Mark's weekly blogging

Hello everyone! My IT guy (Eddy) has gotten on me heavily about not regularly updating my blog. The old dog is now being taught a few new tricks so to speak.

We will be updating our blog on Wednesday’s from now on. The blog will be an on going educational tool featuring tips and techniques on how to use some advanced business principles to stimulate more revenue for you and your family. I will also be mixing my own anecdotal humor from time to time based primarily on world events. We would love to have your input as well into what we publish so, please subscribe and comment as often as you like.

Part 1 of many!

Equity Cash out Strategy for a Business Owner

The business owner, equity cash out strategy is a business transfer approach that can be beneficial to a business owner who holds the majority of his or her net worth in the business. Using this strategy, a business owner can diversify assets, increase liquidity and gain substantial tax benefits. At the core of the strategy is an Employee Stock Owner Ship Plan (ESOP). This strategy brings benefits to the owner, the company, and the employees. Briefly, a lender loans money to the company who guarantees loan payments. The company then loans money to the ESOP who makes loan payments. This allows the ESOP to buy the owner’s equity as stock and the owner can receive cash proceeds.

To find out more specific details about this strategy, watch for our blog next week!

THX

Mark

I would like to thank all of you have been sending us deals for the past several months.  Those of you who are new and have been around a little while know how much fun it is when we close them.  Congratulations to those folks!!  There are swome other people that we have seen becoming discouraged by the quality of their deals.  Don't be!!  This part of what happens in an economic climate such as the one we are in today.  Lenders are looking for only cream of the crop type deals and the underwriting requirements are much more stringent.  The rule of thumb that I like to use is to simply ask yourself this one question:  Would you lend this person your money? 

Stay focused, do not get discouraged and lets close even more deals this month!

Thank You all,

Mark

Now finally, let’s talk about what an ESOP actually is:

An ESOP is a qualified retirement plan to invest mainly in employer stock. It can hold S or C corp. stock. Family control can be maintained even if 100% of ownership is sold off. It also allows money to be borrowed from the credit of the company.

The plan must also do a few things to be legitimate.

Be nondiscriminatory, offer participation to employees over 21 years of age after one year of service, provide vesting after five years of service, allocate forfeitures to other participants, and allow vested employees who terminate to sell back shares.

WOW! How many will be left when it is all over?  Lenders are dropping like flies this week. 

Let's help some business owners protect their retirements with this strategy.

Now that the Equity Cash out Strategy for Business Owners has been fairly thoroughly explained – let’s talk about who can utilize this plan.

A company held as a privately held C corporation (if not, a restructure may be considered)

An owner who has held the company stock for 3 years of more

The stock was not acquired through a tax-qualified retirement plan or stock option plan of the corporation

Good Day to all! 

A funny thing happened yesterday, someone I have known for quite sometime (Poor Fellow) told me I should have been a psychic.  You see, 2 years ago I predicted the collapse of the Residential Mortgage banking system and what the fall out was going to be.  I do not believe it was a difficult thing to see coming.  The industry has a large number of professionals who were and are under educated helping the general public who is even less educated about these matters and all of whom were driven by one central principal: Greed and the desire to be Financially Successful at all costs.

Everyone is going to pay for this methodology and thought process for several years to come.  The Boomerang Effect is only just beginning.  (The Boomerang Effect is the principal that when you throw a boomerang in to the air it will absolutely make it's way back to you at some point and time.  The only uncertainty is how hard it will hit and can you catch it.  More simply put - KARMA) 

Please keep coming back to see us each week as we hope to keep teaching new principles in finance and funding so that you might be able to teach your clients and then we will be able to reverse the cycle of ignorance and despair in our world today.  Pay it forward so to speak.

Thank You and these are just my opinions.  Enjoy part 3 of 5! Please feel free to reply with your own thoughts.

Mark

Business Owner Equity Cash-out Strategy Part 3 of 5

Last time we brought you an explanation of an Equity Cash out Strategy for Business Owners. Today, we’re going to talk about the benefits of the owner, company and employees.

First, let’s talk about the owner (often your client). The owner gets many benefits including:

Deferred capital gains tax (temporary or permanent)

Ability to monetize some (or all) of their business equity

Partial ownership with total control

A diversified and reduced investment risk

Ability to sell complete company equity or in stages over time

Private market ready for stock

Increased flexibility in managing investments

Let’s move on to company benefits:

Increased employee retention

Cost-effective benefit plan

Great employee productivity

Income tax deduction for ESOP contributions

And finally:

Ability to have ownership in the company

No cash outlay

Deferral of income tax on employee stock contributions

Although this may sound like a phenomenal plan – it may not be suited for everyone….come by next time to see who qualifies to utilize this strategy!

I hope everyone is having a great summer.  I am actually doing this on time! YIPPEE

Here is part 2 of something I have found extremely useful over the past several years.  You will need the help of a Financial Planner who is licensed for this strategy but what a great professional relationship to have anyway. 

Last time we brought you an explanation of an Equity Cash out Strategy for Business Owners. Today, we’re going to talk about the benefits of the owner, company and employees.

First, let’s talk about the owner (often your client). The owner gets many benefits including:

Deferred capital gains tax (temporary or permanent)

Ability to monetize some (or all) of their business equity

Partial ownership with total control

A diversified and reduced investment risk

Ability to sell complete company equity or in stages over time

Private market ready for stock

Increased flexibility in managing investments

Let’s move on to company benefits:

Increased employee retention

Cost-effective benefit plan

Great employee productivity

Income tax deduction for ESOP contributions

And finally:

Ability to have ownership in the company

No cash outlay

Deferral of income tax on employee stock contributions

Although this may sound like a phenomenal plan – it may not be suited for everyone….come by next time to see who qualifies to utilize this strategy!