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CEO Compensation in Private Venture-Backed Firms

[twocol_one] Ola Bengtsson Johnson School Cornell University Ithaca, NY 14853-6201 Tel.: 607.254.8807 lob2@cornell.edu [/twocol_one] [twocol_one_last] John R. M. Hand Kenan-Flagler Business School UNC Chapel Hill Chapel Hill, NC 27599-3490 Tel.: 919.962.3173 hand@unc.edu [/twocol_one_last] We study the pay earned by CEOs during the early life-stages of private venture-backed firms. The typical venture-backed startup needs considerable external […]

Preferred Stock Valuation Issues

In general the most important factors to be considered in determining the value of preferred stock are: The stock’s yield rate, Dividend coverage ratio, and Protection of its liquidation preference. In addition, the appraiser has to assess the preferred stock voting rights, redemption privileges, and discounts for lack of marketability if the preferred stock is […]

Business Valuation – A Tool to Assess Business Ownership Transition Options

Business owners will find themselves evaluating various ownership transfer options for their companies, especially as they near those golden years.  Wise owners have planned for the transition of their businesses from the first day they stated their businesses. Appropriate planning, well in advance of any contemplated transaction, will enable business owners to maximize overall company […]

Interpretation of Employee Stock Option (ESO) Valuation Methodologies

In stock options analysis there are three mainstream methodologies and approaches used to calculate an employee stock option value, these are: Closed form models like Black–Scholes model, also known as the Black-Scholes-Merton model (“BSM” or “Black-Scholes”), and its modifications such as the Generalized Black-Scholes model (“GBM”); Monte Carlo Path Dependent Simulation methods; and Binomial Lattice. […]

Internal Revenue Code Section 83(b) Election

Property transferred in connection with performance of services (Internal Revenue Code § 83) (a) General rule. If, in connection with the performance of services, property is transferred to any person other than the person for whom such services are performed, the excess of— (1) the fair market value of such property (determined without regard to […]

Business Valuation: Baby Boomer Business Owners Retiring and the Need for Adequate Planning

Trends in the Baby Boomer Population Baby boomers now comprise approximately 78-80 million Americans and account for the largest age cohort of the population in the United States. This age cohort includes those born between 1946-1964. Of this population age cohort, approximately 10.0%, or 8.0 million Americans have household incomes greater than $50,000, and also […]

Stock Valuation and Stock Option Pricing Alternatives

Publicly traded companies, venture capital firms, and private equity firms are now dealing with the same set of financial accounting & reporting, tax reporting and disclosure requirements related to their stock options. These requirements include ASC 718 (formerly SFAS 123R) – Accounting for Stock based Compensation,  Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) […]