senior Debt, Mezzanine & Types Offerings Senior Loans Senior Loans Senior Debt, Mezzanine & Equity Equity Senior Debt, Mezzanine & Equity Equity Company Size (EBITDA) Company Size (EBITDA) Any size Any size $3.0 million minimum $3.0 million minimum $25.0 million minimum $25.0 million minimum Minimum Deal Size Minimum Deal Size None None $3.0 million $3.0 million $100 million $100 million Interest Rate Interest Rate Floating Floating Fixed, floating & variable Fixed, floating & variable Fixed, floating & variable Fixed, floating & variable Maturity Maturity Less than 5 years Less than 5 years 3 to 30 years 3 to 30 years 5 to 40 years 5 to 40 years Fewer & less restrictive than bank, but bank, Fewer & less restrictive than Covenants Covenants Full Package Full Package Minimal Minimal more difficult to amend but more difficult to amend Information Information Confidential Confidential Confidential Confidential Public Public Providers Banks Institutional Investors Institutional Investors Institutional Investors & Individuals & Providers Banks Institutional Investors Individuals • Most middle market companies source their senior debt needs in the bank market.
- 25. Mezzanine Capital Characteristics • Typically takes the form of either junior secured debt, senior subordinated debt or preferred stock/junior subordinated debt. • Mezzanine capital provides issuers with capital that increases debt capacity and strengthens the credit quality of the issuer’s senior debt. • The primary investors in mezzanine financing are institutional investors such as insurance companies and mezzanine funds. • The overall cost of issuance makes mezzanine the kind of capital companies “Need not Want”
- 26. Mezzanine Capital Characteristics (cont.) • Investors receive their return from the following sources: ̶ Up-front Fee ̶ Fixed Current Pay (interest/dividend) ̶ Fixed Deferred Pay (Pay-in-Kind interest/dividend) ̶ Variable Deferred Pay (equity linked upside) • Mezzanine financing typically incorporates equity linked upside in the form of warrants, common stock, conversion features, or other equity linked upside components. However, it can be arranged with or without providing the investor with equity upside. ̶ The presence of a pay-in-kind (PIK) interest component can either reduce or eliminate the need for equity linked upside.
- 27. Mezzanine Capital Characteristics (cont.) • Granting a second lien on applicable assets could enhance the perceived credit quality of subordinated notes. However, a careful review of existing senior debt is necessary. • Growth and/or intangible opportunities (synergies, market positioning, new technology or products, recapitalization as a result of declining operating results) are needed to justify the issuance of mezzanine capital.
- 28. Market Assessment • Under current market conditions, bank’s senior debt limit is 2.0 – 3.5 times EBITDA. Issuers with limited collateral and in cyclical industries may have even tighter leverage constraints. • By adding a layer of mezzanine debt behind the senior debt, issuers can lever, on a total debt basis, 3.0 – 4.5 times EBITDA (industry dependent). • Many mezzanine investors are flush with cash and actively pursuing refinancing transactions. A number of insurance companies, which have limited below-investment grade appetite, are focusing on mezzanine transactions to maximize the return on their limited below-investment grade basket.
- 29. Market Assessment (cont.) • Under current market conditions, investors will require the following returns on subordinated debt, given various credit qualities: Instrument Range of Expected Investor Return Range of Issuance ($ in millions) Junior Secured Debt 9.0% to 15.0% $5.0 to $50.0 Senior Subordinated Debt 14.0% to 18.0% $5.0 to $75.0 Preferred Stock / Junior Sub. Debt 18.0% to 22.0% $5.0 to $50.0
- 30. Structural Considerations • The ultimate goal of issuing mezzanine capital is to increase flexibility. As with any capital instrument, greater flexibility generally increases the cost of mezzanine capital. • The mezzanine capital in a Company’s capital structure can serve two basic purposes: 1. Permanent Capital: Ability to lever their balance sheet multiple times over a five to seven year period. Not concerned about reducing total debt, preserving liquidity to minimize the opportunity cost of missing growth opportunities. For such flexibility, investors want upside as compensation for additional leverage.
- 31. Structural Considerations (cont.) • The mezzanine capital in a Company’s capital structure can serve two basic purposes: 2. Bridge Capital: Total debt reduced within 5-7 years through either sale of equity/assets or financial performance. Purpose is to provide current liquidity until a point that it is no longer needed. Issuer wants capital that provides current flexibility but at a lower cost, knowing that leverage will be reduced. Investors behave like debt-holders and charge for deviations from the covenant package. Typically look for step downs in covenants to assure timely repayment. Allow for prepayment at a reasonable cost and less focused on equity upside.
- 32. Mezzanine Capital: Junior Secured Debt • Provide issuers with growth capital at a lower cost than subordinated debt; however, it is more restrictive. • Allows issuer to extend senior financing. • Investors are interested in two types of issuers: ̶ Those with excess collateral; and ̶ Those with minimal collateral that have a conservative leverage profile (Debt to EBITDA) and strong franchise value. • Note holders are granted a second lien on the Company’s assets. • Payments of interest and principal are senior obligations of the Company.
- 33. Mezzanine Capital: Junior Secured Debt (cont.) • Typical junior secured debt is structured with the following: ̶ A fixed rate of interest (significant portion can be in the form of PIK notes); ̶ Matures concurrently with the longest term loan of the Company; ̶ Same covenants as bank facility; ̶ Cross defaults with bank debt; and ̶ Call protection (fixed schedule: Year 1, no-call; Year 2, 103%; Year 3, 102%; Year 4, 101%; and par thereafter). • Investors follow the same process as that of a subordinated debt or preferred stock investor.
- 34. Mezzanine Capital: Junior Secured Debt (cont.) • Calculation of Investor Return (9.0% to 15.0% all-in-return): ̶ Investor Return is derived from an up-front fee, current cash pay coupon and pay-in-kind (PIK) coupon. Typically, no equity upside is granted to investors. • Inter-creditor terms are as follows: ̶ Pari-passu with other senior lenders in right to payment prior to a payment default. ̶ Subordinated to other senior debt in liquidation.
- 35. Mezzanine Placement Process (Customized to meet Issuer Concerns) Advisor Selection Week 1: Authorization of Fifth Third as financial advisor. Due Diligence Week 2: Fifth Third due diligence meeting. Approximately 14 to 18 Weeks Weeks 2-4: Preparation of Confidential Informational Information Memorandum / Collect Memorandum by Fifth Third. Contact prospective investors and Confidentiality Agreements collect CA’s. Week 4-5: Marketing of transaction commences. Information Memorandum is distributed. Marketing of Transaction Week 5: Investor Conference calls conducted Week 6: Investor Road Show /Visits arranged. Week 7: Term sheets received. Finalize business points and select Term Sheets Received / investor (typically one investor). Term sheet signed and investor Investor Selection due diligence commences. Week 8 to 16: Due diligence meeting for investors, quality of Investor Due Diligence earnings review and other consulting work if necessary. Closing Weeks 17-18: Documentation, closing and funding.
- 36. Considerations for Issuers • Timing Critical • Financial Covenant Package ̶ Pre-acquisition Considerations Expensive ̶ Similar to Bank Facilities with wider ̶ During levels Can be coordinated with other due ̶ Standstill period diligence ̶ Payment blockage Will need to submit an LOI with financing contingency • Marketing Strategy ̶ Post ̶ Coordination with Bank Facilities Limited capital available for Bridge ̶ Inter-creditor issues key Financing to a Mezzanine Financing • Broad vs. Narrow Marketing • Investor Due Diligence ̶ Confidentiality is critical ̶ Site visits ̶ Broad effort can be time consuming ̶ Quality of earnings (acquirer and ̶ Test market for structure and pricing target) • Issuance Costs ̶ Market review ̶ Private Placement Agent Fee ̶ Legal Review ̶ Investor Up-front Fee (part of return) ̶ Investor Counsel & Consultants ̶ Company Counsel ̶ Miscellaneous
- 37. Senior Debt Market Update - Middle Market • Commentary • Average Debt Multiples of MM Loans • Last week, the middle market loan market had a solid batch 6.0x of new money deals, including a pair of acquisition loans and 5.0x 4.8x 4.6x 4.4x 4.5x 4.5x a pair of LBO transactions. Yet, issuance volume is trailing 4.2x 4.1x 4.0x 4.1x 4.2x 4.0x 3.8x 3.9x 2Q11. 4.0x • Market sentiment was more upbeat, certainly compared to 3.0x recent weeks, but issuance volume remains less than 2Q11 2.0x volume. 1.0x • Large MM issuance of $10.9 billion so far in 2Q12 is behind 2Q11 levels by 24%. Traditional MM volume trails by 43%. 0.0x • Even though, supply is still lackluster, selectivity is seen in the market as a few deals have been passed over. In fact middle market yields widened to the 7.7% context in June, FLD/EBITDA SLD/EBITDA Sub Debt/EBITDA after dropping below 7.0% in April. • Premiums between middle market and large corporate B- rated credits declines in the second quarter of 2012.
- 38. Senior Debt Market Update – Middle Market (cont.) • MM Non-Sponsored Issuance: Large & Traditional • Average New-Issue First-Lien Stats (last 90 days) $ in billions $40 Spread (L+) Floor (bps) Offer Price YTM $35 Middle Market 587 137 98.40% 7.80% $30 Large Corporate (All) 485 129 98.50% 6.66% $25 Gap (bps) 101 7 10 114 $20 $15 Middle Market 587 137 98.40% 7.80% $10 Large Corporate (Single-B) 497 131 98.60% 6.77% $5 Gap (bps) 90 6 14 103 $0 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 Traditional Large • Note: Non-sponsored issuance data as of June 6, 2012. Other data as of June 14, 2012. • Source: Thomson Reuters LPC, S&P LCD
- 39. Senior Debt Market Update – Asset-Based • Commentary • Total ABL Volume and Deal Count ($ billions) • Asset-based lending got off to a slow start in 2012, ABL Volume Deal Count gaining momentum several weeks into 1Q12. Over 50% $35 140 of the $19.1 billion in asset-based volume syndicated during the quarter was raised in March alone. $30 120 • New deal flow was limited at a thin 17% of total issuance, $25 100 given the absence of M&A. Unsurprisingly, this gave rise $20 80 to intensified competition and looser terms. Fixed assets increasingly crept into deal structures as spreads drifted $15 60 down modestly to what many believe to be a market $10 40 bottom. $5 20 • Lenders noted that while deals became more aggressive by several measures, they were also far more likely to be $0 0 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 scrutinized by credit committees. Ultimately, drawn spreads on asset-based credits remained fairly stable compared to last quarter, closing out Q1 2012 at roughly LIBOR + 228.
- 40. Senior Debt Market Update – Asset-Based (cont.) • Average ABL Pro Rata Pricing (bps) • ABL Refinancings as Percentage of Total ABL Issuance Drawn Refinancings as % of Total 500 90% 450 80% 400 70% 350 60% 300 50% 250 40% 200 30% 150 100 20% 50 10% 0 0% 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 2004 2005 2006 2007 2008 2009 2010 2011 1Q12 • Note: All data as of March 31, 2012. • Source: S&P LCD, Thomson Reuters LPC
- 41. Tax Merger & Acquisition Considerations Patrick O. Mullin, CPA, CMA Skoda Minotti
- 42. Agenda • Taxable Stock Deal • Taxable Asset Deal • Tax-Free Exchanges • Planning Opportunities • Due Diligence • Other Items
- 43. Taxable Purchase of Stock P purchases all of T’s stock for cash and/or notes
- 44. Taxable Purchase of Stock (cont.) • In a taxable stock purchase, T’s shareholders recognize the gain or loss (usually capital) realized on the sale of their T stock. • P’s basis in the T stock is equal to the purchase price paid by P plus expenses (such as legal fees) of effectuating the acquisition. • T recognizes no gain or loss on the sale of its stock, and T's basis in its assets after the acquisition remains the same as before the acquisition (absent an election under Code §338). • T’s other tax attributes are generally not affected by the acquisition (absent a Code §338 election). • T's ability thereafter to use its Net Operating Loss, Capital Loss and tax credit carry forwards may be limited.
- 45. Stock Sale Advantages & Disadvantages Advantages • Legal liability for seller • Old shareholders get capital gain treatment • Carryover tax attributes • Available with any transaction • No special tax compliance required Disadvantages • Legal liability for purchaser • No step-up in basis • Tax attributes can be limited
- 46. Taxable Purchase of Assets P purchases all of T’s assets (and generally inherits T‘s liabilities) for cash and/or P notes.
- 47. Taxable Purchase of Assets (cont.) • In a taxable asset purchase, P takes a basis in T’s assets equal to the purchase price paid by P plus any T liabilities transferred to P plus P's acquisition expenses (such as legal fees). • All of T’s assets normally generate deductions (depreciation, amortization, cost of goods sold, and the like). • T recognizes full gain or loss on the sale of its assets. • T’s tax attributes ̶ e.g., Net Operating Loss, other carryovers and tax accounting methods are not acquired by P.
- 48. Taxable Purchase of Assets (cont.) • T's NOLs and other carryovers are, however, generally usable by T to offset gain on the asset sale. • T’s shareholders do not realize taxable gain or loss on T's asset sale, unless T liquidates (except that where T is an S-Corporation. • There is generally double tax where T sells its assets and distributes the proceeds to its shareholders in liquidation.
- 49. Asset Sale Advantages & Disadvantages Advantages • Limited or no legal liability for purchaser • New owners get asset basis step-up for purchase price • Tax attributes are retained by seller Disadvantages • Legal liability for seller • Purchaser does not get tax attributes • Seller may have some ordinary gain • Compliance requirements (Form 8594 - Asset Allocation Statement)
- 50. Tax Free Exchanges “A” reorganization
- 51. Planning Opportunities • Internal Revenue Code Section 338(g) election (not very common) ̶ “Old” target company deemed to have sold all its assets – offset with Net Operating Losses? ̶ “New” target company deemed to have acquired all of the assets the next day = step up in basis for larger depreciation and amortization purposes. ̶ Does not affect the purchasing company’s basis in target company. ̶ Purchasing company alone makes the 338(g) election.
- 52. Planning Opportunities (cont.) • Internal Revenue Code Section 338(h)(10) election (much more common) ̶ Stock sale treated as an asset sale. ̶ Advantageous if seller has gain on target company stock and gain on its’ assets. ̶ Preserves target company’s tax attributes (Net Operating Loss?) for the benefit of the seller. ̶ Buyer gets step up in basis for larger depreciation and amortization purposes. ̶ Election jointly made by buyer and seller.
- 53. Due Diligence • Income Tax – Federal, State and Local • Franchise Tax • Employment/Payroll Tax • Sales & Use Tax • Property Tax • Foreign withholding & reporting • Unclaimed Funds
- 54. Other Items • Financing Costs - deductible over the term of the financing • Deal Costs: ̶ Generally, costs to acquire are required to be capitalized – facilitative? ̶ Some may be amortizable and others may attach to basis in stock of acquired company. ̶ Nature of the cost and timing often the difference between deductibility and capitalization – general M&A exploratory cots? Pre or Post LOI? Integration Costs? ̶ Success based fees safe harbor – 70% non-facilitative and deductible, 30% facilitative and capitalized.
- 55. Questions? • Gregory J. Skoda, CPA – Chairman, Skoda Minotti
- 56. Contact Information • Kenneth M. Haffey, CPA, CVA – [email protected]; 440.449.6800 • Jonathan L. Ives, CFA – [email protected]; 216.274.5045 • William Weil, CPA – [email protected]; 216.274.5992 • Patrick O. Mullin, CPA, CMA – [email protected]; 440.449.6800