...Graduate Finance Policy 03 December 2014 Master Limited Partnerships Executive Summary Investment vehicles are available in many different forms. They are used to earn money over a certain period of time. Investors have to make decisions quickly before the investment option is no longer available. The focus of this paper is the investment option of Master Limited Partnerships. Master Limited Partnerships are a type of investment vehicle that has been around since the early 1980s. They are a publicly traded partnership that is used by companies that own energy and natural resource assets. These companies are usually those that are mature and have no additional investment opportunities. There are several governance models for MLPs that are lined out from the traditional model to any modifications that have been made in the course of their lifetime. Each MLP can have different features oulined in their operating agreements, so investors need to have a good understanding of the MLP that can be bought into. They have advantages and disadvantages just as any other investment option. An advantage is that they are not doubly taxed while a disadvantage is that the detailed record keeping could outweigh the benefit of the tax advantage. There are more advantages and disadvantages outlined in this paper, but these are the most notable. Most are similar in nature, but there are different requirements stated for that particular partnership. The distributions are normally paid...
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...EARLY WARNING REPORT FILED UNDER NATIONAL INSTRUMENT 62-103 1. Name and address of the offeror ESL Partners, L.P., a Delaware limited partnership (“Partners”) ESL Investors, L.L.C., a Delaware limited liability company (“Investors”), SPE I Partners, LP, a Delaware limited partnership (“SPE I”), SPE Master I, LP, a Delaware limited partnership (“SPE Master I”), RBS Partners, L.P., a Delaware limited partnership (“RBS”), ESL Institutional Partners, L.P., a Delaware limited partnership (“Institutional”), RBS Investment Management, L.L.C., a Delaware limited liability company (“RBSIM”), CRK Partners, L.L.C., a Delaware limited liability company (“CRK”), ESL Investments, Inc., a Delaware corporation (“ESL”), and Edward S. Lampert, a United States citizen. Partners, Investors, SPE I, SPE Master I, RBS, Institutional, RBSIM, CRK, ESL and Mr. Lampert are collectively defined as the “Offerors”. The principal address of each of the Offerors is 1170 Kane Concourse, Suite 200, Bay Harbor, Florida 33154 2. The designation and number or principal amount of securities and the offeror’s security holding percentage in the class of securities of which the offeror acquired ownership or control in the transaction or occurrence giving rise to the obligation to file the news release, and whether it was ownership or control that was acquired in those circumstances. On November 13, 2012, Sears Holdings Corporation (“Sears Holdings”) is effecting a partial spin-off of shares of Sears Canada...
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...Table of Contents I.) INTRODUCTORY PRINCIPLES 2 A.) Efficiency and Other Concepts 2 B.) Agency and Partnership Law 2 II.) INTRODUCTION TO THE CORPORATE FORM 16 A.) Formation and Structure 16 B.) Debt, Equity, and Valuation 22 III.) CONTROL OF CORPORATE DECISIONS 32 A.) The Role of the Shareholder 32 B.) Management Obligations 50 1.) Duty of Care 51 2.) Duty of Loyalty 56 3.) Duty of Fairness: Parent-Subsidiary Relationships 63 4.) Duty of Good Faith 64 5.) Management Obligations Under Federal Securities Laws 67 C.) Shareholder Litigation 76 IV.) Structural Changes 85 A.) Transactions in Control 85 B.) Mergers and Acquisitions 86 1.) Mergers 87 2.) Sale of Assets 93 3.) Asset Purchase or Tender Offer 94 C.) Public Control Contests 96 1.) The Poison Pill 100 2.) Enhanced Review When Business is Up for Sale 103 3.) Proxy Contests for Corporate Control 106 4.) Protecting the Deal: Shareholder Lockup Agreements 109 I.) INTRODUCTORY PRINCIPLES • Definitions o Corporate Law: The allocation of rights and power within a corporation; the internal body of law ▪ Addresses the creation of economic wealth through the facilitation of voluntary, ongoing collective action ▪ Flexible- expectation that market discipline will weed out what is not working ▪ Principle aim- reduce agency costs of all sorts o Securities Law: Regulates capital markets that corporations use to obtain funding ...
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...Currently the business is structure as a Sole Proprietor. Several alternate business structures may provide additional benefits for Far Horizon. One of Far Horizon's goals is to raise additional capital. The potential investors have required a forty-nine percent ownership of the business. In order for the current owner of Far Horizon to retain operating control of the business and to raise capital, four types of business organization merit investigation. Two types of corporations "C" and "S" would provide structure for gaining capital but have substantial documentation requirements. Two types of Partnerships, General and Limited provide the ability to maintain control of the operations of the business but can subject the owner to significant liability. Each of the four options is described in more detail below. C-Corporation In a C-Corporation, the shareholders have the protection of limited liability. The Shareholders liability cannot be greater than the amount they have invested in the business. Dividends from a C-Corporations are taxed twice, once at the corporate level and again on the individual income taxes of the shareholders receiving the dividends. C Corporations have to ability to change ownership of stocks and add new shareholders relatively easily. C-Corporations can have unlimited numbers of shareholders and different classes of stock. A corporation is a separate legal entity from its shareholders. A corporation has perpetual life, meaning that the corporation...
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...very helpful. With this invention I see that in the future there will be many different ways to use my product in a safe manor just like the TV remote control. I have little skill in the business aspect of things and very little money to start off with. I am trying to figure out what type of business structure (Sole Proprietorship, Partnership, or Corporation) would best suit my needs and help my family out in the long run. To begin, sole proprietorship is a type of business that is the easiest to set-up, it’s all your own money, time and decision making. The business goes on your own tax return, to make it very simple. All the profits you would receive go straight to you and it would take the least amount of money to operate. However, all the liability lies on your shoulders. If the company gets sued due to bad quality products everything you own such as your house, car, or any other valuable assets could be taken away to pay the cost of the damages. An example of this business practice would be a small store or a restaurant. Partnership is a little different in the fact that there are 2 different types. One being general partnership where 2 or more partners contribute everything to the business, money, skills, time, and their effort. With this type each partner is personally liable for all debts of the company and can get their assets taken away to pay bills owed to other. Each partner has an equal say on what goes on as well. Sometimes this is a good thing for...
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...PART A Sole proprietorship: A sole proprietorship has one owner and is unincorporated. Some advantages that the owner of a sole proprietorship might enjoy include total control of running the business, receiving all proceeds of the business, and multiple tax benefits. Disadvantages that the owner of a sole proprietorship might encounter include sole responsibility and liability for the business and limited access to funds and resources. • Income taxes – The business does have a separate income tax. All profits and losses from the business are reported with the sole proprietor’s taxes by filing the “Form 1040, and along with it Schedule C.” http://www.theamericancollege.edu/pdf/fa251-class1.pdf (n.d.) Retrieved October 4, 2011 from www.my.wgu.edu • Control – The business owner enjoys complete control of the business. There are no partners or board members to interfere with the owner’s plans to run the business. In regards to the daily operations of the business, the owner can decide to run it himself or hire someone else to run it. The owner may make changes to the business, including moving the business, expanding or selling at any time, without consulting anyone else. • Profit retention – All profits of the business belong to the proprietor. The owner does not have to pay any partners or pay any dividends to shareholders. • Liability – Owners of sole proprietorship have unlimited and total liability for the business. The owner’s personal assets and liabilities are not separate...
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... Publicly Traded Partnerships (PTPs) and the passive loss limitations According to the IRS Publication 925, there are two sets of rules that may limit the amount of deductive loss from a trade, business, rental, or other income producing activity. These rules apply to individuals, estates, trusts, personal service corporations and closely help corporations. When it comes to PTP the rules must be applied separate to income or loss from a passive activity. In this essay I will tell what a PTP is and I will also give examples of some PTP’s. I will also tell what benefits these PTP’s claims will result from their investments. A publicly traded partnership (PTP) is a partnership between limited partners who provide the capital for the company and the general partners who manage the company. Limited partnership shares in the company are publicly sold by the partnership, offering equal equity or dividends of a public traded company. The publicly traded partnership must withhold tax on any actual distributions of money or property to foreign partners Real estate, energy (including alternative energy fuels), transportation and commodities are some of the PTP’s that the IRS restricts to limited partners. This matters because PTP’s combine the tax advantages of passing along tax liabilities to partners when distributions are made and the liquidity of a publicly traded company. For tax purposes, the distributions of income/dividends to limited partners are not treated...
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...Assignment #2 March 17, 2013 Donnia Carter Professor Scarlett March 17, 2013 Donnia Carter Professor Scarlett Identify the pros and cons of the partnership as a form of ownership. Partnership businesses are businesses that have more than one owner that profit from the business. There are several different types of partnerships. * Unlimited partnership: partnership where you are responsible for both your mistakes and your partner’s mistakes. * Limited Partnership: includes at least one general partner that manages the businesses and one limited partner that contributes financially but gives up the right to manage the business. * Limited Liability Partnership: all partners have management rights and limited liability. The pros of a partnership would include the “ability to pool finance”. (McGowen, 2012) With pool financing there is more investing involved giving the business and strong financial foundation. Another pro or advantage would be the “ability to Share responsibilities and capitalize on complementary skills”. (McGowen, 2012) This meaning that partners can share their interest and skills as well as the workload, making the business stronger and more prosperous. The downside to these partnerships can be explained a little in the definitions. For instance with the limited partnership you could be the limited partner who has all of the right to financially invest but you have no management rights. So if the company fails, you lose your investment. Discuss...
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...Restitution- where one party gets something out of the contract but the other party doesn’t perform so you got to require to give the benefit back * Reformation Types Of business entities Goals: pay as little tax as you can and limit liability Sole proprietorship: easiest business to form * Individual – personal venture * Advantage: easy to do, no separate taxes to pay, no corporate taxes to pay so lower taxes * Disadvantage: fully 100% liable Partnerships generally: individuals operating a business a co-owners * No separate taxes * Both partners are liable is a downfall * General partnership: association of 2 or more person in a business * Liability: generally, each participant is individually liable for partnership activities Limited partnership: General partnerships: all partners are involved and all equal shares of profit and voice but in a limited there are 2 classes of partner: general & limited * General are operating day to day so they are the ones that are liable * The limited partners are the investors so have no say in how the business operates Professional corporation (P.C.) * Permits professionals to incorporate * Duties of directors and officers Non-profit corporations * Must also be approved by the IRS and state tax board Non-profit corporations * Must also be approves by the IRS...
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...There is no boss the owner has total control over the operations. • PROFIT RETENTION – All of the profits are considered personal income of the sole proprietor. • LOCATION – The owner can move or expand the business as they see fit they are easy to set up and work in any setting appropriate for the business. Most sole proprietorships are home based or have small offices and storefronts. GENERAL PARTNERSHIP: is a business owned by two or more owners. In General partnerships each partner is fully active in the firm giving input in management and each partner is fully liable for the debts of the business. • LIABILITY – Each partner assumes unlimited liability for the debts of the business and can be held totally responsible for debts and malpractice committed by any of the partners. • INCOME TAXES – A partnership is a pass-through entity, not a separate taxable entity, and no federal income tax is imposed on the business itself. Each partner clams the profits or loss on their personal taxes. • LONGEVITY/CONTINUITY – The death of a partner may automatically end the partnership. The business may survive if the partners make a plan to continue the business. The reaming partners may transfer, purchase or sell the departing partners share of the business. • CONTROL – Each partner is fully active in the firm giving input in...
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...will be a vital factor to consider in the decision of going to business for ones self. Other important components to take into context are the different forms of business organizations, the financial statements associated with those organizations, tax, legal and accounting implications, and both the advantages and disadvantages for each form of organization. Exhibiting skills, discipline and hard work can be of value when entering the realm of entrepreneurship. The first step in starting a business, is determining the form of business organization the business will be. There are three types of organizations to chose from which are sole proprietorship, partnership, and corporation which is subdivided into C corporation and S corporation. The sole proprietorship is a business that is started and owned by one person. Partnership involves at least two or more persons involved as partners when the business is started. A corporation is a business organized as a separate legal entity by it’s stockholders (). A C corporation is a business that is taxed separately from its owners, whereas an S corporation is not. Each form of business possesses many advantages and disadvantages. One advantage of a sole proprietorship business is the fact that it is easy to start up. Others pros include complete control, tax advantages, cost effective, lesser start-up fees, autonomy and unlimited liability of the owner(). On the other hand the disadvantages of this form of business is the fact that business...
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...examining the sports bar identifying the ownership structure and control issues will determine of the proper business entity be used. Below is the information provided for this business: “Lou and Jose plan to open a sports bar and restaurant where customers socialize and watch sporting events on large-screen TVs that hang around the bar. They do not have much money, but they do have Miriam, a wealthy investor who does not have time to participate in the business, but wants to provide capital to start the business in return for a percentage ownership” (University of Phoenix, 2010, p.14). There are three partners, two of them will be active in the business the third will not but provides the capital to get the business up and running. A limited partnership (LP) is the proper...
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...Sole Proprietorship: A business structure in which an individual and his or her company are considered a single entity for tax and liability purposes. There is no legal distinction between the owner and the business itself. ·Liability - Seeing as there is there is no difference between a company and the owner with a sole proprietorship, the proprietor has unlimited liability, meaning the owner of the business is personally responsible for all debts, contracts, and obligations the business has. Unlimited liability puts all of the proprietors assets (home, cars, bank accounts, etc.) at risk should a lawsuit not covered by insurance arrive, or should debts go unpaid. ·Income taxes- With no legal distinction between the owner and the business, income from the business is taxed as normal personal income. Tax rates are dependent on the state, but individual income tax is by and large high. ·Longevity/ Continuity- A sole proprietorship can only have a single owner, meaning no partners can be brought into the business. Seeing as the owner is the same as the business itself, if the owner were to die, the business also dies. The assets of the business become part of his/her estate. Sole proprietorship businesses can be dissolved as quickly as they can be created; the business assets can be sold or given away. ·Control- One advantage of a sole proprietorship is that the owner of the business has a large, near total amount of control. The owner can ultimately make all decisions...
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...ownership should one take with incorporating a business; now there are three forms of ownership, the sole proprietorship; a partnership; or a corporation. Being that one may have little to no financial and management skills, no net worth, no idea of what start-up funds one will need, one will still keep their spinning wheels. When one know there are similar products out in the market in comparison to their invention, they know that eventually they will generate significant sales that can be incorporated into today’s technology right along with other products in the marketplace. With all of this in mind it has cause many to research about the best form of ownership with the business that they wish to incorporate. Anyone can see that the simplest and most common form of ownership for a new business owner is a sole proprietorship. This form of business is ideal for an individual owner, who can manage and own the business with full responsibility for all business transactions. If one wish to incorporate there spouse or a family member later in the business they can than form a limited partnership which will allow a partner to invest money but not have the management responsibility and the formalities that are set forth by the Revised Uniform Limited Partnership Act (RULPA) that will be executed and filed in accordance with local and state authorities. The limited partner will only be liable to the extent of money they vested into the company. This will still allow the sole owner...
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...Harper wants to engage CPA Goodwin to perform an audit. d. CPA H. Poirot bought a home in 1989 and financed it with a mortgage loan from Far-raway Savings and Loan. Farraway was merged into Nearby S& L, and Poirot became the manager in charge of the Nearby audit. e. Poirot inherited a large sum of money from old Mr. Giraud in 2000. Poirot sold his house, paid off the loan to Nearby S& L, and purchased a much larger estate. Nearby S& L provided the financing. f. Poirot and Mala Lemon (a local real estate broker) formed a partnership to develop apartment buildings. Lemon is a 20 percent owner and managing partner. Poirot and three partners in the accounting firm are limited partners. They own the remaining 80 percent of the partnership but have no voice in everyday management. Lemon obtained permanent real estate financing from Nearby S& L. g. Lemon won the lottery and purchased part of the limited partners’ interests. She now owns 90 percent of the partnership and remains general...
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