Growing companies often choose to create a board of directors or an advisory board to bring in outside influence and perspective. While the two kinds of boards have similar responsibilities, differences in how the boards are managed influence which type of board should be used. Most companies bringing in outside advisors for the first time start with an advisory board because it is less formal and less constricting.

Out of the blue, you’re approached with what sounds like a great deal, almost too good to be true. An owner of a company in a similar industry wants to merge. You’ve been thinking about how to boost your flat-lining sales. Could this be the solution? Mergers and acquisitions can be the perfect answer to issues around growth or exit planning, but exploring them can also cause more problems than they solve, wasting both time and money. How do you tell the difference? First, understand the beneficial reasons to consider mergers and acquisitions (M & A). Second, learn and avoid mistakes commonly made by businesses when considering M & A.

If you’re considering a merger or acquisition, being proactive rather than reactive gives you the most control and keeps you in the best position for negotiations. Typically, your main motivation to even consider a merger or acquisition is to fuel growth or fuel your exit. Understanding yours and your company’s goals and needs in relation to these motivations before approaching an M & A situation is your best strategy.

Fueling Growth

Most companies seek development – organically or by acquisition. When considering expansion, many keep their focus a little too broad by simply thinking that they want to increase profits. Strategically, it is important to dive down into the three main areas of growth and determine which one (or which combination) will drive opportunities for financial impact.

• Process: A merger or acquisition is effective when the sophisticated systems at one company will benefit the other and when acquiring those processes will be more efficient and cost-effective than developing them on your own.
• People: A merger or acquisition may be wise when hiring and training people will be more costly and time-consuming than acquiring the talent the other company has already developed.
• Product: The cost and time involved with expanding a product line can be prohibitive. Merging or acquiring another company that is already successfully manufacturing and/or selling those products can be the optimal solution.

Fueling Your Exit

If you’re not planning on gifting or selling your company to family or other team members, a merger or acquisition may be the exit plan that provides you with the retirement you’re seeking. Having a plan in place for the change of ownership ensures that you secure a desirable deal to reach the financial goals you set for yourself and your family. Achieving financial objectives and a smooth transition of ownership occurs when the business owner plans in advance, takes the time to view the business from the perspective of a prospective buyer, and makes changes necessary to make the business more marketable and desirable to buyers.  The value of your business will be determined based on anticipated future cash flow of the operations.  Fully examining your operations and “getting your house in order” ahead of time is key to securing the valuation you may seek.

Another benefit when considering a merger or acquisition is that, even if the deal does not go through, you will have learned a lot. First, the next time you consider a merger or acquisition, you and your team have a much better understanding of the process and can manage it more quickly and cost-effectively. Secondly, the process teaches you a great deal about your business. Looking at your organization through the eyes of someone considering you for a merger or acquisition gives an entirely new perspective on your businesses. This perspective can help you to identify changes that will make your business even more appealing in the next opportunity, like securing non-compete agreements with key employees.

If you are considering a merger or acquisition, be sure to seek legal and financial advice before connecting with potential new business partners. Click here to review six mistakes companies make when considering a merger or acquisition. The biggest mistake companies make is to move far along in the process before seeking legal and financial advice.

If you have questions about mergers and acquisitions, please contact Cray Kaiser today.

In November of 2015, sponsors of audited employee benefit plans received a letter from the Department of Labor notifying them that over 40% of all audits submitted were not completed in accordance with auditing standards. Why is this concerning? Because audits that are not correctly performed create many issues for all those involved with employee benefit plans, including the plan sponsors, fiduciaries and participants.

Annual audits are an ERISA (Employee Retirement Income Security Act of 1974) requirement for plans with participants over a certain threshold and are attached to Form 5500. An audit verifies the assets of the plan and confirms the plan is operating according to the plan documents and in compliance with applicable laws and regulations. These audits have a filing deadline of October 15 each year.

Errors in plan administration can trigger issues with the IRS, including penalties, and can also cause legal problems for the plan’s fiduciary. More importantly, audits that are correctly done can detect a number of errors that, if not caught early, turn into major problems.  Commonly seen errors include: incorrectly calculated employee deferrals, employer matches, and deferrals for unique forms of compensation (like commissions or bonuses). Other common issues that may be uncovered with an audit include:

• Improper disposition or holding of forfeitures
• Failure by the plan of certain nondiscrimination testing, without adequate corrective action taken
• Top-heavy issues
• Other deviations from the Department of Labor and IRS requirements or from the plan document

The November Department of Labor letter communicates the results of the DOL’s audit of plan auditors. The intent of the letter was to encourage plan sponsors to confirm that they are using qualified, experienced auditors. Plan administrators are held responsible as fiduciaries of the plan, and can be held personally liable if they are not making reasonable choices with regard to their plan. This includes due diligence with selection of their plan’s auditor.

While many accounting firms are choosing not to continue to offer employee benefit plan audits as a service, Cray Kaiser assures clients that we are uniquely qualified for this work. In addition to our commitment to quality and continued education in this area, our staff has a great deal of experience understanding the nuances of these audits. Cray Kaiser is also a member of the American Institute of Certified Public Accountants’ EBPAQC (Employee Benefit Plan Audit Quality Center), a group created to improve quality of benefit plan audits with news alerts, training, webinars, audit quality center and other resources.

On the surface, a franchise seems like a low-risk investment with promising rewards. You don’t need to start your own business from scratch and a lot of the hard work seems to come with preset directions. It can’t be that bad, right? The reality is, buying a franchise is not just an investment of hundreds of thousands dollars, but also a healthy investment of analysis and skepticism.

Starting your own business is no easy task. There is lots of risk involved and the resulting stress can become overwhelming to handle while navigating hundreds of business decisions a day. If you add a spouse into the ownership arrangement, things only become more complex. Here’s what you should know before starting a business with your spouse.

All business have varying degrees of success. But all successful businesses have a realistic, useful and dynamic business plan in place. It’s more than a pointless exercise. Your plan should help you make attainable financial goals and formulate time-tested strategies to reach those goals. Have you started drafting your business plan?

Time to sell your business? Unfortunately, it’s a little more complicated than signing some paperwork and watching a large sum of money appear in your bank account. Many entrepreneurs make mistakes when selling, and the same mistakes can be seen repeating in every industry. We picked the most common six mistakes to avoid.

If you fill out your own 1099, it always seems less daunting than other tax forms due to its shorter length. But did you know one little mistake can cost you $100 per infraction? Don’t let this “little form” bite you with expensive penalties later on. All mistakes are easily avoidable if you’re thorough.

Ever since wire transfers moved online, both personal and work bank accounts are more vulnerable to fraudulent electronic funds transfers from tech-savvy thieves. Avoid malicious attacks by recognizing the tell-tale signs of a fraudulent wire transfer.

Keeping records of important paperwork is a necessary evil, especially when preparing to do both personal and business taxes. But it doesn’t have to be a necessary headache. Let’s narrow down which documents you should hang on to versus ones you can throw away for good.