For beauty business news, beauty store owners turn to Beauty Store Business. Beauty business trends, beauty business profiles and more!
Issue link: http://beautystorebusiness.epubxp.com/i/326802
78 July 2014 | beautystorebusiness.com member's stock when that individual gets divorced. Commonly, the business will have a "call right" on those shares. A call right is a provision that empowers remaining family members to buy out the shares. Again, the idea is to keep the stock out of the hands of an individual who might not help the business grow. 2 . How will the value of stock be determined? When it comes time to buy out shares of a departing owner, some mutually agreeable method must be used to set a price on the shares. "Will the valuation be done by a single CPA experienced in valuations?" poses Hanlon. "Or will each person hire a different CPA for independent valua- tions, with the final value somewhere between the high and low extremes?" Another approach is to specify a set share-valuation formula—such as a given multiple of earnings—ahead of time. This can be less than ideal, though, since business and market conditions at the time of an owner's departure may be different from those at the time a buy/ sell agreement is written. 3 . How will the stock purchase be funded? You must also plan for the funding of a buyout—perhaps a line of credit that can be tapped for the money. Absent such a plan, the pay- ments required to purchase the stock of a departing owner can be crippling. Your business may need to sell off some of its assets to raise cash or borrow money, which can have a negative impact on your line of credit. This is a good spot to mention the value of life insurance as a source of funds to purchase the stock Get Some Help Buy/sell agreements can help resolve disruptive family business events that might otherwise erode the bottom line or even scuttle the enterprise. Because they deal with the uncomfortable nexus of personal and business goals, buy/sell agreements are difficult to write well. You may want to obtain the assistance of a skilled consultant specializing in the field. "The very best way to find a consultant is through referrals," says Kimberly M. Hanlon (khanlonlaw.com), a Minneapolis-based attorney active in business and estate-planning matters. "Ask other business owners whom they use and if their consultants have been doing a good job." Select a consultant who has a lot of real-world experience creating buy/sell agreements for family businesses. "You want someone who has experiential learning," says Hanlon. "Reading about the topic is not the same as experiencing the outcomes of different scenarios." Bear in mind too that you will be sharing a lot of personal, intimate family information with your adviser. "When creating a buy/sell agreement, the journey is often more important than the destination," says Don Schwerzler of Family Business Experts (family-business-experts.com), an Atlanta-based family business counselor. That journey involves heart- to-heart chats with family members. "When you start talking with family members, you start uncovering potential problems. It's important that all of the family relationships are understood before you write the buy/sell agreement so you don't kill the goose that lays the golden egg." Successful counselors are multitalented and understand both human and financial dynamics. The alternative is disjointed advice. "A family business may have a CPA who is good at tax work but not so understanding of family relationships," says Schwerzler. "So the owners end up going to a family therapist who may be good at the warm fuzzy stuff of human enterprise but may not understand the profit motive of a business. As a result, the family gets conflicting advice." Consumer IQ PBA EXECUTIVE SUMMIT 2014 Explore Consumer Trends and Cultivate Future Leadership Today's consumer has more access to information, more control over purchases, and more choices than ever before. Join The Professional Beauty Association (PBA), and executives from top beauty manufacturers at the 2014 PBA Executive Summit. Learn how marketing and communications have changed with technology advances, see what Gen Y & Millenials are responding to and explore comprehensive industry data to identify upcoming trends and how to apply them to your business strategy. Moderator: Gene Randall As a former CNN Anchor and NBC Correspondent, Randall has been front and center to chronicle global events over the course of his impressive career span as a specialist in American Politics. te Thursday, December 4, 2014 Friday, December 5, 2014 Time 5:30pm – 7:30pm 9:00am-6:30pm Loc tion Omni Scottsdale Resort & Spa at Montelucia Scottsdale, AZ Price $499- PBA Members / $740 Non- Members Event and Registration information at probeauty.org/execs Seating is limited. Jane Buckingham What Gen Y & Millenials Want From Your Brand Jane discusses the various marketing strategies geared toward gen x and Y age groups. Steven Berlin Johnson Where Good Ideas Come From Johnson's considers innovative breakthroughs and principals that will encourage creativity and help grow businesses. Carrie Mellage Results from PBA's Industry Research Study Results from PBA's Industry Research study, in collaboration with Kline Pro Research, will be unveiled. education advancing our industry B u y / S e l l A g r e e m e n t s W h a t Y o u S h o u l d K n o w . i n d d 7 8 Buy/Sell Agreements What You Should Know.indd 78 6 / 3 / 1 4 4 : 4 8 P M 6/3/14 4:48 PM