Tag Archives: business ownership

How Can You Sell a Business to a Buyer Who’s Broke?

According to a recent report from the Federal  Reserve Bank, over half (52%) of Americans could not pay for a $400 car repair without borrowing. We can assume that most of these folks would not be legitimate prospects to purchase … Continue reading

Posted in Business Perspectives, Economic Trends, Exit Planning, Selling a business, Strategy and Planning | Tagged , , , , , , , , , | Leave a comment

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The Luxury of No Resources

Among the Baby Boomer business owners who are beginning to plan their retirement, there are millions who founded the companies they plan to sell. Many of these were technicians when they started. They began as employees, and then used their … Continue reading

Posted in Business Perspectives, Exit Planning, Selling a business, Strategy and Planning | Tagged , , , , , , , , , , , | 1 Comment

One Response to The Luxury of No Resources

  1. Pingback: The Luxury of No Resources | The ExitMap | Transition Planning for Business Owners and their Advisors

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Key Man Policies May Not Cover a Buy/Sell Agreement

Over the last few weeks, I’ve had a number of conversations with clients about key man insurance. Let me say at the outset that I don’t sell insurance, and have no financial stake in whether any client has coverage or … Continue reading

Posted in Entrepreneurship, Exit Planning, Strategy and Planning | Tagged , , , , , , , , , | 6 Comments

6 Responses to Key Man Policies May Not Cover a Buy/Sell Agreement

  1. Frank Benzoni P.E. Retired says:

    John

    Another “Wide Awake Article” – To be advised is to be prepares, and you continually do that.

    Always look forward to the next !!!

    Thank you

    Frank

  2. Pingback: Key Man Policies May Not Cover a Buy/Sell Agreement | The ExitMap | Transition Planning for Business Owners and their Advisors

  3. John,

    Agreement that key-man insurance policies should be separate from buy/sell – ownership agreements. Having lived through the unexpected loss of two employees, I would encourage small businesses to look beyond ownership when considering key man insurance as part of their disaster planning process.

    Brad

  4. Mike says:

    Another type insurance to consider is whole life purchased using Section 79 Insurance.
    Allows the company to pay for the insurance ( deduction to the company) owner pays tax on only part of cost, however beneficiary is the stock holders estate ( or wife) .
    Company pays for policy , stockholder owns and benefits from it directly.
    Can tied funding this to some part of stock valve in the future.

  5. RICH FREELAND CBC says:

    John- My 43 years in the life business has taken me into many areas of practice. The usual KEY MAN POLICY is usually designed for one purpose only.It is to cover the loss of a “Key Man” such as a top salesman that brings in more than 50% of the companies business or an engineer or project manager that a company could not operate or complete a job if they should die. Buy and Sell agreements are usually to cover owners , partnerships or corporations for death or long term disabilities to owners or stock share holders to keep the business from imploding or having to deal with non producing spouses or minor corporate owners.All these plans should be drawn up by a law firm that is experienced in Business Law! not Legal zoom! The last thing is making sure that the agreements are funded with the proper products to meet the contracts specifications in the B&S agreement. I would shy away from Sec 79 plans in funding these agreements and look at the latest IRS rulings on SEC 79 use in business insurance? Comments Welcome! RICH FREELAND CBC

    • John F. Dini says:

      Thanks Richard. I agree that key man policies should be used for critical employees as well. I know dozens of companies, however, where key man covers the owner, who does not function in a sales or client management role, and the owners’ belief is that the benefit will be used to purchase stock from their families. As to the applicable IRS codes, you illustrate my point that such instruments must be carefully constructed by a professional such as you.

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When Employee Incentives Don’t Work

My definition of an incentive is variable compensation designed to encourage specific behavior. The challenge is to make sure that behavior is really something you want to encourage. A home building company bonuses purchasing managers based on their ability to reduce … Continue reading

Posted in Incentives, Managing Employees, Sales | Tagged , , , , , , | Leave a comment

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Small Business Owners are the Same Everywhere

I’m returning to this space almost exactly a month from my last post. It’s the longest period that I’ve missed in the last 6 1/2 years, but I heartily recommend a refresh break to business owners, and it was worth … Continue reading

Posted in Business Perspectives, Customer Relations, Entrepreneurship, Leadership | Tagged , , , | 2 Comments

2 Responses to Small Business Owners are the Same Everywhere

  1. Pingback: Small Business Owners are the Same Everywhere | The ExitMap | Transition Planning for Business Owners and their Advisors

  2. This sounds like a fantastic trip. Fun, food, and the ability to see how the rest of the world runs their small businesses. Lots of lessons learned and ready to share. And, a hardy welcome back.

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