Given the wide spectrum that this discipline covers, neurosurgeons must be well-versed in a wide array of surgical treatments. “On top of experience and residency at a trauma center, I’ve also undergone fellowship training in cerebrovascular surgery as well as skull-based neurosurgery,” says Peyman Tabrizi, M.D., a neurosurgeon at Western Medical Santa Ana.
Smart Business spoke with Tabrizi about neurosurgery, neurovascular emergencies and technological advances in the neurosciences.
What types of conditions do neurosurgeons typically treat?
We deal with various types of intracranial hemorrhages. We also work with spinal trauma which includes fractures or dislocations of the spine. When dealing with trauma you have two forms: penetrating trauma and blood trauma. Forms of penetrating trauma include gunshot wounds or stab wounds to either the head or the spine. Forms of blood trauma include automobile accidents, motorcycle accidents and falls.
As far as non-emergency cases are concerned, there is a whole gambit of pathologies that a neurosurgeon deals with: brain tumors, spine tumors, brain aneurysms and hemorrhagic strokes to name a few.
How does a neurosurgeon treat spinal cord trauma?
With spinal trauma we try to take pressure off of the spinal cord. If there is any fractured portion of the bone that is pinching the spinal cord, we remove the fragments so that the patient can become mobile again. When a trauma patient comes in with a spinal injury, he or she has to be bedridden until the spine is stabilized. If it’s a thoracic or a lumbar spine, then a vascular surgeon or a trauma general surgeon is needed to help with the exposure. Once it’s exposed, the neurosurgeon can address the situation by determining the degree of damage.
What is the procedure for someone who has suffered a skull fracture?
If the patient is involved in a motor vehicle accident, or falls and sustains a skull fracture with internal bleeding, then he or she is taken to the operating room immediately. A skin incision is made in the area of the bone that is fractured and the brain is visualized. Bleeding is controlled, and any minimal blood clots are evacuated. Then the bone is replaced and secured, the fracture is repaired, the skin is closed, and the patient can return to the ICU.
There are some instances in trauma where the brain tissue is so damaged that there is significant brain swelling. In such conditions, the bone flap which is the portion of the bone that is removed and set aside in the operating room until the brain is addressed may need to be stored until the patient has recovered from the acute phase of insult.
What kinds of advances in neurosurgery have occurred over the past few years?
There have been many advances. We have better equipment and improved instruments to deal with neurological cases such as spinal and brain injuries. For example, we now use a navigation system that allows surgeons to navigate within the brain to a specific location. When a patient is taken to an MRI or CAT scan suite, special markers are placed on the scalp which transfers images to the data base in the operating room. The data is used to form a 3-D image, which allows for various views of the brain. During the operation, the images that are obtained are used to help a surgeon hone in on a lesion with more precision.
Also, significant advances in research, associated with both trauma and nontrauma neurosurgical issues, have been made. For example, the appropriate management and approach to stabilization of spinal fractures has transpired through many years of research.
How has the development of minimally invasive techniques aided neurosurgeons?
These days, the amount of skin tissue that is needed is quite small to perform the removal of herniated disks as well as performing spinal fusion. In the past, a neurosurgeon would normally need to make a long incision to be able to perform the operation. Now, with minimally invasive surgery, a very small incision is made, and through that small hole, the same operation can be performed.
How important is continual innovation in the field of neuroscience?
Without continued research and progressive innovation, we would not be able to see increased survival rates and increased improvement in functionality of patients. Ongoing research and advancement in both science and technology helps provide better patient care.
PEYMAN TABRIZI, M.D. is a neurosurgeon at Western Medical Santa Ana. Reach him at (714) 834-0439 or email@example.com.
Periodically reviewing your employee benefits program makes sense on multiple fronts. It provides the opportunity to revisit your carrier’s rates and make sure they are still competitive. Input from employees can be taken into consideration and implemented if feasible. And finally, you want to make sure that your program measures up well against others in your industry.
“Because benefits plans are such a hot topic,” says Phil Graybill, vice-president of benefits, sales and consulting for Sander A. Kessler & Associates, “I, as an employer, would want to either meet or exceed what my competitors are offering.”
Smart Business spoke with Graybill about the importance of analyzing employee benefits programs, what constitutes a good benefits plan and what steps should be taken if the program could be improved.
How important is it for companies to periodically analyze their employee benefits programs?
In terms of importance, it is very high. Employee benefits plans are a chief operating expense and are usually one of the two or three highest expenses that a company has. Also, employees are taking a much closer look at employee benefits nowadays. The media coverage that has been given to the cost of health care and the nation’s health care system has been phenomenal. Everyone is very concerned about the rising costs of health care which makes employees take a very hard look at the types of benefits that an employer offers.
What factors should companies consider when analyzing their employee benefits program?
You want to analyze the network provider’s accessibility on a managed care level and what its discounts are. Determining which carrier can provide the best costs and matching up coverage options to what the company’s employees are looking for are also important factors.
When possible, benchmarking data should be used to compare your program with direct competitors. You want to review coverage options and contributions strategies that your competitors are deploying.
What are some elements that constitute a good benefits plan?
It needs to meet the coverage guidelines that will be appreciated by employees and it needs to meet the affordability of the employer.
If, for instance, you as an employer were to offer only a ‘Cadillac’ plan but you weren’t contributing the lion’s share, that might be a detriment to the employee who won’t be utilizing the plan all of the time and will face a high deduction out of his or her paycheck. The same holds true vice-versa as well.
The bottom line is that the plan needs to either meet or exceed what the employer’s competition is offering.
If upon inspection, the program could be improved, what steps should be taken?
Timelines should be constructed and adhered to by the employer, its broker and the insurance carrier based on what changes are going into place and what timeframe the changes will be going into effect. Far too many times, decisions are made very quickly and then there is a disconnect between the insurance carrier and the employer.
Secondly, properly communicating with employees is critical. They should be told as early as possible about any changes with a positive spin. It’s a good idea to provide information about the reality of health care costs. A way to convey the overall value that employees are still receiving is to create total benefits statements that include salary, benefits, workers’ compensation costs, vacation, etc.
How should a company seek input from its employees to ensure that the benefits program meets their needs?
If you have one location and 100 to 200 employees, it’s certainly feasible to pull your employees in from time to time and have a meeting about the benefits program. I’ve seen larger companies use insurance focus groups, which provide a representative sample of employees’ needs. Surveys provide a low-cost option of measuring employee satisfaction. Many options are available on the Internet.
How important a role does having a strong benefits package play in attracting and retaining key employees?
Employees know that having strong health care and benefits is the key for them and their families to stay above water. A small-percentage difference in salary in what a person wishes they could make and what the employer offers is becoming secondary to what type of health care coverage is available.
PHIL GRAYBILL is vice-president of benefits, sales and consulting for Sander A. Kessler & Associates. Reach him at (310) 309-2221 or firstname.lastname@example.org.
Surging interest rates, however, also signal an opportune time to revisit your balance sheet. Companies that pro-actively adjust their accounts-receivable policies, reassess their cash-flow projections and explore alternative investment strategies will find themselves ahead of the curve when it comes to planning for the long-term.
“This is a good time to revisit your assumptions,” says Pete Gautreau, partner at accounting firm Vicenti, Lloyd & Stutzman LLP.
Smart Business spoke with Gautreau about the effect that rising interest rates will have on the business environment, the importance of paying down revolving debt and why he wouldn’t postpone earmarking funds for necessary capital improvements.
How do rising interest rates affect business operations?
They create uncertainty and leave a big unknown in the long-term planning process. As the cost of money goes up, it becomes more important to weigh financing options, explore cash management opportunities and communicate well with existing and potential lenders.
Higher interest rates tend to correlate with delayed payments from customers. How should accounts receivable be monitored during a period of interest rate hikes?
Early payment discounts offered to customers can be tailored to those that you want to encourage a prompt remittance. However, you don’t want to go overboard by offering discounts just to hasten payment. The cost of offering discounts can easily outweigh the increased cost of money that occurs when interest rates rise. Also, it is important to make late payment penalties explicit in customer arrangements and have them strictly enforced. Finally, a manager should be personally responsible for collections in a company.
Why is it important to speed up cash flow to pay down revolving debt?
When interest rates go up, the gap between savings rates and borrowing rates widen. This makes it increasingly important to use excess cash to pay down revolving debt. Most companies now make use of automated sweep accounts with their banks, which is an automated device that takes excess cash out of a company’s bank account and uses it to pay down debt. This occurs constantly without much effort. Most banks now offer this service, but not many bankers necessarily volunteer the information that it is available.
Is this a good juncture to re-evaluate cash flow projections?
Debt service, assumptions on rates of return, discounts all these assumptions should be revisited in a flex market such as this. It’s also a good time to negotiate with customers, vendors and lenders. Having a solid understanding of your company’s current and future cash flow will serve as a great basis for those discussions.
With interest rates escalating, how should excess cash be invested to achieve optimal levels of return?
Paying down revolving debt becomes increasingly important. If a company is debt-free and liquidity is not an issue, then getting money out of a noninterest-bearing account and into a CD account or flexible interest-bearing account would be a good move. Also, if the liquidity is there, fixed-income securities make sense as the yields are increasing. Taxfree bonds are also an option as they are paying excellent rates with no taxes dues on the earnings.
How long should the investments be tied up for?
I would recommend that investment maturities be staged. Many times, your primary bank has the ability to wire money into CDs from other banks. This is done to keep the credit concentration risk down, find the best rates, and to stage maturity dates. Not many businesses have the luxury of investing in fixed-income securities as those normally require a longer lock in period. It’s unusual for a business to lock things in for more than six months.
What advice would you give to a CEO or business owner about making capital improvements in the current environment?
I believe industry and general economic trends should weigh more heavily in a decision such as that. Where the interest rates are going to go, where the market is going to go, is really anybody’s guess. Capital improvements are a long-term commitment for a long-term payback.
We’re in a volatile market now. If I were to be making these decisions as an owner, I would see the current market conditions as a short-term phenomena. I don’t know if I would weigh that too heavily on my capital improvements, which are long-term investments.
PETE GAUTREAU is a partner at accounting firm Vicenti, Lloyd & Stutzman LLP. Reach Gautreau at (626) 857-7300 or Pgautreau@vlsllp.com.
The key to ensuring harmony is acknowledging conflict and understanding the underlying reasons for why these disputes have risen. This is where the practice of conflict resolution comes into play.
“To be successful in conflict resolution, it is important to realize how you usually respond to situations when wishes, goals or interests differ,” says Yael Hellman, a professor in organizational leadership at Woodbury University.
Smart Business spoke with Hellman about the driving forces behind conflict in the workplace, why conflict resolution can be an effective tool in resolving disputes and when an outside facilitator should be used.
What is conflict resolution?
To understand conflict resolution, it is important to know the definition of conflict. Although there are multiple definitions of conflict, a common theme is that for there to be conflict, the conflict must be perceived by the parties involved. These parties are usually two or more people who have interests or goals that appear to be incompatible. Conflict is when one person’s wishes differ from those of another. Conflict resolution, in its simplest term, is getting what you need without stepping on others. The ideal goal is to get to a win-win situation or solution.
What are some of the typical reasons for conflict in the workplace?
Conflict in the workplace may occur when people feel stressed, hassled, overworked or do not feel that they are acknowledged or compensated appropriately. Other reasons include perceived inequities, change and innovation. Change may include any change in status quo in regard to schedules, management, leadership, policies, etc.
How can a business use conflict resolution to address discord?
Businesses that use conflict resolution successfully generally follow these competencies for managing the conflict.
- Begin with a positive overture.
- Identify the correct definition of the problem.
- Understand the critical ingredients of collaborative thinking.
- Use open communication to resolve the challenges of change.
- Offer tools and assistance, such as mentoring or open-door policies, that best deal with the tensions and pressures that accompany change.
- Have the ability to listen to conflict and provide appropriate feedback.
- Remember that conflict isn’t always negative.
When can conflict be good for an organization?
Whether a conflict is good or bad depends on the type of conflict. In fact, conflict is sometimes encouraged because a harmonious, peaceful, tranquil and cooperative workplace may become static, apathetic and nonresponsive to the needs of change and innovation. Some leaders suggest that a minimal level of conflict should be maintained just enough to keep the workplace alive, self-critical and creative.
Why is conflict resolution effective in resolving disputes?
Conflict resolution helps to diffuse potentially explosive situations by understanding human driving forces. These are the basic needs of being valued by others, to be in control and the need for personal self-esteem. With conflict resolution, both parties are listened to and heard without judgment or being discounted. Trust is built, information is shared, and communication is enhanced. When employees feel they are being heard and acknowledged, then motivation, production and job satisfaction increase.
What are the dangers of not intervening when there is interpersonal conflict among employees?
When there is unaddressed interpersonal conflict among employees, a company may experience high absenteeism, sabotage, apathy or low morale and low motivation. Also, high turnover can become an issue and, in the worst case, a potentially explosive and violent event could occur.
In what instances should an outside facilitator be brought in?
The intensity of a conflict is generally described as an issue, a dispute or an impasse.
An issue is a mild conflict that may often be resolved informally by the parties involved.
A dispute is a conflict that can become polarized when the issue has a history and the parties are entrenched on both sides. It may take a mediator to help resolve this type of dispute. The mediator may include trained human resource or management personnel. Sometimes, if a big conflict cannot be solved, it can be beneficial to find out if there is a small area within the larger issue that can be resolved.
An impasse is a conflict with a fairly long history and the parties have created a mythology of hate to keep the sides polarized. It usually takes a mediator or an arbitrator from outside the organization to help resolve this type of conflict.
YAEL HELLMAN is a professor in organizational leadership at Woodbury University. Reach her at (818) 252-5145 or email@example.com.
“It is significantly reshaping the way that companies structure and dole out compensation and other benefits to employees and other service providers,” explains Mark Saulino, a tax partner in Alschuler Grossman Stein & Kahan LLP’s Transactional Department.
Smart Business spoke with Saulino about why these changes were enacted, how companies should make sure they are in compliance with the new law and the severity of penalties for offenders.
Why were changes made to deferred-compensation laws?
Section 409A was enacted by Congress to prevent perceived abuses by executives and companies in the area of deferred compensation. Deferred-compensation abuses are simply another one in the long list of issues that surfaced as a result of the recent corporate scandals that everyone is all too familiar with. Part of the concern was the perception that there was too much flexibility under prior law to offer benefits to employees and other service providers that had a built-in value today, but were not taxable until a later date.
How should a company determine which plans are subject to the new rules?
Companies really have to be careful about assuming that 409A will not apply to a given situation based on the notion that they’re not doing something that anyone would perceive as ‘abusive.’ 409A is broad in scope and can apply to many arrangements that would fall outside what most people would consider deferred compensation such as stock options, bonus arrangements, severance agreements and expense reimbursement plans.
My advice to companies has been to check for 409A issues whenever the company grants any type of benefit to an employee or another service provider other than straight wages or salary that are payable at the time that the services are provided. Because the rules are so complicated and voluminous, I think it’s the safest approach until companies become familiar enough with the rules to be sure about what they can and cannot do.
If a company has a deferred-compensation plan with grandfathered benefits, should it amend the old plan or adopt a new one?
There are three requirements that must be met in order for compensation or other benefits to be grandfathered under 409A. Those three requirements are: the arrangement must have been entered into on or before October 3, 2004; the arrangement must not have been materially altered since that date; and the compensation or other benefit under that arrangement must have been earned and vested before January 1, 2005.
Companies that have outstanding arrangements where the benefits are not grandfathered should really consult their tax counsel as to how to best remedy the situation. The ability to terminate a plan that does not comply with 409A generally went by the wayside as of Dec. 31, 2005.
But companies can amend their plans to bring them in compliance with 409A before the end of 2006. Companies should be careful, however, not to take any actions before they consult with their tax counsel because they could create a situation that is more difficult, if not impossible, to fix under the new rules.
Who faces the penalty for noncompliance?
The primary consequences fall on the employee, but employers would really be shortsighted to think that it does not affect them. For one thing, there are reporting and withholding issues for the employer that flow from Section 409A. But those issues really pale in comparison to the concern with avoiding the public relations issues that would flow from saddling one or more critical employees with problems under 409A.
What types of penalties are involved?
The consequences are dire. Service providers face a 20 percent tax on any benefits that do not comply with Section 409A’s requirements for deferred compensation. This is in addition to the regular income taxes that are payable on those benefits. This means that some taxpayers will pay income tax at a rate of more than 60 percent on any benefits that are subject to 409A.
There are also possible interest charges that can be imposed on the benefits. At this point, it is not entirely clear how the additional tax and interest charges will apply in certain contexts they’re still working on that and we’re waiting for guidance but suffice it to say that the consequences are pretty severe.
MARK SAULINO is a tax partner in Alschuler Grossman Stein & Kahan LLP’s Transactional Department. Reach him at firstname.lastname@example.org.
Before bonds can be issued, a company must demonstrate creditworthiness. This is where lenders come into play.
“The role that the bank plays is actually simple. We provide the credit enhancement. We also handhold the customers through the entire process,” says Rick Arcaro, vice president of middle market lending at Comerica Bank.
In order for Industrial Development Bonds to be viable, a lender must be in the mix to provide a letter of credit that guarantees the funds. The investors who purchase the bonds are not as interested in who’s using the proceeds as in the credit of the bank that is providing the underlying support. In addition, IDBs must also meet state and federal requirements to qualify for tax-exempt status.
Smart Business spoke with Arcaro about how Industrial Development Bonds can be utilized, how lenders help with creditworthiness, and how a company should proceed if they are interested in pursuing this type of financing option.
What types of businesses can use Industrial Development Bonds?
At its core, it is a low-interest financing option that is specifically for manufacturing and processing companies. In order for a company to really benefit from an Industrial Development Bond, the financing needs to be more than $3 million. It’s underwritten just like a loan would be; as such the company has to be profitable and a good credit risk.
How can the funds be used?
The Industrial Development Bonds generate proceeds that can be used for acquisition of owner occupied real estate, company expansion, or for the purchase of equipment or machinery. Typically, the funds are used for buying a building and purchasing new equipment for the building.
What are some of the benefits of Industrial Development Bonds over other types of financing options?
From a cash-flow perspective, you may see a savings of 15 percent to 40 percent over conventional financing with Industrial Development Bonds. From 1982 through 2003 bonds were issued at an overall average interest rate of 2.6 percent lower than the average prime rate for the same period. This form of financing will benefit a company with lower interest cost and ultimately lower monthly payments.
What role does the lender play in helping companies obtain Industrial Development Bonds?
Before a bond can be issued, the company must be creditworthy. The bank-provided letter of credit ensures that the bondholders will get their money. We’ve provided credit enhancements for many different companies within the manufacturing and processing industries. What we’ve found in the marketplace is that there are very few banks supporting Industrial Development Bonds because they are time consuming. There is a six-month average time frame from application submission to closing of the bond issue for land and building projects. Make no mistake, there is a fair amount of work that goes into these transactions. However, the savings will benefit most businesses for many years to come.
In addition to the lender, who else is involved with the process?
Most companies use a third-party advisor to quarterback the proceedings. The advisor assists in the handling of the application with the state and federal governments, while at the same time manages actual bond issuance processes. There’s also bond counsel, the bank’s attorney and the customer’s attorney. There are a lot of moving parts involved.
How should a company proceed if they are interested in applying for an Industrial Development Bond?
Typically at a minimum, banks request three fiscal year-end statements, and personal financial statements of the business owners. Also, a “sources and uses summary” to show what the financing will be used for. The summary would include cost of the building with a break out of land versus construction, new equipment purchases and other expenses that would impact the customer’s project. In addition the bank would require projections to show the future cash flow of the completed project. An evaluation is completed prior to starting the process with Industrial Development Bonds financing to make sure that it makes sense financially.
RICK ARCARO is vice president of middle market lending at Comerica Bank. Reach him at (213) 486-6239 or email@example.com.
“Coils have dramatically altered the landscape for treating aneurysms,” says Dr. Gary Duckwiler, professor of interventional neuroradiology at UCLA Medical Center. “In the United States, we now have about 50 percent of the aneurysms being treated by coiling, whereas this treatment didn’t even exist before 1990.”
Smart Business spoke with Duckwiler about the risk factors associated with brain aneurysms, how they are treated, and what some of the advantages of using GDC coils are.
What are some of the risk factors associated with brain aneurysms?
There are some hereditary associations with aneurysms, but for the vast majority there is no significant family history. If you do have a history in your family of two close relatives having an aneurysm, then we recommend screening for aneurysms, because you definitely have an increased risk. There is a possibility that the creation and rupture of an aneurysm may be associated with smoking and high blood pressure. If you can stop smoking and control blood pressure, it may reduce your risk.
When a brain aneurysm ruptures, what are some of the physical signs?
People typically describe the abrupt onset of a very severe headache. Typically, on a scale of 0 to 10, they describe it as a 15. It is often described as a thunderclap headache: fine one second and the next second it is blinding. Even if the headache is not as severe as that in other words, a minor hemorrhage people typically describe it as something that they’ve never felt before. Sometimes with a severe hemorrhage there may be an associated loss of consciousness.
What is the primary focus of treatment when an aneurysm occurs?
First, we need to stabilize the patient, so it’s a 911 call. Once the patient is stabilized from a medical standpoint, we address the treatment of the aneurysm. There is a very high likelihood that the aneurysm will rupture again shortly after the original rupture, so we consider it an emergency and treat the aneurysm as soon as possible using either surgery or the coil technique.
How have advances in coil technology changed the way that aneurysms are treated?
The first detachable coils for use in brain aneurysms were developed here at UCLA in the late ‘80s and early ‘90s by Dr. Guido Guglielmi. They are small, very thin, platinum coils, so they’re very soft and very dense on the X-rays. In many European countries, aneurysm coiling has replaced surgery with about 70 percent of the aneurysms being treated by coiling and only 30 percent by surgery.
What are some of the advantages of using GDC coils versus surgery?
The coil procedure itself is minimally invasive. We use a needle and do our treatment within the blood vessel system, so all that is left at the end of the procedure is a Band-Aid over the area of the entry, not too dissimilar from an intravenous line. The minimally-invasive nature of this procedure really shortens recovery time.
In addition, some aneurysms lie very deep within the brain and are very difficult to approach surgically. Because we’re navigating within the blood vessel system, we can access nearly any vessel that harbors an aneurysm. That being said, for many aneurysms, surgery is still the preferred method of treatment.
Here at UCLA, we’re lucky enough to have superb services both in neurosurgery and interventional, with the most appropriate option being offered to the patient.
In the future, what other innovations do you expect to see in the treatment of aneurysms?
Since the first detachable coils, many innovations have occurred, such as changes to the shape of the coil. When it’s placed into the catheter, it’s straight. As it comes out of the catheter, it takes its predefined shape. The different diameters and shapes of the coil are utilized to fill the aneurysm to the best degree.
Also, shunts and liquid agents can help in some of the larger, giant aneurysms that we now have difficulty treating.
Finally, we’re involved with research, looking at blood flow in the artery and aneurysm. An aneurysm develops because there is an underlying weakness in the wall and also because the blood flowing against that weak area causes the aneurysm to expand. We are doing research into altering that flow so that the impact on the wall of the aneurysm is diminished, and thus the risk of growth and rupture is reduced.
GARY DUCKWILER is a professor of interventional neuroradiology at UCLA Medical Center. For more information, reach the UCLA Medical Center at (310) 264-7113.
Randy Donsky, a financial and business planner with Sander A. Kessler & Associates Inc., believes that businesses can benefit greatly from having these safeguards in place.
“Key-person insurance is to indemnify and minimize interruptions to a company’s cash flow if a key person dies,” he says. “The buy-sell agreement is very important, because it establishes continuity and sets the value of a company with minimal distractions.”
Smart Business spoke with Donsky about the importance of having key-person insurance, who should be covered, and how buy-sell agreements should be valued and funded.
What is key-person insurance and how does it work?
It’s an insurance policy that is going to protect the business from the death of a key employee. The proceeds from a life insurance policy go into the company’s till, and they use that money to indemnify themselves against the loss of the sales or the revenue generated by that key person. The monies can also be used to provide the capital to fund a search for the replacement. This includes using a headhunting firm or putting an ad in the paper. It’s really a two-pronged purpose.
Why is it so important for a business to have key-person insurance in place?
If you have a key person who is the rainmaker for the revenues of the company, the loss of that person could have a severely detrimental affect on the cash flow. Let’s say that you have a person who is really good at bringing in business and another person who is good at operations. Without one, the other is not as strong. If you lose the rainmaker, the person inside won’t have a way to bring in new sales and vice versa.
How should a business determine who should be covered?
They should review how important a person’s function is. Without that person, how would it affect the company and how quickly could they replace that person? Would that person not being there have an adverse affect on the company’s ongoing success? If the answer is yes, then a policy would be warranted. Typically, these policies cover senior management, but it could be a senior sales person or technology person. The policy should cover up to ten times the salary of the key person.
What is the purpose of a buy-sell agreement?
A buy-sell agreement is a document between business owners or partners that obligates a buyer and seller and sets the price of the transaction that is going to occur. In other words, if you and I are in business together and something happens to me, it obligates you to buy my shares from my estate and it obligates my family to sell to you. It’s a very, very important document. It puts everything in writing, and it minimizes areas of disputes and distractions that come along with the loss of a partner.
How is value established with a buy-sell agreement?
A business can have an appraisal done by a third party, or through that third party it can identify a formula like a percent of sales or revenues or income. That formula is made part of the buy-sell agreement so it is an ongoing, moving target. Sometimes parties will agree on a price that is good for 12 months. Then they revisit the issue and establish a new price, which is good for another 12 months, so the process is ongoing.
How are buy-sell agreements funded?
Having just a buy-sell agreement without a funding source is not a good thing. You must have a funding vehicle, and that is typically done through a life insurance contract. An entity purchase is where the corporation would be the buyer of the policy and it would buy the shares from the deceased family’s estate and retire those shares. A cross-purchase is where both partners take policies on each other’s lives.
RANDY DONSKY is a financial and business planner with Sander A. Kessler & Associates Inc., a property and casualty insurance and employee benefits firm. Reach him at (310) 309-2233 or firstname.lastname@example.org.
The Export-Import Bank’s Working Capital Guarantee Program provides a number of financing options designed to meet the needs of U.S. exporters. The program guarantees 90 percent of the principal and interest on loans extended by commercial lenders, and the loan amount may be used for a variety of purposes related to exporting goods.
Pete Knudson, senior vice president at Comerica Bank one of the lenders that offers this program says that obtaining financing for exports can be a dicey proposition.
“Most banks and financial institutions do not typically accept foreign accounts receivable as collateral, nor do they accept export orders as evidence of orders for goods to be purchased and/or manufactured or services to be provided,” he explains. “This really makes the Working Capital Program beneficial, particularly for small to mid-sized companies.”
Smart Business spoke with Knudson about how a new Fast Track program can be beneficial for companies in need of rapid funding, eligibility requirements for the program, and why the U.S. government is aiming to level the playing field in the competitive world of exports.
What is the Fast Track program, and how can a business secure this type of funding?
The Fast Track program was introduced at the end of last year. We are one of only eight lenders in the United States six are commercial banks and the other two are finance companies that offer this service. It provides a quick and easy process for credit facilities in excess of $10 million and up to $25 million. The company must have a domestic credit facility with the financing institution of at least $5 million and a positive tangible net worth. If there is a personal ownership level of at least 20 percent, then that personal ownership must be supported by a personal guarantee.
Who is eligible for the program?
Eligibility is specifically for companies that are located in the U.S. It can be a foreign company, but the location must be in the U.S. It must have a one-year operating history, and must have a positive net worth. Financial statements are required. The U.S. government provides us with a 90 percent guarantee, so we need to examine the creditworthiness of the companies.
It depends on the size of the transaction and the size of the company as to whether the statements are prepared by the company or a CPA.
What are some common reasons for claim denials?
The most common reason for claim denials would be missing a claim filing deadline. Other reasons include changing material terms with the exporter without the Export-Import Bank’s approval, non-notification of any events of default, and no collateral security filings. Another critical one would be nonpayment of the Ex-Im fees.
Once the financing has been approved, what can the funds be used for?
The funds are used to purchase finished product for export. They can be used for payment of raw materials, equipment, supplies, labor and overhead used to produce goods and/or provide services for the export. They can cover standby letters of credit that serve as bid bonds, performance bonds or any type of payment guarantee. Also, they can be used to finance foreign receivables.
What are some advantages of the Export-Import Bank’s guarantee program over other types of credit programs?
Typically, it is done with a fee structure that gives it an advantage over private commercial insurance programs. Also, it is a guarantee which is quite a bit different than insurance. Insurance tends to provide support against named perils, whereas a guarantee from the U.S. government covers all events and not just named perils.
How important is this program for American exporters to be able to compete globally?
Much of the eligible collateral would not be acceptable to a lending institution. Therefore, having the U.S. government provide a 90 percent guarantee can either make or break the financing requirement for the individual exporting company.
Many foreign competitors are also provided support by their individual governments, whether they are in the U.K., France, Germany or Japan. These countries all have institutions that provide governmental support to their exporters.
This program is an attempt by the U.S. government to level the playing field and allow our companies to compete with companies that are located in other countries.
PETE KNUDSON is senior vice president at Comerica Bank. Reach him at (310) 297-2849 or email@example.com.
“People around the globe are more connected to each other than ever before,” explains Andre van Niekerk, dean of the School of Business at Woodbury University. “Information and money flow more quickly than ever. Goods and services produced in one part of the world are increasingly available in all parts of the world. International travel is more frequent. International communication is commonplace. This phenomenon is known as globalization.”
Smart Business spoke with van Niekerk about what to look for when getting schooling in globalization, what types of courses are most applicable and who should take advantage.
What must a business consider when choosing an institution that offers continuing education classes about globalization?
First, a school of business must have global partners. This not only provides credibility, but it indicates that there is a basic understanding of what globalization means. Often, businesses do not realize that going global means relentlessly working on the business and personal relationships. It takes months and years to develop and cement such partnerships. It is therefore important to be able to bring this experience and understanding to the continuing education arena.
Second, the faculty/instructors must have extensive global experience. It too, is a matter of credibility and being able to translate the finer nuances of culture to the educational program. At Woodbury University, for instance, we emphasize the theoretical side as well as the practical side of our faculty. Those who teach about international or global business perspectives have hands-on experience.
How much additional education might a business executive need if a company is going global?
It depends on the background that a specific executive brings to the table. If they have served on foreign assignments, or have worked on cross-cultural business issues singularly, or as a member of a team, they would have a cross-cultural maturity that would allow them to receive just enough information about the new assignment and location to be able to hit the ground running. If they are novices, they will need much more intensive training and cultural exposure.
However, as your question implies, if the company is going global, then it is necessary to include everyone in at least a very detailed fact-sharing session with all employees. The better everyone understands the mission of the company, in a global sense, the better everyone will be able to communicate and coordinate their activities towards a global perspective.
What types of courses are most applicable?
At a minimum, courses in the host country’s customs, foods and language. The do’s and don’t’s specific to that culture. An overview of the business climate and core industries of that country. The financial systems prevalent in the country. It is also good to know how to remain connected with your own culture while serving overseas. This provides stability and eases the re-entry into your own culture when you return. In summary, any courses that provide you the ability to transfer knowledge from your own familiar context to that of another country, or from them to you.
How far down the chain of command do executives need to be educated?
I would make the case that all employees need to know what the company’s global strategy is all about. However, everyone who will interact with the global project or general global outreach of the organization will not travel there; neither will all of them travel to you. It is very likely that only certain individuals will physically visit the other countries. However, there may be intense interaction with global counterparts without ever visiting them or them visiting you. Therefore, there needs to be a well-thought-out and well-orchestrated plan of communication and synchronization of systems and technology to make it all work together efficiently.
How important is it for top managers to understand the nuances of globalization?
It is absolutely crucial that the main players those who direct the strategy and who make the bigger decisions be intimately familiar with the nuances of globalization. Because the tone and the direction of the company is identified by top management, they should understand the mission of their globalization. Also, they must be able to communicate it very effectively to the rank and file.
ANDRE VAN NIEKERK is dean of the School of Business at Woodbury University. Reach him at (818) 252-5284 or firstname.lastname@example.org.