Think only multi-national conglomerates are confronted with million-dollar lawsuits filed on behalf of disgruntled investors? While it may be tempting to assume such pricey legal entanglements only apply to corporate giants like the Enrons and WorldComs of the world, a recent milestone for a cash settlement belongs to a much more modest business. What began as a single store stocked with athletic footwear that opened in Birmingham, Ala. in 1977 has become famous for much more than its shoe selection.

An ESOP (Employee Stock Ownership Plan) is an attractive way to access the personal wealth currently trapped in the shares of Florida’s privately owned businesses and share the wealth with the employees that helped create that business.

New guidelines impacting common stock valuations may result in identical classes of stock being assigned widely varying values. The different methodologies acceptable under the criteria established for IRC Section 409A could create conflicting valuations, which would create varying results for FAS 123R purposes. Private equity firms may be particularly vulnerable to resulting inconsistencies because of the potentially dramatic changes in the equity values of their portfolio companies due to operational improvements and/or top-line growth. Clearly there needs to be a better understanding of the purpose and application of each methodology.

Prevention versus treatment. One might assume investment dollars flow freely into preventative care based on the overall media coverage. However, having just returned from the largest bio-healthcare conference of the year, I can tell you that investing in treatment (pharmaceuticals, medical devices, health insurance, etc.) is still king and has no near-term threat of being overthrown. Approximately four percent of the $2 trillion spent annually on healthcare is earmarked for prevention. So it is easy to understand the investor focus on treatment.

The tides in Nova Scotia’s Bay of Fundy are the most extreme in the world with a 56 foot variance between high and low. Consequently, Canadian fishermen value how well the ship’s captain knows each and every prominence and tributary.

As private equity transactions increase, the need for junior capital (second lien loans and mezzanine debt) has risen exponentially. According to Standard & Poor’s, the average middle market deal for the second quarter of 2006 ($50 MM in EBTIDA or less) was funded using 40% equity, 40% senior debt and 20% junior capital. The recent historically low interest rates made second lien financing attractive in larger deals with greater collateral. Therefore, the need for traditional mezzanine financing was reduced and was primarily used to bridge the gap between the second lien and the equity.

The Phone Call

The current push from business and government to shift healthcare responsibility and costs to individual consumers, often called Consumer Directed Healthcare, is laying the groundwork for the creation of a wide array of new kinds of businesses, services and products, with many health care providers turning to mergers and acquisitions as the fastest way to meet the new demand.

Whether you are a CFO holding stock options or an employee looking forward to a year-end bonus, you need to be aware of the new provisions in Section 409A of the IRS code. Broadening the definition of deferred compensation, the rules now cover stock plans, option plans, stock appreciation rights (SARs), bonus arrangements, and more. Penalties for noncompliance are significant, making it essential that you are aware of how your compensation is valued and reported.

One of the toughest questions a business owner will ultimately face is when to sell the company. But once that decision is made, a host of other questions arise: How do I ensure I get the best value for my company? Do I want to walk away completely or retain some ownership and How long do I need to stay on after the sale to ensure the transition goes smoothly? And what about my employees, how do I make sure their loyalty and support is rewarded and their future secure? And that dreaded of all questions, how do I minimize the tax bite?