Business Succession Planning Errors to Avoid

Business succession planning requires careful considerations by business owners as leadership changes effect the entire business including employee retention, customer relationships, and products or services offered by the company. Avoiding the following common succession planning errors will help business owners achieve a successful leadership transition:

1.Failure to Keep the Process Transparent
A transparent planning process will keep your management team informed, build trust in the planning process, and prevent the loss of key employees to competitors.

2.Fear of The Future
Many times business owners so closely identify themselves with their company, they become concerned with ” What will happen to me” and postpone succession planning out of fear. The question that should be asked is ” What is best for the future of my business” in order to move from fear to a productive planning process.

3.Having a Focus On The Past and Not The Future

Many times Business Owners want to develop future business leaders that are similar to themselves when the focus should be on developing  leadership  skills that will focus on the future business environment and new customer development .  Poor business leadership can be a disaster for any company.

 

The goal of the Business Succession Planning Process should be the idea of establishing a legacy of sustainability for both their employees and customers. Failure to plan is a road map to failure.

 

 

 

 

 

 

 

Business Practices to Prevent Fraud in Small to Medium Legal Practices

The best defense against business fraud is for the attorney or attorneys to be involved in the business aspects of their legal practice. The goal here is to implement strong internal controls to accurately record income and expenses and to to safeguard business assets.

The following are recommend business internal control procedures:
1. Use of accounting software to record business revenues and expenses and prepare
monthly financial statements.
2. Monthly reconciliation of business bank statements and review of bank account
transactions on a regular basis.
3. Secure business check stock and if paying expenses online use only secure websites.
4. Password protect access to accounting and records using strong passwords.
5. Use anti-virus software with an active subscription( not free anti-virus software).
6. Have an alarm system for the business office location.
7. Backup accounting and business records on a regular(daily) basis.
8. Background check all new employees.

Note: The failure to implement strong internal controls and business oversight
procedures provides an opportunity for fraud.

Commercial Damages and Unjust Enrichment

Financial experts in commercial damages normally calculate damage remedies that focus on a plaintiff’s loss that is calculated either as lost profits or loss business value. While unjust enrichment is a damage remedy that focuses on the defendant’s benefit or gain.

Lost profits and lost business value remedies measure damages from the plaintiff’s perspective with the purpose of making the plaintiff whole. Lost profits is a measure of damages utilized when a business suffers a temporary decline as” a result of” or” but for” the alleged damaging act. Lost business value is a measure of damages that is utilized when a business suffers a permanent loss such as ceasing operations or permanent loss of a business segment.

The third remedy, unjust enrichment,   measures damages based on the defendant’s benefit not the plaintiff’s loss.  It is not a measurement of damages based on the plaintiff’s records and operating results but a measurement of damages based on the defendant’s  records and results of operations. This can have a significant effect on the discovery process.  When parties  distrust each other, meeting an opponent’s request for a production of documents in a litigation matter can be a significant issue in the outcome of the case.

As a damage remedy, unjust enrichment seeks to deprive the defendant  of the alleged ill-gotten benefit or gain. Unjust enrichment is generally used as a remedy for breach of fiduciary duty and intellectual property infringement. Unjust enrichment has historically been associated with claims on trade secrets, copyrights, or trademarks but its use as a damage remedy has grown  with the  increasing role  of intellectual property in the economy.

Another difference between lost profits and unjust enrichment is how the benefit is measured. While lost profits uses ex ante evidence at the time of the alleged tort or breach and the commercial damages expert will  rely on the plaintiff’s forecasts, projections, or budgets to estimate  what would have happened if not for the defendant’s actions, in unjust enrichment the expert  will use an ex post measurement of the actual benefit the defendant received based on evidenced through the trial date.

As the differences indicate, unjust enrichment is a remedy that yields damages based on the defendant’s benefit and seeks a measure of relief without unfairly treating the defendant but carries enough weight to act as a disincentive for future unfair actions by the defendant.

 

 

The Benefit of Using a Forensic Accountant in Divorce Cases

One of the primary objectives in a divorce is the division of marital property , which includes all
assets and liabilities accumulated during a marriage. An experienced divorce attorney can help with property division however, when it comes to complicated financial assets a forensic accountant can be invaluable in assisting an attorney with a complex financial situation.

A forensic accountant can help discover essential financial information that could affect spousal
support, child support,and the division of assets. A forensic accountant can help with the following:
1. Discovery of hidden assets
2. Determine personal expenses
3. Evaluate inconsistencies in documents and statements
4. Assess the long term financial impact of proposed divorce settlements

In heated divorce situations, it is important to ensure that all assets personal and business are fairly valued before any division and prior to any agreement being finalized. When a divorce case requires special attention, the work of a forensic accountant can make a significant financial difference.

Misconceptions about Fraud in the Family Business

A family owned business likes to think that it is immune from fraud and that their trusted employees including family members would never steal from the business. Sadly, family businesses are not exempt from fraud and to think that your company is safe from this type of activity can put your business at significant risk for embezzlement and other acts of asset theft. The most common misconceptions related to family business fraud are: [Read more…]

Business Valuation Seminar Fraud

Business owners and their attorneys need to beware of companies that offer business valuation and consulting services seminars. These seminars are usually a closed invite only event that will snare a few business owners who are anxious to sell their business. The key is to convince  a business owner that his or her business is worth  much more than it is and in the process to charge a large fee  for a  written report to support this fictitious number. [Read more…]

Key Factors That Affect Business Value

Most business owners never think about the value of their business until they are ready to sell and retire. At this stage it is often too late to enhance the value of the company . The following key factors affect the sale value of most businesses. [Read more…]

Tennessee Supreme Court Adopts Modern Valuation Methods For Dissenting Shareholder Disputes

In a case involving dissenting shareholders forced out of a closely held corporation in Nashville, the Tennessee Supreme Court has overruled its prior case law and adopted a standard that will allow trial courts to use modern methods such as discounted cash flow to determine ” fair value” of dissenting shareholders stock. [Read more…]

Exit Strategy : Employee Stock Ownership Plan

One way for business owners to transition their ownership to employees and to receive liquidity for their stock shares is through the establishment of an employee stock ownership plan(ESOP). [Read more…]

Business Valuation and The New Tax Law

The Tax Cuts and Job Act signed into law by President Trump in 2017  will have both long term and short term effects on business value as the provisions in this legislation will require more complex modeling by business valuation professionals for after tax cash flows and the cost of capital calculations. [Read more…]