According to a Harvard Business Review blog, businesses and investors focus solely on return on equity (ROE) at their own peril. Among the problems, the authors note, is that "[g]rowing debt leverage and stock buybacks funded through accumulated cash can help to maintain a company's ROE even though operational profitability is eroding."

Return on assets (ROA), they assert, is far better at orienting a business toward its fundamentals, since "capability leverage" is relatively impervious to the winds of finance.

Our expert consulting team can help you determine which combination of the many metrics that exist will best serve your business needs. Please call our Consulting or Business Valuation Services teams today.

With the news that Tesla Motors, which almost built a factory in New Mexico in 2007, has filed a $100 million IPO, it is clear, as Entrepreneur notes, that venture capital may be cashing out of its current investments, which could free capacity to fund new deals. The news is welcome in an industry that last year saw its lowest investment level nationally since 1997.

New Mexico's venture capital community in 2008 was ranked first in the country for growth over the past decade, according to the Albuquerque Journal. The state has continued to focus on the sector and recently announced a new focus on renewable energy, which could continue to attract high-tech businesses and investors.

The growth of a venture-backed business requires careful planning and awareness of issues such as business valuation and IT infrastructure. If your company is planning for growth and you have questions about mergers and acquisitions, conversion of corporate structure or other issues, please contact REDW's Business Valuation Services team today for more information.

The Journal of Accountancy has a good article on the steps to take when determining whether in-house or external audit resources should be used to investigate allegations of financial statement fraud. The article outlines seven steps that should be factored into consideration:

Step 1: Identify Implicated Parties
Step 2: Consider the Quality of Preliminary Information
Step 3: Assess Possible Materiality
Step 4: Consider Expertise Necessary to Investigate
Step 5: Mind the Logistics: Language, Resources and Timing
Step 6: Consider the Perspectives of Other Constituents
Step 7: Perform a Cost-Benefit Analysis

However, it's the factor noted as a sidebar to the article, which makes a strong case for considering an external audit team:

In some instances, it can be beneficial to position external resources as the “bad guy,” especially to conduct sensitive investigative procedures involving key personnel. Because most investigations are confidential, when employees learn of terminations or other remedial actions emanating from an internal investigation, they may assume that management or internal audit’s actions were vindictive. In these situations, an internal audit department can quickly become known more as an internal affairs department. This can impair the openness of future dialogue between the internal audit team and the rest of the company’s employees, with long-term consequences for corporate culture and controls.

So, if you find yourself in need of a "bad guy" to conduct a sensitive investigation, REDW's got a team ready to help. Probably, the nicest "bad guys" you'll ever meet.

Tough economic times can make selling a business difficult. Valuations are low and obtaining the financing necessary to close the deal is a challenge. Analysts are finding it difficult to agree as to whether or not the recession is over; however, almost all seem to agree that the road to recovery will be a long one.

This means, if you're a Baby Boomer looking to sell your business and retire, waiting for a stronger economy may not be a viable option. Even further reducing the attractiveness of this option is the fact that capital-gains taxes may soon rise beyond their current level of 15%. Considering all of this, it's probably not surprising that there is an increase interest in employee stock-ownership plans:

That's pushing some business owners to create their own buyers — in the form of employee stock-ownership plans that also serve the purpose of providing employees with retirement benefits.

ESOPs are employee benefit plans subject to regulation under ERISA, the Employee Retirement Income Security Act of 1974. But they're also an efficient exit strategy for owners of privately held companies, whose ranks are expected to swell now that Baby Boomers are beginning to retire. In a typical ESOP deal, the company creating the ESOP borrows the money to fund the transaction and then pays it back over time. It contributes shares to the ESOP trust annually and allocates them to employees, usually in proportion to their compensation but sometimes incorporating a years-of-service criteria, too.

There are some critical issues that must be considered if you want to utilize an ESOP as part of your exit strategy. Your first step should be to contact REDW's benefits and business valuations experts, and .

Carl Alongi, CPA/ABV, the co-founder of one of Albuquerque's largest certified public accounting and business consulting firms, has joined REDW The Rogoff Firm - New Mexico's largest, locally owned firm of CPA's and business & financial advisors, and a growing regional player throughout the Southwest.

"The wealth of knowledge that Carl has developed over the last 40 years in the areas of business valuation, business planning and management, tax, and litigation support provides a tremendous amount of value for our clients" notes Ron Rivera, REDW's Managing Principal. "Plus, Carl's longstanding commitment to community involvement ties in nicely with a cornerstone of REDW's core values.

Carl currently serves on many local boards of directors, including: University of New Mexico Foundation, Central New Mexico Community College Foundation, Albuquerque Academy Board of Trustees and CPA Mutual Insurance Company.

"In recent years, I've been focusing on financial investment advising, and REDW has a strong wealth management group that complements this area of interest," added Carl.

In addition to wealth management, Carl will continue providing clients with business valuation and litigation accounting services.