An organizational growth process is an integrated management and financial strategy that allows privately owned businesses to take advantage of many of the financial tools that are available to their publicly traded counter parts. Privately held corporations that take advantage of these growth strategies not only see the bottom line grow, they see a shift in management culture and attitude that becomes “infectious” throughout the whole company. Once executed, the company never looks back.
Taking your company to the “next level” requires creating an attitude and a culture that rewards success; giving your company the financial tools necessary to execute the growth plan, while showing you how to compensate those who are part of the success. Using innovative tax favored strategies to grow your company requires a team of professionals who have the ability to understand your goals, create the plan, give you the financial tools to execute, assist the company throughout implementation, and clearly communicate the requirements and rewards to your management team.
ATI Capital Group, Inc. ("ATICG") is a designer and facilitator of such plans. We bring a team of independent professionals together who concentrate and have a unique experience in helping business owner’s design, implement, and complete such plans. ATICG acts as an "architect" and\or "general contractor" during the design, implement, and completion of such plans. ATICG acts as an architect during the design phase taking you through all the features, benefits, and requirements of each alternative course of action. Our background in accounting, income and estate tax planning and compliance, corporate finance and business valuations uniquely positions us to provide unbiased plans that will meet your needs based on your specific facts and circumstances. Our “alliance” with ERISA attorneys, deferred compensation attorneys, independent trustees, CPA’s and other professionals allows us to be professional, independent and very thorough during the implementation of your plan. During implementation ATICG acts as a “general contractor” taking on several tasks directly and contracting other tasks to the abovementioned independent professionals who have the expertise to execute based on your plan. This process provides you with a task oriented team that understands your needs, has agreed to execute your plan as designed, and is desirous of working with your existing team of advisors to get the task completed. Upon completion we are available for ongoing support and service.
What questions do business owners ask?
We often hear and address the following questions or issues when discussing corporate transition strategies:
- Can I motivate my key executives based on increases in value of my company?
- How do I accurately measure or determine the value of my company?
- What things can I do to increase the value of my company?
- Am I doing anything that is actually decreasing the value of my company without my knowledge?
- Can I motivate my key employees with stock options without losing control over my company?
- If I implement a stock based incentive plan, will I have to answer to my employees about my compensation or benefits? Will I have to show them my financial statements?
- Can I have a stock based incentive plan without ever transferring the shares to my key executives?
- If I implement a deferred compensation plan or a stock based incentive plan, does it prevent me from selling my company down the road?
- Can I use a stock based redemption plan to have my key executives buy me out of my stock down the road?
- If I sell my stock to my employees through any such plan, do I have to retire from the Company?
- What are the tax consequences of doing this?
- What happens if I set up this plan and one of my key executives quits the company, gets divorced, or passes away, will I lose control of my stock?
These and other related questions are most common and are on the mind of many business owners. This concept is evidenced by the following conversation:
Client:
My employees will never be concerned with helping me be more profitable, it’s just not in their nature. They are excellent professionals but it is just different for me as the business owner.
Sam:
Don’t you think that if your key executives had a long-term profit motivated incentive program in place they would respond?
Client:
Maybe, but I’m not going to give them all the profits. I have to provide for my own retirement you know, and my son although he is a little young now may take over the business someday. What if some people on my management team perform and some do not? How do I bridge the gap between when I want to retire and when my son can take over the Company?
Sam:
A properly executed stock based incentive plan for them which can be broken down into groups or individualized on a case by case basis can go a long way.
Client:
What about me? How am I going to extract my value out of the company before I retire?
Sam:
A properly funded deferred compensation plan can be set up for that. Remember, since you are probably the first to leave the company, your plan will be funded first and the company will set aside the money for your payout while you are still in control.
Client:
Well, what if we set this all up and someone comes in from the outside and makes me an offer I can’t refuse? Will this plan keep prospects from making an offer to buy my Company?
Sam:
The plan will be flexible enough to provide for what we call a “change in control event”. Management will be rewarded, but not at your detriment. In fact, having a proper plan in place will show potential purchasers that you have a “blueprint” for them to follow, which all else being equal, makes your company more attractive, not less, as a buy-out candidate.
Client:
And this is all tax deductible?
Sam:
If we are careful and properly structure, and implement, a plan that is in compliance with ATI Capital Group’s Executive Compensation Study, we will have a much better chance of having all reasonable compensation tax deductible.
Client:
Well, what if the plan is not going well?
Sam:
You can always adjust as you go, because the management team will never own stock in the Company, they will not be able to take action against you. But because the plan and their incentive compensation is tied to performance, and ultimately to increases, in stock value they will become profit motivated not just sales motivated.
The fact of the matter is, a properly integrated executive compensation plan, that rewards management based on the increase in stock value, along with a deferred compensation plan that fully funds your retirement before you step down from the day to day operations, will grow the equity value of your company. We can show you how to create, measure, and maximize the equity value of your company with compensation plans that are structured to be in compliance with, and deductible under, IRC §§162(a) and 162(a)(1). We work with you to analyze and explain the options to management, while creating a positive profit motivated culture. This is a process not an event, and proper planning will make the process a success for everyone.
