Covid-19 Impact on Valuation: Minority Interests and Gift Taxes

By David Ogurek, CVA

When this unforeseen global pandemic began a few months ago, countless questions swirled inside the heads of many business owners, beginning with “What do I do now?”. Others followed like, “How will I pay my bills?” or “What will happen to my employees?”. Fortunately, several programs were created to help business owners answer those questions. As plans begin across the country to reopen many businesses, more questions will arise like, “How will I get my business back to where it was before?”, and, more importantly, “What is my business worth now?”.

Unfortunately, for many business owners, their company will be worth less than it was just a few months ago. While a lower fair market value may affect the potential sale of a business to an outside buyer, there can be a significant benefit to a reduced fair market value: lower gift taxes when transferring interest in a business to a family member.

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Armstrong Building Maintenance partners with Revolent Capital Solutions

April 20, 2020

For Immediate Release

Caber Hill Advisors announced today that it advised Armstrong Building Maintenance (Armstrong) on its recapitalization with Revolent Capital Solutions. Caber Hill acted as the exclusive advisor to Armstrong Building Maintenance in the transaction. 

Based in Honolulu, HI, Armstrong offers janitorial and facility services to commercial clients across various industries, including education, medical, hospitals, office, retail, shopping malls, and financial institutions.

Bryson Raver, Managing Partner of Revolent Capital Solutions based out of Tampa, FL commented, “For over forty years, Armstrong Building Maintenance has consistently provided service to recognizable corporations and institutions across the  great state of Hawaii.

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Confused about the Paycheck Protection Program? You're Not Alone

April 4, 2020

The federal stimulus for small businesses, known as the Paycheck Protection Program, went live yesterday. But not much happened.

Most banks are still figuring out how to roll out these loans as the guidance from the federal government came in late Thursday, April 2, and still lacks clarity. Many are collecting information from interested customers with plans to contact them directly as soon as they are ready.

Here is what we recommend:

  1. If you haven't already contacted your banker, do so now. Many banks will take a "first in, first out" approach to approving applications so make sure that you inform your banker of your interest and complete any forms they request.
  2. If you haven't done so already, calculate your average monthly payroll for 2019. Make sure to include the cost of health insurance, retirement plans, and any employer-paid state and local taxes, but also cap any employee compensation at $100,000.
  3. Make copies of the Drivers License of any owner who owns 20% or more of your company as they will likely be required with your application.
  4. Review SBA Form 2483 and complete the sections you are able. You will need to fill this out in order to apply.

You can find more details on the payroll calculation and requirements for loan forgiveness by reading the Borrower Fact Sheet prepared by the U.S. Treasury.

As always, give one of us a call if you need support.

Disclaimer: The information listed above is based on our analysis and discussions with numerous banks as of the time of this writing and is subject to change upon the release of new information. We will update this page if any material changes become known.

What We're Reading About the CARES Act

President Trump just signed the $2 Trillion CARES Act into law, and everyone's inboxes are being flooded with emails reacting to it and explaining it's provisions. Rather than attempt more of the same, we'd like to share what we've found to be some of the most informative resources:

The briefest - Creative Planning's take on Implications for Small Business Owners.

Slightly longer - The National Law Review's piece titled Small Business Relief in the CARES Act.

The most detailed - Barnes & Thornburg wrote a lengthy but excellent article titled Specifics of CARES Act and Implications for Businesses and Individuals.

These are just some of a number of well-written pieces. We will, however, provide our advice.

If you think you qualify for any of the SBA loans being made available, start preparing to apply. Calculate your monthly payroll, health insurance, rent/mortgage, and utilities expenses, and gather any supporting evidence you have of these expenses. Prepare to also provide recent tax returns and other financial statements, for both the business and yourself personally.

Banks aren't accepting applications yet, and it may be up to two weeks before they can. You, however, can begin contacting banks now, building relationships with key decision-makers and educating yourself on the process and your likely eligibility.

If you would like some guidance specific to your business or industry, give us a call. We're happy to share our perspective on the CARES Act and the market more generally.

Lastly, we are offering a limited number of pro bono hours to help businesses with cash flow modeling and decision-making around the types of financing available. We can also lead capital raising efforts for business owners unable to manage them on their own. Reach out to your Caber Hill contact or email us at This email address is being protected from spambots. You need JavaScript enabled to view it. to learn more.

Your Business in Survival Mode - How Caber Hill Can Help

These are unexpected and unprecedented times. We have so many friends whose companies are completely shut down for the foreseeable future, employees furloughed, and worried about where cash shortfalls will be made up. All of us are faced with tough decisions and big challenges in the weeks and months ahead.  The more we can all help each other, the better.  Taking care of yourself, your families, friends, neighbors, and communities is more important than anything at this moment.  That is priority number one and we are trying to help in every way we are able.

Unfortunately, the Covid-19 pandemic has altered the M&A landscape as well. Some transactions are still closing but the majority are on hold as buyers take a wait-and-see approach. Lenders are focusing on their existing books of business and deprioritizing new opportunities. There are some immediate actions you can take:

  • If you have an outstanding business loan, call your relationship manager now and ask for help. Many will.
  • If you have a line of credit, pull down the entire outstanding amount. Guarantee that you have access to the cash regardless of whether or not you'll need it.
  • The SBA is also providing disaster relief loans of up to $2 million per business. Read about that here.
  • New government programs are being introduced daily, both nationally and locally. Consult your advisors to determine which are best for you.

 In addition to our traditional deals, we help clients navigate tough times in many ways, including:

We are also constantly communicating market activity and the current sentiment among capital providers. If we can help in any way, by our services, our guidance, or simply our perspective, please give one of us a call.

Eventually, we will reach the end of this crisis and return to normal. M&A activity will rebound. Private equity firms are still sitting on record levels of cash that they need to deploy, and the investors and companies that believe acquisitions are core to their growth strategies will need the acquisition engines running on all cylinders once things return to normal. If your near-term plans called for selling your business, rest assured that you will still be able to, likely as soon as later this year. If you are in growth mode, ensure that you can weather this storm and position yourself to be even stronger once we reach a recovery.

We wish you the best in these challenging times.

Sincerely,

The Caber Hill Team

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