See also Internet /intranet /extranets W.W.
Trang 1658 Index
Sher win-Williams Company, 62– 63, 64
Silgan Holdings Inc., 408
Sirena Apparel Group, 525
SmithKline Beecham PLC, 576
Snapple Beverage Corp., 568, 569–570
Social Security/FICA, 326
Software, 156 –164, 540–541
Sole proprietorship, 226
continuity of life, 234
control, 237
formation, 228–229
liability, 245
out-of-state operation, 231
recognition as legal entity, 232
taxation, 248–249
transferability of interest, 235–236
Southwest Airlines, 53–54
Spin-offs and split-ups, 347–350
Spreadsheet software, 157–160
Standard(s):
collecting, 213
cost accounting systems, 217–219
currently attainable, 203
engineering studies, 213–214
fixed costs, 218–219
government accounting, 217–218
motivation, 213–215
past data, 215
setting (by board of directors), 516
time/motion studies, 214
types of, 202–203
valuation, 623
variable costs, 218
Stead, Jerre, 568
Stock(s), 331–335
appreciation rights (SARs), 331–332
vs cash deals (M&A), 582–583
employee plans (ESOP), 341–343
shareholders, 189, 239–240, 511
substantially disproportionate distributions,
340–341
synthetic, 439
tax issues, 331–335, 340–341
Storage Technology Corp., 376, 377
Story model, 263–265
Straddle, 425
Strategic partners, 281
Strategy, 516 –518, 552–553
Streaming media, 170
Strike price, 364
Subchapter S, 227, 252–253, 318–322
Substitution, principle of, 596
Sunk costs, 299
Sustainable earnings, 72–96, 617 See also
Earnings
Swaps, 361, 433, 434, 447– 449
equity, 448
interest rate, 449– 451
SWOT, 178 Synthetic cash, 439 Synthetic stock, 439 Systematic risk, 613 Taglines, 263 Takeover, 562 Tax issues:
acquisition, 322–324, 578, 580, 583, 585 business decisions, 314–352
business expenses, 325–326 business forms/entities, 228, 248–255 buy-sell agreements, 345–347 case illustration, 315 complete termination of interest, 341 deferred compensation, 326 –328 dividends, 26, 339–340 employee stock ownership plans, 341–343 equity sharing, 330–335
estate planning, 343–347 executive compensation, 325–330 family limited partnerships, 344–345 foreign subsidiaries, 405– 406 gift tax, 317–318
income tax note (example), 78–79 individual federal income tax rates, 249 interest-free loans, 328–330
like-kind exchanges, 337–339 nonrecurring items, 59– 62, 78–79, 90, 93 passive losses, 320–322
pass-through entities, 319–320 reverse triangle merger, 352 sale of corporation, 350–351 shelters, 321
spin-offs and split-ups, 347–350 stock appreciation rights (SARs), 331 stock options, 332–334
subchapter S corporation, 316 –322 substantially disproportionate distributions, 340–341
taxable income and income tax, 296 three-corner exchange, 339 unreasonable compensation, 315–316 vacation home rental, 335–338 Team (business plan section), 281–283 advisory boards, 281–283
bios/roles, 281 board of directors, 281 compensation, 283 external members, 281–283 ownership, 283
strategic partners, 281 Technology See Information technology Telef lex Inc., 359
Telsik, Sarah, 519 Tenneco Inc., 364, 373, 405 Three-corner exchange, 339 Tiger International Inc., 410– 413
Trang 2Index 659
Timeline, 281, 282
Time/motion studies, 214
Time value of money (TVOM) analysis, 299–301
Time Warner/AOL, 561, 563, 586
Titan International Inc., 370–371, 388
Toys “R” Us Inc., 40, 42, 43
Transaction processing, 140–144
Transfer pricing, 404– 407
Transfer of risk, 424, 432
Travelers Inc., 575
Trimark Holdings, 45
Turnover ratios, 18
UAL Inc., 364
“Ubiquitous” computing, 538
Underlying earnings See Sustainable earnings
Under writers, 464– 466
United Airlines, 563, 576
United States government restrictions on
business practices associated with foreign
subsidiaries and governments, 356, 413– 415
UNIX operating system, 538
Unsystematic risk, 615
Unusual charges, 85, 94
USAir, 563, 576
Vacation home, renting (tax impact), 335–338
Valuation of business, 593– 625
adjustment to earnings for purposes of,
608– 609
appraisal of fair market value, 604– 606
approaches to value (asset /income/market),
594
band of investment, 607
buyers (different types of ), 594–595
comparison to industry averages, 604
control interest, 622
control premium, 619
cost of capital, 606 – 608
direct equity methodology, 605– 606
discounted cash f low method, 609– 618
discount for lack of control, 622
discount for lack of liquidity, 621– 622
discount for lack of marketability, 622
fair market value, 595, 604– 606
financial buyers, 594–596
financial statement analysis, 599– 603
guideline companies approach, 618
industry analysis, 597
Internet links, 625
investment risk, 596 marketability, 622 market value of invested capital (MVIC), 608 minority interests, 622– 623
“mom and pop” business, 595 principle of alternatives, 596 principle of substitution, 596 process overview, 595–597 publicly traded guideline-companies method, 618– 621
ratio analysis, 601– 603 reconciliation of methods, 621 standards, 623
strategic/investment buyers, 595 Value creation in M&A, 573–581 Value engineering, 623– 624 Varco, 93–94
Variable overhead indices, 211–212 Variance analysis/reports (budgets), 179, 180, 212–213
Veeco Instruments, 43 Vertical integration, 576, 577 Vertical merger, 563 Vishay Intertechnology Inc., 364 Visual fit (method of cost behavior estimation), 118–119
Walker, James, 260 Wal-Mart, 552–553, 554, 559 Warrants, 445
Wealth, maximizing, 291–292 Weighted average cost of capital (WACC), 304–305, 616
Western Digital Corporation, 354 Wide area network (WAN), 165, 166, 537, 547 Windfall profit and windfall tax, 295–296 Wireless modems, 164
Word processing software, 156 –157 World Market Watch, 34
World Wide Web, 167–168 See also Internet /intranet /extranets W.W Grainger, 555
Xerox Palo Alto Research Center, 538 Y2K, 541
York International Corporation, 369 ZETA, 32
Z score, 31–32