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search for solutions by category, industries, insights, and people.
If there’s one thing our broad experience has taught us, it’s this: One size does not fit all.
Accounting Today
Accounting Today
Southeast’s fastest growing hubs as well as Bengaluru, India
In this replay of our recent webinar, our Financial Services team explores the regulatory, accounting, and risk management developments shaping financial institutions at this point in the year. The discussion covers key accounting and financial reporting considerations, including the SEC’s proposed transition from quarterly to semiannual Form 10-Q reporting, as well as developments in interest rate and liquidity risk management. Panelists also provided insight into evolving credit risk monitoring practices, emerging risks facing financial institutions, and practical considerations for strengthening governance, oversight, and risk evaluation in a changing economic environment.
View the slides from the webinar here.
For construction contractors pursuing U.S. Department of Defense (DoD) work, cybersecurity has become a direct factor in bid viability. Beyond traditional safety, bonding, and performance requirements, the DoD now expects contractors to demonstrate verified cybersecurity controls as a condition of contract award.
That expectation is formalized through the Cybersecurity Maturity Model Certification (CMMC) program, which embeds cybersecurity directly into DoD contracts for companies that design, build, repair, or maintain defense facilities and infrastructure. Rather than relying on policy statements or self attestations, the program ties validated security practices to eligibility for both prime and subcontract work.
With phased implementation already underway, CMMC is rolling into new and existing contracts. For construction contractors, cybersecurity readiness now influences bidding strategy, teaming arrangements, and continued participation in the defense construction market.
For a broader overview of CMMC requirements and certification levels, see Understanding CMMC: What Defense Contractors Need to Know.
CMMC applies to both prime contractors and subcontractors across the Defense Industrial Base (DIB), including construction firms. Even when cybersecurity is not a contractor’s core business, construction projects often involve access to Federal Contract Information (FCI) or Controlled Unclassified Information (CUI).
Examples include:
When this information resides on contractor-managed systems or third-party platforms, CMMC requirements apply.
CMMC is a DoD-mandated cybersecurity assessment and certification program that verifies whether contractors have implemented required safeguards for FCI and CUI. Unlike prior models that relied largely on contractor representations, CMMC ties verified cybersecurity practices directly to contract eligibility.
The framework aligns existing requirements into a single enforceable standard across the defense supply chain.
Most DoD construction contractors will encounter either Level 1 or Level 2 requirements.
CMMC requirements are now being incorporated into DoD contracts and have become a condition of contract award. Failure to meet the required CMMC level can result in loss of eligibility to bid or participate in defense contracts, including as a subcontractor.
Phased implementation is now underway. CMMC requirements are now appearing in solicitations and contracts, marking the transition from policy guidance to active enforcement.
For construction contractors, these milestones often overlaps with long bid and award cycles, multi year project timelines, and layered subcontractor relationships. As a result, CMMC compliance affects not only IT systems, but also project planning, teaming strategies, and risk management decisions across the life of a contract.
CMMC readiness helps construction firms understand how cybersecurity requirements apply to their operations before certification becomes mandatory.
At Elliott Davis, a CMMC Readiness Assessment is performed by a coordinated team that understands construction operations, project workflows, and DoD expectations. Readiness efforts focus on:
For construction contractors, readiness often clarifies where cybersecurity responsibilities sit across field operations, corporate systems, and third party platforms.
CMMC reflects a broader shift in how the DoD manages risk across its supply chain. Cybersecurity is now treated as a prerequisite for participation, not an administrative afterthought.
Construction contractors that address readiness early are better positioned to respond to solicitations, support prime contractor requirements, and maintain continuity across active and future projects.
Elliott Davis works with construction contractors in the DoD pipeline to support CMMC readiness through scoping, gap assessments, and planning support. Our focus is helping firms understand how CMMC applies to their operations and what steps support contract access as requirements continue to roll into DoD construction work.
Contact us today to start the conversation.
Section 1202 of the Qualified Small Business Stock (QSBS) can dramatically increase after tax returns for investors by allowing some or all of the gain on exit to be excluded from federal tax, rather than taxed at long-term capital gains rates. If portfolio companies qualify and the fund structure permits it, QSBS can be a meaningful differentiator when comparing fund strategies and net performance.
Our integrated approach helps private equity sponsors proactively evaluate, document, and implement 1202 QSBS strategies across their investment portfolios in a way that is practical, defensible, and aligned with investor return objectives.
We help clients target ideal portfolio companies currently structured as pass-through entities which may be good candidates for a QSBS conversion to C corporation. To begin the process, we screen portfolio companies against baseline 1202 QSBS eligibility factors, including entity type, business activities, asset composition, and capitalization history. This step requires careful analysis of the eligibility factors against the specific facts and circumstances of each company.
Following this identification phase, we narrow the universe to those companies where QSBS qualification may be viable and impactful based on facts, exit timeline, and expected appreciation.
To qualify for the Section 1202 QSBS gain exclusion, an investment generally must be held for more than three years (five years prior to July 4, 2025). If a restructuring or conversion is required to achieve QSBS eligibility, the QSBS holding period typically begins on the effective date of the conversion, not the original acquisition date.
Importantly, conversion to a QSBS-eligible C corporation structure has pros and cons as compared to a pass-through structure outside of the potential QSBS gain exclusion. We help you evaluate those factors as part of the decision-making process.
A defensible, qualified valuation is highly advisable to support the conversion or restructuring of any company seeking to capture the 1202 QSBS tax treatment. Without an appraisal, the QSBS benefit is subject to substantial IRS audit risk.
This valuation serves three critical purposes:
By fixing value at the time of restructuring or conversion, future appreciation up to the applicable exclusion limitation, often $15 million per investor, may qualify for QSBS gain exclusion, subject to holding period and other requirements. This step is foundational to aligning expected exit economics with QSBS benefits and mitigating IRS challenge risk.
We then perform a detailed 1202 QSBS technical analysis, tailored to the specific facts of the company and the sponsor’s structure.
This includes:
The outcome is a comprehensive 1202 QSBS eligibility package, designed to be IRS audit defensible and suitable for inclusion in transaction files, investor reporting, and future diligence processes.
Finally, we work closely with the sponsor’s legal advisors to implement the approved structure.
This phase includes:
Our role is to bridge tax strategy and legal execution, ensuring the structure is implemented seamlessly and in a manner consistent with the underlying QSBS analysis.
By integrating QSBS planning early—well before a liquidity event—private equity sponsors can create meaningful after-tax value for investors while maintaining flexibility around growth and exit strategy.
This structured, end-to-end approach brings clarity, defensibility, and measurable return on investment (ROI) to QSBS planning—transforming Section 1202 from a reactive exit-stage consideration into a proactive portfolio value creation tool.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.
