How Are Privately-Held Businesses Valued?  The EBITDA and Asset Valuation Approaches The value of closely-held businesses can become the subject of debate, particularly in divorces and business break-ups.  With a closely-held business (typically those that held by family members or who have a small number of investors), there is no public market for the shares or equity interests of the businesses.  As a result, it’s not possible to look on a stock exchange to see

What are Subchapter S Corporations, and What Owners are Eligible? Perhaps you are starting a business, and have heard about a popular type of business entity known as a “subchapter S corporation.”  What, you may wonder, is a subchapter S corporation, and how is it different than a “regular” corporation?  And, is my business eligible? The Legal Rights of a Subchapter S Corporation and Taxation Legally, a subchapter S corporation is exactly the same is

How are Subchapter S Corporations Taxed? Subchapter S corporations are not taxed on income at the corporate level.  Instead, net income (or losses) are allocated to the shareholders in proportion to each shareholder’s share ownership, and then each person is taxed on the profits (or will have a deduction for losses).  Let’s consider an example: Suppose a subchapter S corporation makes $100 in a year, and there are 4 equal shareholders, each of whom own

What Needs to be Done to Preserve Limited Liability Protection? Indiana and other states provide that the owners of corporations and limited liability companies (shareholders and members, respectively) generally will not have any personal liability for business debts.  The law treats such businesses as separate legal entities, and this limited liability protection is a very important reason that most business owners will be better off by forming their business as a corporation, limited liability company,

Non-Compete and Non-Solicitation Agreements – What are the Enforceability Limits? The courts have long held that businesses have a legitimate interest in protecting critical assets, including non-public ways in which they conduct business and valuable customer and client lists.  Similarly, courts have also held that employees have a legitimate interest in not having their employment opportunities eliminated through prohibitive agreements that may be required by employers. What, then, is the outcome when an employer attempts

Business Purchases and Sales – Stock vs. Asset Sales There are two primary ways that a business can be acquired – through the purchase of all of the stock (or other equity interests) of a business, or through the purchase of the assets of a business. This blog posting briefly describes the differences in each of these approaches, but does not cover all aspects that should be considered.  In all cases, if you are considering

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