Making Credit Decisions Based on…..air?

| Financial

By Mike Alerding     I have spent the last 25+ years as a volunteer loan committee member of two SBA 504 loan committees and two mezzanine financing organizations. In doing so, I have had the opportunity to look at literally thousands of financial statements from borrowers and potential borrowers from closely-held and usually smaller businesses. I have watched lending professionals approve loans using a variety of information, some of which is actually relevant to the loan itself. I have also had Read more [...]

Selling a Closely-Held Business – a process of evolution

| Business Miscellaneous

By Mike Alerding     It has been a while since we have seen the Mergers & Acquisition business restart its engine. Since 2007, the number of sales of closely-held businesses that have sold has slowed to a standstill. Many businesses that should have sold during the past four years are still sitting on the sidelines waiting for all of the necessary M&A ingredients to come together. Unfortunately, for the smaller size businesses, they may have a bit longer to wait. Closely-held businesses Read more [...]

Creation of Private Company Financial Reporting Standards

| Audit and Accounting

Letter to Board of Trustees of the Financial Accounting Foundation Dear Financial Accounting Foundation: I am writing in support of the Blue Ribbon Panel’s recommendations on the creation of Private Company Financial Reporting Standards (PCFRS) for privately-held companies. A new set of meaningful and pragmatic standards and a separate standard-setting body are critically needed as soon as possible in order to assist the real engine of our economy – closely-held businesses – in spending less Read more [...]

The Buy-Sell Agreement – the Soul of a Succession Plan

| Business Miscellaneous

By Mike Alerding     It has always amazed me how many businesses are running today without the benefit of an enforceable, reasonable and affordable buy-sell agreement. What is even more amazing is that many of these businesses are mature companies where the effects of not having a buy-sell are often more critical as the patriarchs begin to look at retirement and begin to get serious about a formal succession plan. Simply put, the soul of every good business succession plan is an effective buy-sell Read more [...]

Time For States To Get On Board With New Expert Witness Rules

| Litigation

By Mike Alerding    Effective December 1, 2010, an important and long-awaited rule change was made to Rule 26 of the Federal Rules of Civil Procedure relating to expert reports. Working as an expert in a variety of different matters for the past 25 years, I was relieved and overjoyed with the change. Now it is time for the different states to get on board with making changes to their rules to accommodate this same type of change. The changes to Rule 26 now provide that the expert’s draft report Read more [...]

Information Overload in Financial Reporting for Closely Held Businesses – Part 3

| Audit and Accounting

By Mike Alerding     Over the years, closely held businesses have really received the short end of the stick when it came to compliance with accounting and reporting standards. Pronouncements have always started with the publicly held sector and trickled down to the closely held sector, even though many – if not most – of them either didn’t really apply or had diminimus value to the reader/users of the financial statements. The trickledown effect has been costly and continues to increase Read more [...]

Information Overload in Financial Reporting for Closely Held Businesses – Part 2

| Audit and Accounting

If a tree falls in the forest and no one hears it, did it really make a noise? By Mike Alerding     I have been reviewing, drafting and analyzing financial statements for closely held businesses for almost 40 years. I have had the opportunity to see basic financial statements and disclosure requirements change markedly, probably a half a dozen different times, usually as a result of some malady in the US economic markets. Beginning with the formation of the Financial Accounting Standards Board Read more [...]

Information Overload in Financial Reporting for Closely Held Businesses – Part 1

| Audit and Accounting

Let’s get back to keeping our eye on the ball... By Mike Alerding     In the spectrum of financial reporting for business entities, the past nine years are generally known as the “Post-Enron” period. The debacle that US businesses have had to endure during this period is not only unprecedented in terms of the number of new financial reporting rules but, more importantly, in terms of the complexity and absurdity of the types of disclosures that are now required. By any definition, it has Read more [...]