Transaction Structuring Strategies

Every step along the complex path of executing an exit strategy demands access to advice from professionals who have been there and know the opportunities and pitfalls. Even though structuring of the exit transaction comes to an end of the process, structuring is included here as a positioning strategy because it impacts the value of the Expected Wealth Transfer. Key structuring considerations are:

• Consideration of risk and reward
• Tax consideration
• What incomes and expenses are included (i.e. belong to transacted business)?
• What assets and liabilities are ex/included?
• What pre-transaction liquidation, settlement/exclusion opportunities exist?
• What relationships between buyer and seller arise? (employment, advisory, landlord, supplier, partners, etc.)
• Documenting or codifying contractual relationships (employees, vendors, customers, debt)

The majority of the middle-market businesses bought and sold derive their valuation, at least in part, from cash flow or earnings. The very key question then arises: "What assets and liabilities are essential to and an integral part of the ongoing enterprise, thereby supporting the established earnings flow?"