Transaction Advisory

For buyers and sellers looking for strong, lasting financial counsel, Adams Capital provides independent financial opinion through transaction advisory, fairness opinions, and board services. Combining technology and 90 years of valuation experience, we can help you determine whether a transaction makes sense from a financial perspective. Gain insight on opportunities, structures, and risks so you can close good transactions and walk away from bad ones. Our objective is to help you achieve financial peace of mind throughout the lifecycle of the deal and beyond by giving you all valuation information you need to make an informed decision.

Transaction Advisory Services

Adams Capital helps buyers and sellers make informed decisions and close good transactions. We do that by tapping into years of transaction advisory experience and valuation expertise. When fiduciary issues are a concern, our transaction advisory engagements may include a fairness opinion. If no true independent decision maker exists, we are equipped to set transaction prices.

Our work is routinely relied on by trustees, executors, and knowledgeable decision makers. Compensation is neither contingent on findings nor dependent on a transaction outcome. We typically begin transaction advisory engagements with a fixed fee and then charge hourly for follow-on support. You can trust that your team at Adams Capital is considering all appropriate financial, operational, and industry information.

Fairness Opinions

When a Board of Directors considers a proposed transaction, price is one of the first and most critical inquiries. With diligence and court determined fiduciary duty, the Board must exercise due care in affirming the fair price before approving a proposed transaction. At a minimum, they must consider all relevant facts and alternatives and provide supporting documentation when making a recommendation. Conflict of interest and fiduciary duty may preclude a Board from issuing an opinion on the fairness of a proposed transaction. Faced with these practical and legal considerations, a diligent Board should always seek the counsel of a qualified, independent valuation firm such as Adams Capital to seek an unbiased opinion of fairness for a transaction. Situations that warrant a fairness opinion include:

  • Apparent investor conflicts
  • Deals driven by expected synergies
  • Deals far afield from core business
  • ESOP transactions
  • Financing
  • Multiple creditor classes with different rights
  • Multiple equity classes with different rights
  • Non-competitive sales process
  • Recapitalization
  • Related party transactions
  • Restructuring
  • Significant transactions
  • Solvency/insolvency
  • Stock buybacks
  • Substantial executive severance in the event of a change in control
  • Terms and conditions that depart from comparable transactions

The question of fairness from a financial perspective comes down to whether the seller is receiving enough and whether the buyer is paying the right amount. Defining fairness boils down to identifying the intersection between these respective valuations. Selecting the appropriate basis of value is vital and demands that key questions are answered, including:

  • Are there recent transactions involving controlling interests in similar companies?
  • Are there suitable comparable publicly traded companies?
  • How did the subject company perform historically?
  • How is the subject company expected to perform in the future?
  • What, if any, synergies can the buyer hope to realize from the transaction?

Answering these questions requires objectivity, judgment, and experience. Adams Capital helps companies build this backdrop against which a proposed offer is evaluated and deemed fair or unfair. We are well-accredited and experienced in providing fairness opinions in support of a Board’s fiduciary duty.

Board Services

Professionally managed family-owned businesses have unique challenges and opportunities. Family reporting ensures that all family owners have routine reporting of necessary financial and operational information. The information is also particularly helpful to fiduciaries.

To allow management to focus on the business and avoid potential family distractions, Adams Capital provides an independent financial opinion either through participating on or presenting to the Board of Directors. Management originates the reporting. Adams Capital reviews it for consistency and accuracy. We forward quarterly reports, each with an assessment, opinion, and recommendation. The outcome of this careful financial review is informed family business owners who have the capacity and confidence to focus on important metrics.

Corporate Recapitalizations

Recapitalization is the process of restructuring the capital of a closely-held business to address business liquidity succession issues, cash flow, and wealth. It is a viable approach in the following scenarios:

  • Protect assets from creditors
  • Create benefits for business owners from countries that lack comprehensive tax treaties with the United States
  • ​Minimize estate tax liability on a future business appreciation
  • Provide a way for someone to transfer future equity growth to children, grandchildren or others in the event that their business investment grows in value beyond what they need

Proper valuation is critical for appropriately structuring the transaction. Ensuring equivalent value is transferred takes a full understanding of company value and the rights associated with different classes of stock and debt. The IRS scrutinizes recapitalizations and valuations so clear, unbiased, supportable valuation is critical.

Adams Capital is experienced with valuing companies for recapitalization purposes. We have successfully defended recapitalization conclusions in court and before the IRS. Working closely with your legal and financial advisors, we can assure you a beneficial and appropriately structured recapitalization that meets your wealth maximizing goals.

Employee Stock Ownership Plans

Employee Stock Ownership Plans (“ESOP”) valuation is a complex matter and must consider each company’s unique facts and circumstances.

Introduced in 1974 as part of the Employee Retirement Income Security Act (“ERISA”), ESOP is a vehicle to motivate employees with company ownership. An ESOP is structured as a legal trust and classified as a qualified retirement plan under the Internal Revenue Code. A trustee serves in a fiduciary capacity solely in the interest of the ESOP and its participants. Retaining an experienced, independent appraisal firm in the valuation of the closely-held employer securities is paramount in satisfying the trustee’s fiduciary responsibilities.

Valuations for ESOP purposes are necessary for two reasons:

  1. When the ESOP is formed, the initial purchase must be priced fairly
  2. The shares owned must be re-valued annually to determine the repurchase price in the event of employee retirement, departure, disability or death

​ERISA requires an ESOP to pay no more than “adequate consideration” (fair market value) when investing in a businesses’ equity. Plan trustees and fiduciaries determine the fair market value in good faith. ESOP valuation assertions are then scrutinized by the IRS, ESOP trustees, and the Department of Labor.

Because of these many issues, an appropriate ESOP valuation must be well documented, unbiased, and supportable. Adams Capital has substantial experience with valuing businesses and providing financial advisory services for ESOP plan trustees.