Reading buy then build now. What I don’t understand is: how do you value the business on paper at 5x the assets (capital) before buying the business? Wouldn’t the value be equivalent to the cash? Or is it worth that multiple just because it’s in the hands of a corporation that on paper is intended to purchase a business? I wish I better understood how that detail works.
How would u value s corp at 2.5 mil or any value with out having any assets or cashflow or anything, that’s the first question any avg investor would ask
The intention of acquisition or, more officially, with signed LOI. If done in same taxable year, there is no issue. However, I’m not saying this is simple. You MUST be a deal maker.
This sounds a bit like a Search Fund SPAC. Is the investor C -corp and investor in the NewCo or does the Investor C-Corp acquire the company and become the NewCo (like a SPAC) in a reverse merger? Is the primary purpose to shield investors from the SBA diligence process? It they own less then 20% individual, aren't they still exempt?
Hey there! The C Corp acquires the assets of the target company--so in this example it's NOT an equity purchase, it's an asset purchase. This also isn't a search fund in the traditional sense, rather, this would be the reverse of that--a "self funded" searcher who wants to raise equity during the search process. Make sense?
Great video walker!
Reading buy then build now. What I don’t understand is: how do you value the business on paper at 5x the assets (capital) before buying the business? Wouldn’t the value be equivalent to the cash? Or is it worth that multiple just because it’s in the hands of a corporation that on paper is intended to purchase a business? I wish I better understood how that detail works.
How would u value s corp at 2.5 mil or any value with out having any assets or cashflow or anything, that’s the first question any avg investor would ask
The intention of acquisition or, more officially, with signed LOI. If done in same taxable year, there is no issue.
However, I’m not saying this is simple. You MUST be a deal maker.
…says every startup ever. 😂
This sounds a bit like a Search Fund SPAC. Is the investor C -corp and investor in the NewCo or does the Investor C-Corp acquire the company and become the NewCo (like a SPAC) in a reverse merger? Is the primary purpose to shield investors from the SBA diligence process? It they own less then 20% individual, aren't they still exempt?
Hey there! The C Corp acquires the assets of the target company--so in this example it's NOT an equity purchase, it's an asset purchase. This also isn't a search fund in the traditional sense, rather, this would be the reverse of that--a "self funded" searcher who wants to raise equity during the search process. Make sense?