IS YOUR COMPANY A GOOD CANDIDATE FOR A BUYOUT?

In today's hot mergers and acquisitions market, the private equity funds and venture capital funds are fighting fiercely looking for investment opportunities. In 1998, approximately $80 billion was raised by private equity funds alone. Private equity funds are expected to raise eve more in 1999.

So what are the funds doing with all this money? They are expanding into territories and business like never before. Never thought your company would be a good acquisition candidate? never thought about cashing out some of the equity in your business? Think again. It may be more profitable than ever to court some of the finds to your business.

What is the difference between the private equity funds and the venture capital funds?

Private equity funds have more capital funds.

As such, private equity funds tend to make bigger capital investments than venture capital funds. Typically, private equity funds are attracted to more developed businesses rather than to start-ups.

What exactly does it mean when a private equity or venture capital fund buy into your business?

With each transaction, the details vary. However, in general terms, when a fund is interested in making an equity investment into a company, the fund will typically infuse additional capital. Part of the capital will be paid to the existing shareholders and part will be reinvested into the company for a variety of purposes (i.e. expansion, development, sales and marketing).

If a fund invests in your company does that mean that you and your existing management team are out of a job?

Almost always the answer is no. Private equity funds especially are attracted only to companies with a qualifying management team who wants to stay around and

grow the company after the capital infusion.

What does all this mean to your business?

If your business is a good candidate, it may mean liquidating some of your equity while receiving the opportunity to expand your business. With the hot market, your business may be worth a lot more that your current bottom line.

In the next two newsletters I will address (1) what equity investors are looking for in a company, and (2) how to attract buy out funds to your company.

The I.R.S. almost always charges taxpayers with sizable penalties at the conclusion of an audit. Most often the penalties should not have been charged and can be defeated - either before or after they are paid.

Recently, for example, I got the I.R.S. to refund a $22,000 penalty plus interest. I take most penalty cases on a contingency basis. Never hesitate to challenge the I.R.S. penalties.