Denis A. O'Sullivan540.207.8222
Denis A. O'Sullivan
Denis A. O’Sullivan has been providing advice and counsel to business owners for almost 30 years.
From 1996 through 2002, as a senior financial planner for the Mason Companies, Denis worked primarily in San Francisco and Silicon Valley, advising owners of technology companies as they planned their exits. During his career, Denis has helped his clients understand the personal impact of many different types of corporate transactions, including IPOs, recapitalizations, and sales to strategic acquirers and financial sponsors.
Since returning to the Washington, D.C., area full-time in 2002, Denis has focused on helping business owners assess strategic options. Generally working with clients two to three years before an actual liquidity event, Denis has developed a specialty in mapping out the various options available to the business owner, including sale, capitalization and retention, and the likely personal impact of each.
Denis graduated from the University of Virginia in 1986 with concentrations in English Literature and Foreign Affairs. He is a Certified Financial Planner®.
Inflection Analytics offers
Founders who find themselves at a strategic crossroads need to fully understand their options. Should they sell their company, retain it or capitalize? A variety of resources within the investment banking and M&A communities are available to help business owners assess strategic options. However, little is available to help them understand the personal impact of each choice. Inflection Analytics helps business owners understand their strategic options before they hire a banker by calculating the likely outcome for each in terms of investment return, cash flow and tax efficiency. Comparing these outcomes to the owner’s financial independence goals, we assess strategic options using the most important metric of all—personal financial security.
Inflection Analytics models outcomes for a variety of strategic alternatives, including—
- Business retention/hiring key executives
- Bootstrapping/services build-out
- Venture Capital Financing
- Growth Capital Financing
- Debt Financing
- Sale to a strategic acquirer
- Sale to a financial sponsor
The business owner who has engaged an investment banker, or is already talking to likely acquirers, will benefit from Term Sheet Analysis. Every company sale represents a unique combination of risk, cash flow, investment return and tax. Inflection Analytics quantifies these to help entrepreneurs understand the true economic value of a proposed transaction.
Inflection Analytics helps owners with competing offers answer important questions.
- What is the likely net cash result of each offer, accounting for fees, holdbacks and personal income taxes?
- To what degree should one discount earn-out, if this is part of the transaction?
- What strategies might be utilized to reduce personal income taxes?
- What is the appropriate target for net cash out of this transaction, given one’s personal financial independence goals?
- Should one invest all or part of one’s proceeds back into the successor company (i.e., rolled equity)?
- What is the risk/reward trade-off if one accepts stock as part of the transaction, and given this, how much stock should one be willing to take as sale consideration?
Many entrepreneurs will simply choose the preoffered term sheet that has the highest gross sale value. By itself, this is a poor metric to choose a buyer. Inflection Analytics helps sellers understand the true economic value of each proposed transaction, in terms of both net proceeds, as well as risk.
The founder of a closely held business faces a variety of complex issues when transferring ownership of the company to the next generation of leaders.
Inflection Analytics helps founders map out their options in regards to the transfer of equity ownership to management, family members and outside investors. This process is necessarily done within the context of an estate plan for the current owners, as issues such as transfer tax will most often be of vital concern.
For family members who want to preserve the company as a legacy, share transfer may involve payment of gift and/or estate taxes. A long-term gifting and /or share sale strategy, executed within an overall estate plan for the founders, is necessary to achieve the best combination of tax reduction, liquidity and management continuity.
It is worth noting that founders who die without a succession plan often have this imposed upon them—by the IRS. Heirs are given a limited amount of time to come up with estate taxes based on the value of the company, due soon after death. If they cannot, the company must be sold within a relatively short time period.
Investors who provide outside capital reduce the founders’ liquidity risk, but may want a significant role in future management direction and decision-making. Helping founders choose the right investors – the ones who add value beyond just the checks they write – is a primary focus of Inflection Analytics.
Current management may also be a good choice for future ownership. While equity participation programs are useful, providing key managers with a clear path towards significant ownership is essential for their long-term retention.