Today’s article is a part of the Forward Thinking Education Series presented by Legacy Bank, the Latino Chamber of Commerce and the Pueblo Chieftain. Webinars further discussing this and other financial topics can be found on the Latino Chamber of Commerce Facebook page at: https://m.facebook.com/PuebloLCC/
In a previous article we discussed the importance of people having a will in place when they pass away. Wills not only dictate the terms of a deceased person’s estate but stipulate who may have access to their financial assets including bank accounts.
But what about preparing for other situations where you may need someone else to handle your financial affairs? What if you become physically or mentally incapacitated following a stroke or an accident and can’t make financial decisions or initiate financial transactions? This might also occur if your physical or mental health deteriorates over time. Perhaps you’re fine physically and mentally but you travel extensively or live in more than one location during the year but have on-going financial assets and responsibilities in multiple locations.
According to Mark Dunsmoor, Senior Vice President at Legacy Bank, these circumstances may create a need for a third party to manage your personal or business financial affairs. “There needs to be someone available to keep an individual’s or a family’s financial house in order such as paying everyday bills, handling property and income taxes, managing investments and retirement funds, paying health, property and auto insurance premiums or making deposits into and withdrawals from bank account’s” Dunsmoor notes. “That individual needs access to bank accounts, financial assets and records, preferably through an enduring financial power of attorney.” In Colorado a financial power of attorney is also known as a general power of attorney.
To give another individual a durable financial power of attorney, you must sign a legal document authorizing them to handle your financial affairs if you are unable or unavailable to do so. As the person granting this power you are identified as the principal. The person receiving your financial power of attorney is known as an agent. The agreement may be effective immediately or at a future date when the you are deemed unavailable or incapable of making financial decisions. The agent’s authority to act on your behalf terminates when you die. Usually people give their agent broad power to handle all of their finances but that authority can be limited to specific financial actions if desired.
In many cases it makes sense for someone to name their spouse as their agent. Often a husband and wife will name each other. Depending on circumstances, another trusted family member or friend could be selected. Your durable financial power of attorney also ends if you revoke it as long as you are mentally competent to do so.
To create a legally valid durable financial power of attorney, you need to properly complete and sign a fill-in-the-blank form that's a few pages long. Some states have their own forms. In Colorado you can download forms from a variety of websites. Some banks and brokerage companies have their own specialty forms. If you want your agent to have an easier time with these institutions, you may need to prepare two or more documents provided by the institutions with which you do business.
Some states require the document to be notarized and witnessed. Colorado law requires neither but it still may be best to do so. While it is not mandatory that you retain an attorney to help prepare and review your durable financial power of attorney, it may be best that you consider it to obtain specific answers to personalized questions.
Mark Dunsmoor is a Senior Vice President of Legacy Bank with 41 years of banking expertise. Dunsmoor has been recognized as the Greater Pueblo Chamber of Commerce Charles W. Crews Business Leader of the Year and volunteers in many capacities including on the local hospital board.
Author: Mark Dunsmoor, Senior Vice President Legacy Bank
Article Published on The Pueblo Chieftain here.
Today’s article is a part of the Forward Thinking Education Series presented by Legacy Bank, the Latino Chamber of Commerce and the Pueblo Chieftain. Webinars further discussing related financial topics can be found on the Latino Chamber of Commerce FaceBook page at: https://m.facebook.com/PuebloLCC/
If you’re entrepreneurial minded with access to cash or financing, you might be viewing the pandemic as a great time to buy a business. For purposes of this discussion, we will assume you have identified at least one existing business with an established name and reputation, plus a seemingly proven product line or portfolio of services. It should already occupy a suitable building or store front and have the necessary equipment to operate. We will also assume you plan to be an owner-operator.
It is imperative that you collect organizational intelligence on any business you are considering. Obtaining this information will most likely require the sharing of proprietary data. As a result, don’t be surprised if the company asks you to sign a non-disclosure agreement (NDA) protecting any confidential financial or operating information you might be given access to. At the outset, this might include a copy of any documents relating to the firm’s business structure such as bylaws, resolutions, operating agreement and stock ownership if this is relevant. This will confirm the seller’s ownership and its authorization to sell.
“You, as well as prospective lenders or investors, will want to review tax returns, annual profit and loss statements and summaries of operating expenses to see the business’s financial health before and during the pandemic,” says Mitch Brown, Branch President of Legacy Bank. “A month-by-month profit and loss statement more clearly depicts how and when the pandemic might have impacted the business.”
It’s equally important to evaluate aspects of a company’s operation that aren’t specifically portrayed in the financial statements. Does it have any proprietary or patented technology or products that create a long term market opportunity and an edge over competition? Along with that comes the question as to who is the competition and how have they fared during the pandemic. If the company is enjoying strong sales during the pandemic, is it because of the products or services they offer and will these remain in demand as the pandemic subsides?
"Always analyze the customer base," comments Brown. "Are sales spread about equally among customers or are there large customers that represent the lion's share of sales; if so how are those firms doing during the pandemic? Does the business have any long term contracts with them and can they be met?"
For some businesses, a critical aspect of meeting customer demand and growing a business is its relationship with key suppliers. These agreements should be reviewed, as well as, gaining a perspective on whether the pandemic has impacted their ability to provide products and services necessary for growth.
"The financial statements reflect employee salary and benefit costs but do not show some of the more important employee related topics," notes Brown. How many workers have skills and experience critical to the company’s success? Do any employees belong to a union and what are the terms of that contract? When does it expire? For some businesses it is important to know if employees have been working from home, if they should continue to do so and if the company is picking up their work-from-home related costs such as phone and internet.
Don’t forget to determine if the business is involved in any unresolved litigation and what if any financial exposure this might create for your ownership. Finally, it is important to understand if the organization has any long term assets, such as real estate. Recent market corrections may have had an unexpected impact on the value of those assets, especially if one plans to borrow against those assets.
Mitch Brown is the Branch President of Legacy Bank Pueblo West and has over 16-years in banking and finance. Mr. Brown holds a Master’s Degree in Business Administration and is an active part of the Pueblo West community. His involvement includes Rotary Club Pueblo West and YoungLife among others.
Article Published on The Pueblo Chieftain here.
Rebecca Diaz is not a perfectionist. “There’s this expression: GETMO. Good enough to move on,” Diaz explained. “Sometimes you need that philosophy in your life.”
Diaz is acutely aware of women’s tendency to abstain from a job application because every prerequisite wasn’t met to a tee. She knows and has admired women who will stay up all night on a project fine-tuned to perfection. Early in her career, she was used to being the fixer and first responder to any dilemma, big or small. But with experience and working with women along the way, she learned how to run with the big dogs, though her golf skills are still lacking.
Diaz is one of several bankers being honored as a 2020 “Outstanding Woman in Banking” by BankBeat magazine.
After she graduated from Colorado State University in 2008, Diaz hopped around the feeble job market doing odd jobs (like managing a restaurant and being a personal assistant), until she found herself as a bank teller at a large national bank.
“They started me as far down the totem pole as possible,” she said. “I didn’t even get face-to-face customer interaction.”
But promotions were quick to follow. She weaved through mortgage administration and banking, learning about the products and lending and credit along the way. Though she moved up to become an assistant manager at one of the largest banks operating in southern Colorado, the work culture, which she described as toxic, led her to quit and shift to a community bank.
She took a leap of faith and a big demotion, landing at the Pueblo, Colo., branch of Legacy Bank in 2013 as a loan processor, where she expected to remain for the rest of her career. “But the stars lined up and opportunities kept coming in.” She was promoted to a banking officer a year later, and became vice president at the Wiley-based bank in 2018.
Aside from taking more chances, Diaz would tell her younger self and other young professional women to negotiate on their own behalf — whether it be salary, benefits or simply standing up for oneself. “No one else is going to do it for you,” she said. “Most women will just take what is offered to them.”
Early in her career is also when Diaz witnessed and worked with powerful women. “Seeing how determined they were and how hardworking they were — it made me want to strive to be like them.”
And these women double as some of her closest friends. Cassie Hart, Michelle Gardner, LaShawnda Padilla and Crystal Faricy, stand beside her on the Junior League of Pueblo, where she served as treasurer for three years, was the secretary of the board for two, and this year, she qualifies for tenure. The organization encourages women to get out of their comfort zones and make connections, which is a philosophy Diaz continues to apply.
Diaz has been at Legacy since 2013, and this was the first year she was invited to the bank’s golf tournament. “To be seen and to have those conversations outside of the office is so important,” she said.
Diaz was also the first woman the $418 million bank sent to the Graduate School of Banking at Colorado-Boulder, where her term paper landed her at the top of her graduating class — and infiltrated the bank’s culture.
The term paper was on corporate culture and, instead of using the traditional small sample size, Diaz reached out to her own bank’s employees — from the board room to each of its seven branches — to assess its culture at every level. She ultimately submitted the report to Legacy’s board of directors. “It was neat to have a paper that was actually impactful,” she said.
“I learned that culture really does have to start at the top, and it has to be talked about often,” Diaz said. “It has to be led by example.” She also found that when an organization has short and long-term goals, unity and integrity are what get the needle moving.
These values are also what tie Diaz to the Pueblo community. As a member of the Latino Chamber of Commerce, she was named as one of the community’s Top 40 under 40 in 2018. “There are so many young people, especially in Pueblo, who contribute so much,” Diaz said.
Diaz is especially passionate about small business support in the community. Last summer, a client of hers wanted to open a food truck that sells macaroni and cheese.
“It seemed so out of left field,” she said. “We looked at the numbers and it wasn’t making real sense.”
Diaz worked with the customer to make a plan and bring in alternative sources of collateral. Now, the mac and cheese truck is in business on the weekends, “and she sells out every single time,” Diaz said. “And that was the start to changing her life.”
And in the long run, Diaz said the asset with the highest return has been her community involvement.
“I don’t think that people should volunteer or give back with the expectation that they’re going to get anything in return, but that tends to be what happens,” she said. “You get out there and you’re doing what’s important to you and the community. You get to know great people, and it just helps you along your path.”
Come & Visit Rebecca Diaz at the Legacy Bank University Park Location in Pueblo, CO.
Article Originally Published from BankBeat. You can find the article here.
This is the third story in a series of articles about selling a business during the pandemic. The first story discussed the value of improving markets for business sales and the second focused on the financial information buyers will want to review.
This article will review other types of information potential buyers will request or a seller might wish buyers be made aware of to increase the value of the transaction. The influence of some of these items may well be reflected in the financial statements, but much of it has to do with fundamental aspects of a business’s operation.
At the beginning of sales negotiations, even before financial statements are shared, sellers should consider having buyers sign a non-disclosure agreement (NDA) which is a legal contract that describes the confidential information a seller is asked to or wants to disclose to a potential buyer and its advisers but which cannot be shared with others outside the transaction. “Some of these details may relate to expenses a buyer might incur,” notes Mark Dunsmoor senior vice president of Legacy Bank “while others relate to revenue opportunities.”
The expense side includes costs currently incurred by the seller. While a new owner may eventually switch providers for some of these products or services, the categories of expenses required to operate the business will most likely remain the same. “Expenses might include mortgages or lease agreements for buildings and property occupied or used by the seller, as well as, leases for or amounts due on equipment or machinery used in the business,” adds Dunsmoor.
“Insurance policies covering property, vehicles and equipment fall into this expense category, as well as, professional liability insurance, workman’s compensation and product liability,” remarks Dunsmoor. Other typical expenses most sellers may disclose include employee-related expenses such as salaries, health insurance, retirement plans and perhaps employment agreements with certain individuals.
“In this day and age, it may be important to have ‘work from home’ arrangements disclosed that highlight fees the company incurs for crucial communications technology that facilitate emerging remote work lifestyles,” adds Dunsmoor. Some, but not all, of these costs may be based on contractual arrangements, the details of which should be shared. There are also other operating expenses such as utility costs, building and equipment maintenance as well as federal, state and local permits and licensees that might be required to operate the business.
If the company has union employees, the union agreement is an important element to consider. The buyer must also be made aware of any pending legal action against the seller.
“Potential buyers will wish to review files documenting the selling firm’s formal business status including bylaws, resolutions, operating agreement and stock ownership if this is relevant. This will confirm the seller’s ownership and its authorization to sell,” explains Dunsmoor.
In addition to expenses, sellers may have information to share related to its revenue stream. This could include a list of current customers and the amount of revenue they represent featuring a list of viable prospects and vendors or any long-term contracts that may effect the transition.
“Sellers who hold patents, have unfinished patent applications or operate with other trade secrets, which make its products or services unique in the market may be asked to share that documentation,” added Dunsmoor. “These types of documents can hold a high level of value to the right buyer.
Most business will have marketing programs that support the sale of its products and services such as advertising, trade association membership, trade show participation and public service/ community relations activities that are usually requested. While this category might be classified under expenses, it is directly related to the seller’s revenue generation and competitive advantages which together offer a high level perspective of daily expectations.
Mark Dunsmoor is a senior vice president of Legacy Bank with 40 years of banking expertise. Dunsmoor has been recognized as the Greater Pueblo Chamber of Commerce Charles W. Crews Business Leader of the Year and volunteers in many capacities including on the local hospital board.
Article feautured in the Pueblo Chieftain: Link to Article