Landmark Advisors Blog - The News and Information of Startups and M&A

Hernia Mesh Complications in Indiana: Your Legal Options for Compensation

Sat, 22 Mar 2025 14:18:52 GMT

Hernia mesh, a medical device used to repair hernias, has been associated with serious complications, causing significant pain and suffering for many individuals. If you or a loved one in Indiana has experienced adverse effects from hernia mesh, understanding your legal rights is crucial. This post explores the legal avenues available to those affected by hernia mesh complications in the Hoosier State.

The Risks Associated with Hernia Mesh

While designed to strengthen hernia repairs, certain hernia mesh products have been linked to:

Infections: Mesh can become infected, leading to pain, swelling, and further complications.
Chronic Pain: Many patients experience persistent pain after mesh implantation.
Mesh Migration: The mesh can shift from its original position, causing damage to surrounding tissues and organs.
Adhesions: The mesh can adhere to nearby organs, leading to complications and the need for corrective surgery.
Mesh Failure: The mesh may fail to provide adequate support, resulting in hernia recurrence.

Indiana Product Liability Law and Hernia Mesh Claims

In Indiana, product liability law allows individuals to hold manufacturers accountable for defective medical devices. To pursue a hernia mesh claim, you must establish:

Defective Design or Manufacturing: That the mesh was defectively designed or manufactured.
Failure to Warn: That the manufacturer failed to adequately warn about the risks of complications.
Causation: A direct link between the defective mesh and your injuries.
Damages: The extent of your injuries and losses.

Steps to Take for a Hernia Mesh Claim in Indiana

Consult an Indiana Medical Device Attorney: Seek legal counsel from an attorney experienced in medical device litigation.
Gather Medical Records: Collect all relevant medical records, including surgical reports, diagnoses, and treatment plans.
Document Your Symptoms: Keep a detailed record of your symptoms and how they have impacted your life.
Understand Indiana’s Statute of Limitations:

Roundup and Weedkiller Claims in Indiana: Holding Manufacturers Accountable

Sat, 22 Mar 2025 14:05:53 GMT

Roundup, a widely used herbicide containing glyphosate, has faced increasing scrutiny due to its potential link to cancer and other health issues. For Indiana residents who have been exposed to Roundup and suffered adverse effects, understanding your legal rights is essential. This post explores the legal avenues available to those affected by Roundup and other weedkillers in the Hoosier State.

The Risks Associated with Roundup and Glyphosate

Roundup's active ingredient, glyphosate, has been classified as "probably carcinogenic to humans" by the International Agency for Research on Cancer (IARC). 1 Exposure to glyphosate has been linked to:

1. www.abrinternationaljournal.org

www.abrinternationaljournal.org

Non-Hodgkin Lymphoma: Studies have shown a potential association between glyphosate exposure and an increased risk of this cancer.
Kidney and Liver Damage: Long-term exposure may lead to damage to these vital organs.
Reproductive Issues: Some research suggests potential impacts on reproductive health.

Indiana Product Liability Law and Roundup Claims

In Indiana, product liability law allows individuals to hold manufacturers accountable for defective products. To pursue a Roundup claim, you must establish:

Defective Design or Failure to Warn: That the manufacturer failed to adequately warn users about the risks of glyphosate exposure.
Causation: A direct link between your exposure to Roundup and your cancer or other health issues.
Damages: The extent of your injuries and losses.

Steps to Take for a Roundup Claim in Indiana

Consult an Indiana Toxic Exposure Attorney: Seek legal counsel from an attorney experienced in environmental litigation and toxic exposure cases.
Document Your Exposure: Gather evidence of your exposure to Roundup, including purchase records, application records, and witness testimonies.
Obtain Medical Records: Collect all relevant medical records, including diagnoses, treatment plans, and test results.
Understand Indiana’s Statute of Limitations: Be aware of the time limits for filing a claim in Indiana.
Consider Joining a Class Action or Filing an Individual Lawsuit: Depending on your circumstances, you may join a class action lawsuit or pursue an individual claim.

Why Choose an Indiana-Based Attorney?

An Indiana attorney understands the state's environmental regulations, court procedures, and medical networks. They can provide personalized attention and advocate for your best interests.

Legal Strategies and Compensation

Your attorney will employ various legal strategies, including:

Gathering expert testimony to establish causation.
Negotiating with the manufacturer for a fair settlement.
Representing you in court if a settlement cannot be reached.

You may be entitled to compensation for:

Medical expenses.
Lost wages.
Pain and suffering.
Other related damages.

Conclusion

If you have been exposed to Roundup and developed cancer or other health issues in Indiana, you may have legal recourse. Contact an experienced Indiana toxic exposure attorney to understand your options and pursue the compensation you deserve.

Call to Action:

Contact our Indiana law firm today for a free consultation. We are dedicated to helping you navigate your Roundup claim.

Navigating Nexium and Prilosec Claims in Indiana: Your Path to Compensation

Sat, 22 Mar 2025 13:53:00 GMT

Proton pump inhibitors (PPIs) like Nexium and Prilosec have provided relief for millions suffering from acid reflux and related conditions. However, growing concerns about their long-term safety have surfaced, particularly regarding potential links to serious health issues. If you or a loved one in Indiana has experienced adverse effects from these medications, understanding your legal rights is crucial. This post aims to guide you through the complexities of Nexium and Prilosec claims within the Hoosier State.

The Risks Associated with Nexium and Prilosec

Nexium (esomeprazole) and Prilosec (omeprazole) work by reducing stomach acid production. While effective for short-term relief, prolonged use has been associated with several health risks:

Kidney Disease: Studies suggest a potential link between long-term PPI use and chronic kidney disease, including kidney failure.
Bone Fractures: PPIs can interfere with calcium absorption, increasing the risk of osteoporosis and fractures, particularly in older adults.
Stomach Cancer: Some research indicates a possible association between prolonged PPI use and an increased risk of gastric cancer.
Nutrient Deficiencies: Long-term use can lead to deficiencies in essential nutrients like magnesium and vitamin B12.

Indiana Product Liability Law and PPI Claims

In Indiana, product liability law holds manufacturers accountable for defective products that cause harm. To pursue a claim related to Nexium or Prilosec, you must demonstrate:

Defective Design or Failure to Warn: That the manufacturer knew or should have known about the risks and failed to provide adequate warnings.
Causation: A direct link between your use of the medication and your subsequent health issues.
Damages: The extent of your injuries, including medical expenses, lost income, and pain and suffering.

Steps to Take for a Nexium or Prilosec Claim in Indiana

Consult an Indiana Product Liability Attorney: Seek legal counsel from an attorney experienced in pharmaceutical litigation. They can evaluate your case and explain your rights under Indiana law.
Gather Medical Records: Collect all relevant medical records, including diagnoses, treatment plans, and prescription histories.
Document Your Symptoms: Keep a detailed record of your symptoms and how they have impacted your life.
Understand Indiana’s Statute of Limitations: Be aware of the time limits for filing a claim in Indiana. Missing these deadlines can jeopardize your case.
Consider Joining a Class Action or Filing an Individual Lawsuit: Depending on the specifics of your case, you may join a class action lawsuit or pursue an individual claim.

Why Choose an Indiana-Based Attorney?

An Indiana attorney understands the state's legal landscape, court procedures, and medical networks. They can provide personalized attention and advocate for your best interests.

Legal Strategies and Compensation

Your attorney will employ various legal strategies, including:

Gathering expert testimony to establish causation.
Negotiating with the pharmaceutical company for a fair settlement.
Representing you in court if a settlement cannot be reached.

You may be entitled to compensation for:

Medical expenses.
Lost wages.
Pain and suffering.
Other related damages.

Conclusion

If you have experienced adverse health effects from Nexium or Prilosec in Indiana, you may have legal recourse. Do not hesitate to consult with an experienced Indiana product liability attorney to understand your options and pursue the compensation you deserve.

Call to Action:

Contact our Indiana law firm today for a free consultation. We are dedicated to helping you navigate your Nexium or Prilosec claim.

Zhongguancun: The Silicon Valley Americans Never Heard Of

Tue, 11 Mar 2025 18:34:06 GMT

Nestled in Beijing’s Haidian District, Zhongguancun is a name that rarely registers in the American imagination, yet it stands as one of the world’s most dynamic technology hubs. Often dubbed "China’s Silicon Valley," this bustling neighborhood has transformed

from a quiet rural outpost into the beating heart of China’s tech revolution. While Silicon Valley conjures images of sleek campuses and startup lore, Zhongguancun’s story is one of grit, government backing, and a relentless drive to innovate—yet it remains

largely overlooked by the Western gaze.

Zhongguancun’s origins are humble. In the 1950s, it was little more than farmland dotted with a few dozen families, overshadowed by the nearby Old Summer Palace. Its transformation began when the Chinese government designated it a "science city," leveraging its proximity to elite institutions like Peking University, Tsinghua University, and the Chinese Academy of Sciences. These academic powerhouses laid the groundwork for what would become a talent-rich ecosystem, churning out engineers and researchers who would

fuel a technological awakening. By the late 1970s, as Deng Xiaoping’s economic reforms opened China to the world, Zhongguancun found itself at the forefront of a new era.

The spark came in 1980 when Chen Chunxian, a physicist inspired by a government-sponsored visit to California’s Silicon Valley, founded the Advanced Technology Service Association in Zhongguancun. Though short-lived, this venture cracked open the door to private enterprise in a nation where state control had long reigned supreme. Soon, the area earned the nickname "Electronics Avenue" as makeshift markets sprang up, selling everything from transistors to early PCs. In 1988, the government officially recognized its potential, naming it the "Beijing High-Technology Industry Development Experimental Zone." From there, Zhongguancun exploded into a hub of innovation.

Today, Zhongguancun is unrecognizable from its pastoral past. Glass towers house tech giants like Lenovo, Baidu, and ByteDance—names that have reshaped global markets. Lenovo, born from the Chinese Academy of Sciences, stunned the world in 2005 by acquiring IBM’s PC division, cementing its status as a top-tier player. Baidu, China’s answer to Google, and ByteDance, the parent of TikTok, trace their roots to this district, where 80 startups are said to launch daily. The area hosts over 10,000 tech firms, employs half a million technicians, and generates revenues exceeding $800 billion annually. Nearly half of China’s "unicorn" startups—those valued at over $1 billion—call Zhongguancun home.

What sets Zhongguancun apart from Silicon Valley is its symbiotic relationship with the state. While Silicon Valley thrives on a libertarian ethos of free markets and minimal regulation, Zhongguancun’s rise owes much to government policies—tax breaks, subsidies, and talent pipelines like the "Talent Green Channel" that lure skilled workers to Beijing. The Chinese Communist Party sees Zhongguancun as a linchpin in its quest to shift from "Made in China" to "Created in China," a narrative of national rejuvenation through technological prowess. Yet this top-down approach has its critics. Some argue it stifles the organic creativity that defines Silicon Valley, pointing to early copycat ventures that mimicked Western models rather than inventing anew.

Still, Zhongguancun’s innovators have proven their mettle. Companies here don’t just replicate—they adapt. Baidu’s search engine caters to Chinese users’ unique browsing habits, while ByteDance’s algorithms have conquered global attention spans. The district’s proximity to top universities ensures a steady flow of brainpower, with over 200 research institutes and a dozen tech parks fostering collaboration. International giants like Google, Intel, and Microsoft have set up shop, drawn by the promise of tax incentives and access to talent. Microsoft’s $280 million research headquarters, completed in 2011, exemplifies Zhongguancun’s pull as a "workshop for the world."

But Zhongguancun isn’t without challenges. Its talent pool, while vast, lacks the diversity of Silicon Valley’s immigrant-driven workforce. Beijing’s smoggy skies and frenetic pace deter some foreign professionals, and the "996" work culture—9 a.m. to 9 p.m., six days a week—has sparked backlash among young workers. Government oversight, too, looms large. Recent crackdowns on tech firms, from gaming to AI, signal a tightening grip that could dampen the entrepreneurial spirit Zhongguancun has cultivated.

For all its achievements, Zhongguancun remains a mystery to many Americans, overshadowed by Silicon Valley’s cultural cachet. Yet its impact is undeniable. As of 2022, its enterprises raked in 8.7 trillion yuan ($1.2 trillion), a 3.5-fold increase from a decade prior. It’s a hub where protests against zero-Covid policies in 2022—amplified by Zhongguancun-born social media—helped topple nationwide restrictions, proving tech’s power to reshape society from the ground up. Zhongguancun may not have Silicon Valley’s fame, but its quiet rise signals a future where China’s tech ambitions could eclipse the West’s—if they haven’t already.

Trade Strategies for Smaller Chinese Manufacturers Amid Trump’s Trade Policies

Mon, 10 Mar 2025 06:06:41 GMT

As Donald Trump’s second term begins in 2025, his administration’s trade policies are once again sending shockwaves through global markets, with China squarely in the crosshairs. Building on his first-term playbook, Trump has promised steep tariffs—potentially exceeding 60% on Chinese imports—to protect American industries and reduce the U.S. trade deficit. For smaller Chinese manufacturers, already battered by years of trade tensions, supply chain disruptions, and rising costs, these policies present an existential challenge. Unlike their larger counterparts with deep pockets and global reach, smaller firms must adopt agile, innovative strategies to survive and thrive in this turbulent landscape. This article explores the key trade strategies these manufacturers can pursue to adapt to escalating tariffs, export restrictions, and supply chain uncertainties.

The Tariff Tightrope: Diversifying Markets

The cornerstone of Trump’s trade agenda is tariffs, which act as a tax on Chinese goods entering the U.S., once China’s largest export market. For smaller manufacturers reliant on U.S. buyers—think family-run factories producing textiles, electronics components, or machinery parts—these tariffs erode profit margins and price competitiveness. One viable strategy is market diversification. By pivoting to alternative markets in Southeast Asia, Europe, or Africa, these firms can reduce their dependence on the U.S. For instance, countries like Vietnam and Indonesia, with growing consumer bases and favorable trade agreements, offer untapped opportunities.

However, diversification is not without hurdles. Smaller manufacturers often lack the resources to conduct market research or establish overseas networks. To overcome this, they can leverage trade promotion organizations like the China Council for the Promotion of International Trade (CCPIT) or partner with e-commerce platforms such as Alibaba and JD.com, which provide access to global buyers at a lower cost. While the U.S. market may shrink, demand for affordable, quality goods persists elsewhere—smaller firms must seize it.

Supply Chain Resilience: Relocation and Regionalization

Trump’s policies don’t stop at tariffs; they also aim to reshape global supply chains, encouraging U.S. companies to “reshore” or “nearshore” production. This shift pressures Chinese manufacturers to rethink their supply chain strategies. For smaller firms, relocating production to tariff-friendly countries—such as Vietnam, Mexico, or India—is a compelling option. These nations offer lower labor costs, proximity to key markets, and exemption from U.S. tariffs on Chinese goods. For example, Vietnam has emerged as a manufacturing hub, with exports to the U.S. surging over 20% annually since 2018, according to World Bank data.

Relocation, however, poses risks for smaller players. Moving factories requires capital, regulatory navigation, and retraining workers resources many lack. A more feasible alternative is regionalization: building supply chains within Asia to serve Asian markets. By sourcing materials and assembling products closer to home, manufacturers can cut costs and bypass U.S.-centric trade barriers. Collaborating with regional partners or joining industrial clusters in provinces like Guangdong can amplify these efforts, pooling resources to compete on a global stage.

Innovation and Value-Added Production

Tariffs hit commodity goods hardest, where price competition is fierce. Smaller Chinese manufacturers can counter this by shifting from low-cost, high-volume production to value-added products less sensitive to price hikes. Investing in innovation—whether through

advanced manufacturing techniques like automation or developing niche, high-quality goods—can carve out a competitive edge. For instance, a small electronics supplier might transition from producing generic components to specialized parts for renewable energy

systems, tapping into global demand for green technology.

This shift demands investment in research and development (R&D), a daunting prospect for cash-strapped firms. Government subsidies, such as those under China’s “Made in China 2025” initiative, can bridge the gap, offering funding for tech upgrades. Additionally, partnerships with universities or larger firms can provide access to cutting-edge designs and patents. By climbing the value chain, smaller manufacturers can insulate themselves from tariff wars and appeal to buyers willing to pay a premium.

E-Commerce and Direct-to-Consumer Models

Traditional export channels—relying on intermediaries and bulk shipments—are increasingly vulnerable to tariffs and logistical snarls. Smaller manufacturers can bypass these constraints by embracing e-commerce and direct-to-consumer (DTC) models. Platforms like Amazon, Tmall Global, and Shein enable firms to sell directly to overseas customers, reducing reliance on U.S. distributors affected by tariffs. A toy maker in Zhejiang, for example, could market its products to European or Australian parents via online storefronts, sidestepping U.S. trade barriers entirely.

The DTC approach requires digital literacy and marketing savvy, areas where smaller firms may lag. Hiring third-party logistics providers or digital consultants can streamline the transition. Moreover, e-commerce allows manufacturers to test new markets with minimal upfront investment, adapting quickly to shifting demand. As Trump’s policies disrupt conventional trade flows, going digital offers a lifeline.

Collaboration and Collective Bargaining

Alone, smaller manufacturers lack the clout to negotiate with foreign buyers or governments. Together, they can wield greater influence. Forming cooperatives or industry alliances enables these firms to pool resources, share shipping costs, and lobby for favorable policies. For instance, a group of small textile producers could jointly negotiate with a European retailer, securing contracts that individual firms couldn’t win. In China, trade associations like the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) can amplify their voice, advocating for tariff exemptions or trade deals.

Collaboration also extends to supply chains. By integrating with larger domestic firms, smaller manufacturers can piggyback on established networks, gaining access to stable suppliers and export routes. This symbiotic relationship strengthens resilience against external shocks, ensuring survival in a tariff-laden world.

The Road Ahead

Trump’s trade policies, with their focus on tariffs, export curbs, and supply chain reconfiguration, pose a formidable challenge for smaller Chinese manufacturers. Yet, within this storm lies opportunity. By diversifying markets, rethinking supply chains, innovating products, embracing e-commerce, and collaborating strategically, these firms can adapt to a rapidly changing global trade environment. The path forward demands agility, creativity, and a willingness to break from tradition—no small feat for resource-constrained businesses.

As of March 2025, the full scope of Trump’s agenda remains unfolding, but one thing is clear: smaller Chinese manufacturers must act decisively. Those who navigate these challenges with foresight and flexibility will not only endure but emerge stronger, proving that even in the face of giants, the small can prevail.

Please contact Landmark Advisors at andrew@landmarkadv.com to see how we can help you achieve your goals.

Farewell EB-5: The Gold Card Visa Path to the United States

Thu, 06 Mar 2025 01:57:48 GMT

The allure of a "gold card" system, a streamlined pathway to residency or citizenship for high-net-worth individuals and skilled professionals, has gained traction in discussions about immigration reform. While the EB-5 visa program, designed to attract foreign investment, has faced significant challenges, a gold card system offers a potential alternative. This article explores the concept of a gold card and its potential to replace or significantly alter the current EB-5 visa landscape.

The EB-5 Visa: A Troubled Path

The EB-5 visa, established in 1990, aimed to stimulate the U.S. economy by granting residency to foreign investors who created jobs. However, the program has been plagued by issues, including fraud, regional center abuses, and lengthy processing times. The program has been subject to many reauthorizations, and has caused many investors to wait years for a visa, and even longer for their investment to return. The recent reforms have attempted to address many of the issues, but the program is still viewed by many as cumbersome.

The Gold Card Concept: A Streamlined Approach

A gold card system, inspired by similar programs in other countries, would offer a more direct and efficient route to residency or citizenship for individuals who meet specific criteria. These criteria could include:

High Net Worth: Demonstrating substantial financial resources and a commitment to investing in the U.S. economy.
Exceptional Skills: Possessing specialized knowledge, expertise, or entrepreneurial talent in high-demand sectors.
Significant Contributions: Making significant contributions to research, innovation, or other areas of national interest.

The gold card system would aim to attract individuals who can contribute significantly to the U.S. economy and society, while minimizing the risks and complexities associated with the EB-5 visa.

Advantages of a Gold Card System

Efficiency and Transparency: A gold card system could offer a more streamlined and transparent process, reducing processing times and minimizing the potential for fraud. Clear and objective criteria would enhance predictability and fairness.
Targeted Investment: Unlike the EB-5 visa, which often directs investment to specific regional centers, a gold card system could allow for more flexible and targeted investment in areas of strategic importance.
Attracting Top Talent: A gold card system could attract highly skilled professionals and entrepreneurs who can contribute to innovation, job creation, and economic growth.
Reduced Risk: By focusing on individuals with proven track records and substantial financial resources, a gold card system could reduce the risk of fraud and abuse.
Flexibility: A properly designed gold card program could be adapted to meet the changing needs of the U.S. economy, allowing for adjustments to criteria and investment requirements.

Potential Challenges and Considerations

Defining Criteria: Establishing clear and objective criteria for eligibility is crucial to ensure fairness and prevent abuse.
Investment Requirements: Determining appropriate investment thresholds and ensuring that investments benefit the U.S. economy is essential.
Oversight and Enforcement: Robust oversight and enforcement mechanisms are necessary to prevent fraud and ensure compliance.
Public Perception: Addressing concerns about fairness and equity is crucial to maintain public support for a gold card system.
Integration with existing immigration laws: The golden card program would have to be carefully integrated into the already complex US immigration system.

The Future of Investment-Based Immigration

While the EB-5 visa has played a role in attracting foreign investment, its shortcomings have highlighted the need for a more efficient and effective approach. A well-designed gold card system could offer a promising alternative, providing a streamlined pathway for high-net-worth individuals and skilled professionals to contribute to the U.S. economy.

It is important to note that the implementation of a gold card system would require careful consideration of various factors, including economic impact, national security, and public perception. However, the potential benefits of such a system, including increased investment, job creation, and innovation, warrant serious consideration.

The gold card concept represents a potential shift in the approach to investment-based immigration, moving away from a program plagued by issues towards a more targeted and efficient system. Whether it fully replaces the EB-5 program or coexists as a complimentary program, the gold card concept represents a viable option for reforming the current system. As the US continues to compete for global talent and investment, a well-structured gold card program could prove to be a valuable asset.

For assistance with foreign-based investment and immigration needs please contact Landmark Legal Services and the office of Andrew Thompson at (317) 343-0276.

How can small and mid-market businesses benefit from the overturning of the Chevron deference doctrine?

andrew@landmarkadv.com (Andrew Thompson) — Wed, 05 Jun 2024 00:24:22 GMT

The Chevron deference doctrine, established by the Supreme Court in the 1984 case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. , requires courts to defer to a federal agency's interpretation of ambiguous laws that the agency administers, as long as the interpretation is reasonable. If this doctrine were to be overturned, small and mid-market businesses could potentially benefit in several ways:

Reduced Regulatory Burden : Without Chevron deference, courts may be less likely to uphold expansive regulatory interpretations by federal agencies. This could lead to fewer and less stringent regulations, reducing compliance costs and administrative burdens for smaller businesses.
Greater Legal Predictability : The overturning of Chevron deference could lead to more consistent judicial interpretations of laws, as courts would no longer need to defer to agencies' potentially varying interpretations. This predictability could help businesses better understand and plan for their legal and regulatory obligations.
Increased Opportunities for Legal Challenges : Businesses may have more success challenging regulations in court if judges no longer defer to agency interpretations. This could empower small and mid-market businesses to contest regulations they find overly burdensome or unfair.
Enhanced Competitive Landscape : Large corporations often have more resources to influence agency rule-making and to comply with complex regulations. Reducing the deference to agency interpretations could level the playing field, making it easier for smaller businesses to compete.
Regulatory Clarity : Without Chevron deference, agencies might be more cautious in their rule-making, striving for clearer and more precise regulations to avoid legal challenges. This clarity can help small and mid-market businesses understand and comply with regulations more easily.

However, it's important to note that while these potential benefits exist, the actual impact would depend on how courts and agencies respond to the change. Some argue that eliminating Chevron deference could lead to more litigation and regulatory uncertainty in the short term, as courts and agencies adjust to the new legal landscape.

If Chevron deference does get overturned, what should small and mid-sized business owners discuss with legal counsel to protect their rights and business interests

How does Chevron deference contrast with the doctrine of non-delegation

Chevron deference and the non-delegation doctrine are two principles in U.S. administrative law that address different aspects of the relationship between the legislative and executive branches of government, particularly in how laws are interpreted and executed. Here’s a comparison of the two:

Chevron Deference

Overview:

Established by the Supreme Court in the 1984 case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.
It directs courts to defer to a federal agency’s interpretation of ambiguous laws that the agency administers, as long as the interpretation is reasonable.

Key Points:

Two-Step Test:
Step One: Determine if the statute is clear. If Congress’s intent is clear, that intent must be followed.
Step Two: If the statute is ambiguous, the court must defer to the agency’s interpretation as long as it is reasonable.
Rationale: The doctrine is based on the idea that agencies have expertise in their specialized areas and are better positioned than courts to interpret ambiguous statutes related to their regulatory scope.
Impact: It grants agencies considerable leeway in interpreting laws and creating regulations, leading to a significant degree of judicial deference to agency decisions.

Non-Delegation Doctrine

Overview:

A constitutional principle derived from the separation of powers that limits Congress's ability to delegate its legislative powers to administrative agencies or the executive branch.

Key Points:

Intelligible Principle:
Congress can delegate regulatory authority to agencies as long as it provides an “intelligible principle” to guide the agency's use of that authority.
The delegation must include clear guidelines and limits to prevent agencies from having unchecked legislative power.
Rationale: The doctrine is grounded in the constitutional separation of powers, ensuring that legislative power remains with Congress and is not improperly delegated to executive agencies.
Impact: It serves as a check on the breadth of authority that Congress can delegate to agencies. The non-delegation doctrine is invoked to prevent Congress from passing overly broad and vague statutes that grant excessive discretion to agencies.

Key Contrasts

Focus:
Chevron Deference focuses on how courts should interpret statutes that delegate authority to agencies, specifically dealing with judicial deference to agency interpretations of ambiguous statutes.
Non-Delegation Doctrine focuses on the limits of Congress’s power to delegate legislative authority to agencies, ensuring that such delegations are accompanied by clear guidelines.
Judicial Role:
Under Chevron Deference, courts defer to agency expertise and interpretation in ambiguous cases.
Under the Non-Delegation Doctrine, courts scrutinize the legislative grants of authority to ensure they include sufficient guiding principles.
Agency Power:
Chevron Deference can enhance agency power by allowing agencies to fill in the gaps of ambiguous statutes with reasonable interpretations.
The Non-Delegation Doctrine can limit agency power by requiring Congress to provide specific guidelines and limits in its delegations.
Practical Effect:
Chevron Deference often results in courts upholding agency decisions, giving agencies flexibility in implementing statutes.
The Non-Delegation Doctrine, when strictly enforced, can lead to the invalidation of statutes that fail to provide clear guidance, thereby restricting agency discretion.

Together, these doctrines shape the balance of power between the legislative and executive branches, influencing how laws are implemented and interpreted within the administrative state.

Besides the non-delegation doctrine,, under the Constitution's separation of powers, are there other judicial doctrines the Supreme Court has applied that prevent administrative agencies from overreaching on their regulatory po

Yes, besides the non-delegation doctrine, the Supreme Court has applied several other judicial doctrines under the Constitution's separation of powers that prevent administrative agencies from overreaching in their regulatory powers. Some of these key doctrines include:

Major Questions Doctrine

Overview:

This doctrine holds that courts should not defer to agency interpretations of statutes involving questions of vast economic or political significance unless Congress has clearly delegated authority to the agency on the specific issue.

Key Points:

Clear Congressional Authorization: For major issues, agencies must have explicit authorization from Congress to regulate.
Significance: The doctrine is invoked in cases where an agency’s action has broad and significant impact.

Example: The Supreme Court applied the major questions doctrine in FDA v. Brown & Williamson Tobacco Corp. (2000), where it ruled that the FDA did not have the authority to regulate tobacco products because Congress had not clearly granted such power.

Void for Vagueness Doctrine

Overview:

This doctrine requires that laws and regulations be clear and specific enough to provide fair notice of what is prohibited or required.

Key Points:

Fair Notice: Regulated entities must have a clear understanding of legal requirements.
Prevention of Arbitrary Enforcement: Ambiguous laws can lead to arbitrary and discriminatory enforcement.

Example: The Supreme Court has applied this doctrine in various cases to strike down vague regulations, ensuring that administrative agencies provide clear guidelines.

Procedural Due Process

Overview:

The Due Process Clause of the Fifth and Fourteenth Amendments requires that individuals and entities are given fair procedures before being deprived of life, liberty, or property by the government.

Key Points:

Notice and Opportunity to be Heard: Agencies must provide adequate notice and a meaningful opportunity to be heard before taking adverse actions.
Impartial Decision-Making: Decisions must be made by an impartial adjudicator.

Example: In Goldberg v. Kelly (1970), the Supreme Court ruled that welfare recipients must be given a hearing before benefits are terminated, highlighting procedural safeguards required in administrative actions.

Arbitrary and Capricious Standard

Overview:

Under the Administrative Procedure Act (APA), courts can set aside agency actions that are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

Key Points:

Rational Basis: Agencies must provide a rational basis for their decisions.
Consideration of Relevant Factors: Agencies must consider relevant factors and not overlook important aspects of the issue.

Example: The Supreme Court applied this standard in Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co. (1983), where it invalidated the rescission of a rule on passive restraints in automobiles because the agency did not provide adequate reasoning.

Separation of Powers Doctrine

Overview:

The Constitution’s separation of powers doctrine limits the extent to which one branch of government can encroach upon the functions of another.

Key Points:

Checks and Balances: Ensures that no single branch, including administrative agencies (executive branch), can exceed its authority.
Judicial Review: Courts have the authority to review the actions of administrative agencies to ensure they do not usurp legislative or judicial functions.

Example: In Immigration and Naturalization Service v. Chadha (1983), the Supreme Court invalidated a legislative veto provision that allowed Congress to overrule executive actions without bicameralism and presentment, emphasizing the separation of powers.

Nondelegation Doctrine

Overview:

This doctrine holds that Congress cannot delegate its legislative powers to administrative agencies without providing an “intelligible principle” to guide the agency’s exercise of the delegated authority.

Key Points:

Guiding Principles: Delegations must include clear guidelines and limits.
Preventing Overreach: Ensures that agencies do not have unfettered discretion to create and enforce regulations.

Example: While the non-delegation doctrine has rarely been used to strike down laws, it remains a foundational principle that influences the limits of agency authority.

These doctrines collectively ensure that administrative agencies operate within the bounds set by the Constitution and maintain a balance of power among the branches of government.

Does the reversal of Chevron deference predict a regulatory environment that more likely will limit agencies from acting beyond the language of Congressional statutes?

Yes, the reversal of Chevron deference would likely create a regulatory environment that limits agencies from acting beyond the explicit language of Congressional statutes. Here are the key reasons why this would be the case:

Stricter Judicial Scrutiny

Without Chevron Deference:

Courts would no longer automatically defer to an agency's interpretation of ambiguous statutory provisions.
Instead, judges would undertake their own interpretations of the statute’s meaning, potentially leading to stricter scrutiny of agency actions.

Clearer Boundaries for Agency Authority

Defined by Congressional Language:

Agencies would need to adhere more closely to the explicit language and clear intent of Congressional statutes.
This would likely curb agencies’ ability to interpret statutes expansively, ensuring they operate strictly within the confines set by Congress.

Increased Legal Challenges

More Opportunities for Judicial Review:

Businesses, individuals, and other stakeholders would have more grounds to challenge agency interpretations and actions in court.
Courts would play a more active role in determining the scope of agency authority, likely resulting in a more constrained regulatory environment.

Incentive for Congressional Precision

Legislative Clarity and Detail:

Congress may be incentivized to draft more precise and detailed statutes to avoid ambiguity and ensure their intentions are clear.
This would reduce the room for agencies to interpret statutes broadly, thereby limiting their regulatory reach.

Emphasis on Legislative Intent

Focus on Original Legislative Meaning:

Courts would place greater emphasis on the original legislative intent and plain meaning of statutes.
Agencies would need to provide clear evidence that their actions align directly with Congressional intent, rather than relying on their own interpretations.

Predictability and Stability

Consistent Judicial Interpretations:

A regulatory environment without Chevron deference could lead to more predictable and stable interpretations of laws.
Businesses and other regulated entities would benefit from greater legal certainty, knowing that regulations must clearly derive from statutory language.

Examples and Historical Context

Pre-Chevron Era:

Before Chevron deference was established, courts often took a more active role in interpreting statutes, leading to more frequent limits on agency discretion.
Historical examples indicate that without deference, agencies faced greater judicial scrutiny, resulting in a narrower scope of regulatory authority.

Potential Drawbacks

Short-Term Uncertainty:

The transition away from Chevron deference might initially lead to increased legal uncertainty and litigation as courts and agencies adjust to the new standard.
Over time, however, the regulatory environment is likely to stabilize with clearer boundaries for agency actions.

In summary, the reversal of Chevron deference would likely result in a regulatory environment where agencies are more constrained by the specific language and clear intent of Congressional statutes. This shift would empower courts to play a more significant role in interpreting laws, thereby limiting the extent to which agencies can act beyond their statutory mandates.

If the Chevron deference doctrine is overturned, small and mid-sized business owners should discuss the following topics with their legal counsel to protect their rights and business interests:

Review of Current Compliance Obligations: Evaluate current compliance with federal regulations. Legal counsel can help determine which regulations might be affected and how changes in judicial interpretation could impact the business.
Assessment of Vulnerable Areas: Identify areas where the business is most vulnerable to regulatory changes or enforcement actions. Counsel can advise on proactive measures to mitigate risks.
Legal Challenges and Opportunities: Discuss potential opportunities to challenge existing regulations that may be overly burdensome or unfair. Counsel can provide guidance on the likelihood of success and the best approach to take.
Regulatory Monitoring and Updates: Establish a plan to monitor ongoing regulatory changes and judicial decisions. Legal counsel can help set up a system for staying informed about new developments that could affect the business.
Strategic Advocacy: Consider engaging in strategic advocacy, such as participating in public comment periods for proposed regulations or joining industry groups that influence regulatory policy. Legal counsel can assist in crafting effective comments and advocacy strategies.
Contractual and Operational Implications: Review contracts and operational practices to ensure they are adaptable to potential regulatory changes. Counsel can help identify any clauses or practices that may need modification.
Training and Education: Ensure that key personnel are educated about potential changes and their implications. Legal counsel can provide training sessions or informational materials to keep staff informed.
Litigation Preparedness: Develop a litigation strategy in case of disputes with regulatory agencies. This includes understanding the business's legal standing, gathering necessary documentation, and planning for potential court challenges.
State and Local Regulations: While federal regulations are affected by Chevron deference, state and local regulations may also play a significant role. Legal counsel can help navigate the interplay between different levels of regulation.
Risk Management: Implement or update risk management practices to account for increased regulatory uncertainty. This could include adjusting insurance coverage, revising business continuity plans, and ensuring financial reserves are sufficient to handle potential legal challenges.

By addressing these areas, small and mid-sized business owners can better prepare for the potential impacts of the overturning of Chevron deference and protect their interests in a changing regulatory environment.

For assistance dealing with burdensome regulatory issues that are hindering your business, contact Andrew Thompson at Landmark Legal Advisors today.

AI in Action: Enhancing Business Operations Through Artificial Intelligence

Wed, 22 May 2024 04:04:02 GMT

Artificial intelligence (AI) is not merely a technological advancement but a pivotal resource that can transform existing business workflows. When thoughtfully integrated, AI streamlines operations, enhances decision-making, and fosters innovation and efficiency. You can reap substantial benefits by effectively weaving AI into your business practices.

This integration enables companies to operate dynamically and stay competitive in today’s fast-paced market. Landmark Advisors LLC shares more:

Build a Foundation with a Strong Data Strategy

To capitalize on AI, you need a comprehensive data strategy. You must collect, analyze, and utilize data to inform business decisions. Establish clear data governance policies and ensure your data architecture supports scalable AI applications. By doing so, you can uncover actionable insights that drive your business forward, making your operations more intelligent and more predictive.

Continue Your Educational Journey Grasping the intricacies of AI begins with a solid educational base. Earning your computer science online degree enables you to explore artificial intelligence more profoundly while managing your work obligations. Within this curriculum, you can enhance your proficiency in AI, information technology, coding, and the theoretical aspects of computer science. This adaptable learning strategy simplifies the process of advancing both your education and career.

View AI as a Catalyst for Innovation

Adopting AI provides a unique opportunity to reinvent and improve your business processes. It introduces efficiencies and offers new ways to meet customer demands. Cultivating an organizational culture that welcomes change and fosters innovation is essential. Embrace AI as a tool that solves problems and opens doors to new business avenues and models, positioning your company at the forefront of technological advancement.

Revolutionize Marketing with AI Tools

AI significantly elevates marketing strategies by providing deep consumer insights and automating repetitive tasks. For example, AI tools enhance SEO by optimizing content creation and keyword usage, improving your website's visibility.

AI also assists in personalizing marketing campaigns by analyzing customer data, which increases engagement and conversion rates. Consulting online resources can further help refine your website's SEO and overall marketing approach.

Commit to Comprehensive Employee Training

Integrating AI into your business is an ongoing process that requires well-trained employees. Invest in training programs that cover AI's technical aspects and practical applications in your specific industry. Such initiatives ensure your team is competent and confident in using AI tools, maximizing the benefits of the technology across your business. Continuous education in AI will keep your workforce adaptable and forward-thinking, ready to implement new solutions as they arise.

Ensure Transparency in AI Applications

Transparency is crucial in AI implementation. It’s important to communicate openly about how AI technologies are being used in your operations and the benefits they bring. Proactively addressing potential ethical concerns builds trust among customers and stakeholders. Make sure your AI applications respect customer privacy and adhere to regulatory standards, ensuring your business maintains its integrity and reputation.

Monitor and Mitigate AI Biases

AI systems are only as good as the data they process. Biases in data or algorithms can lead to skewed or unfair outcomes. Regular audits and updates of your AI systems are necessary to identify and correct biases. Implementing these quality control measures ensures your AI solutions are fair and effective, aligning with your business values and regulatory requirements, thus safeguarding your company against potential legal and ethical issues.

The Bottom Line

Integrating AI into your business isn't just about installing new technologies; it's about strategically enhancing your operations to stay competitive and relevant in a rapidly evolving market. Adopting these practices guarantees that AI contributes positively to your growth and success, preparing your business for the future while maintaining the human touch that keeps it grounded. This strategic integration helps you leverage AI to its fullest potential.

100 Years Young: The Journey to Increasing Human Longevity

Fri, 12 Apr 2024 03:22:35 GMT

As a longtime consultant to entrepreneurs and startup founders at Landmark Advisors , not to mention a student of ancient scripture, one of the areas that fascinate and drives my efforts for funding and innovation most, is the prospect of improving human health.

My interests lie both in the arena of increasing longevity as well as improvements to the quality of life of individuals as they occupy planet earth, and I see these two goals marching forward together rather than in conflict, at least most of the time. In this article, my focus lies more directly on longevity, as it provides a more objective target and there is more historical data from which we can discern what can be done to continue the progression. In the future though, I will dive into topics that address quality of life ("QofL") factors on their own terms, as I find this equally fascinating and of general concern to the human population at large.

There are many ways to consider the possibility frontier, history and the hope for human longevity. Because our earliest recordings of human lifespan come from the ancient texts of the Hebrew scriptures, those texts are a great place to start.

From Ancient Times to the Present

This article is meant to encourage greater entrepreneurial thought around medical advancement and the capacity of for people to live their lives more abundantly, and not meant as an apologetic of Christian or Judaic faith, but as a good frame of reference for this discussion, it's helpful to consider that the patriarchs of the book of Genesis were said to have had very long lifespans compared with today, and then wihin several generations of the longest lifespans ever recorded few, if any people were living beyond the age of 100 years.

Today, we see more people living beyond the age of 100 than at any time since teh earliest recorded human histories, but again, almost none are living beyond 120.

Nonetheless, the prophets of the Old Testament found reason to believe that this would not always be the case, and the prophet Isaiah, in particular, didn't hesitate to proclaim what he foresaw for the future of human longevity.

Interpreting Isaiah 65:20

In the Bible, Isaiah 65:20 mentions people living to be "100 years old," a verse often interpreted symbolically by Christian scholars as a sign of blessings and abundance, but not a literal increase in longevity. Hank Hanegraaff , a prominent Christian apologist, has discussed this verse in the context of biblical prophecy and its symbolic representation of a blessed and fulfilling life.

It is difficult to find respected scholars who view this passage as meant to have a literal application, on the other hand, some who interpret it more figuratively seem to suggest that it foreshadows improving life expectancies and better health.

In order to resolve an inherent contradiction in this passage, one must either conclude that there is an incremental progression of longevity as the cosmos approaches the new heavens and new earth (the "Whole of Scripture"), or that within the new heavens and new earth, there are people who still die, even if at a hundred years of age (the "Sudden Change").

In the context of Bible scholarship, the latter seems to make no sense. There is a near universal acceptance in the interpretation of the Bible that once the new heavens and earth are fully consummated, there shall or at least maybe a final judgment, but whatever death will occur at that time, the process of aging and death thereafter, will cease. "The last enemy to be defeated is death", etc.

This is important because it creates a promise from the ancient scriptures that, understood from the Whole of Scripture, prophesies precisely what has been occurring in the last hundred years of human existence.

Revisiting the Genesis Genealogies

The genealogies in the book of Genesis, including Methuselah's 969 years, are subject to many different interpretations. Scholars like Dr. Elizabeth Johnson, who favors a symbolic approach to understanding the ages of Bibe patriarchs, suggest these ages may represent the importance of individuals rather than their literal lifespans, however, there is little evidence of how that importance would have been discerned over and against a description of the actual life span thought to be known for each of the patriarchs.

Some scholars do debate, however, debate the reasons for a pattern of decreasing life expectancies in Old Testament times. Factors like environmental changes, dietary shifts, and genetic influences could have contributed to variations in lifespans over generations. The general theological supposition about this pattern is that sin had an impact over time that eventually settled in and hit a natural bottoming out, according to God's providence.

Historical Stagnation in Life Expectancy

Throughout history, factors like infectious diseases, limited medical knowledge, poor nutrition, and high infant mortality rates contributed to stagnant life expectancy, highlighting the challenges of the past.

Infectious Diseases: Infectious diseases have historically been a significant contributor to mortality and reduced life expectancy. Documentation from sources like historical medical records, epidemiological studies, and anthropological research showcases the impact of diseases like tuberculosis, smallpox, cholera, and influenza on population health and life expectancy. Research studies provide insights into how diseases shaped human populations and life expectancy over time.

Limited Medical Knowledge: Limited medical knowledge in earlier centuries meant that many illnesses and conditions were poorly understood and often untreated. This lack of medical understanding led to higher mortality rates and shorter life expectancies. Historical documents, medical journals, and scholarly articles on the history of medicine offer documentation of the evolution of medical knowledge and its impact on improving life expectancy.

Poor Nutrition: Poor nutrition, including inadequate access to nutritious food, deficiencies in essential nutrients, and periods of famine or food scarcity, has been a significant factor in reduced life expectancy. Published studies highlight the link between nutrition and health outcomes throughout history.

High Infant Mortality Rates: High infant mortality rates, often due to factors like infections, lack of prenatal care, and poor sanitation, have historically contributed to lower life expectancies. Historical demographic data, mortality records, and studies on child health and survival rates provide evidence of the impact of infant mortality on overall life expectancy averages.

By examining historical data, medical literature, and demographic studies, we can gain a comprehensive understanding of how factors such as infectious diseases, limited medical knowledge, poor nutrition, and high infant mortality rates have historically influenced life expectancy trends.

Revolutionizing Life Expectancy in the 20th Century

Advancements in medical technology, sanitation, clean water access, the use of antibiotics and improved nutrition led to a dramatic rise in life expectancies globally during the 20th century.

For most of human history, it’s been estimated that global life expectancy at birth has bounced between 20 and 30 years. Beginning approximately in the year 1820, global life expectancy started its exponential ascent, seeing its most impressive gains after 1950 as modern sanitation and medical advancements began to trickle down to developing nations.

Navigating 21st Century Challenges

Despite progress, the 21st century faces obstacles such as antimicrobial resistance, rising chronic diseases, healthcare disparities, environmental issues, and global pandemics, impacting life expectancy improvements. During the pandemic, the US saw declining life expectancies for consecutive years, 2020 and 2021, while making a comeback in 2022. It's too early to conclude that this, while directly, is simply a result of the pandemic, or if a reduction was more predictable regardless of the pandemic itself.

The two biggest issues connected with longer term trends toward a decrease in life expectancy, however, appear to be mental health and chronic disease, especially diabetes, heart disease and cancer. If you consider mental health to be one of many forms of chronic disease, then every factor contributing to decreasing life expectancies is related to chronic disease. By focusing efforts at improvements in treatment, and most importantly, prevention of these conditions, there is a high probability we can eliminate the negative pressure on life expectancies and return to a long term trajectory of increased life expectancy.

Promising Developments for Increased Longevity

Exciting advancements in medical technologies, genetics, nutrition research, and healthcare infrastructure, especially in developing nations, provide optimism for extending human life expectancies. We will be developing a series of articles addressing significant innovations that continue to impact both longevity and quality of life as we continue adding content on this subject.

There are other remarkable achievements in healthcare: breakthroughs in cancer treatments, cardiovascular disease management, and medical device technology that far exceeds earlier capabilities in all of these areas. All of these advancements in care and prevention have contributed significantly to longer and healthier lives, particularly in regions like Asia and even on the continent of Africa.

Anticipating the Future

The next 25 year period holds great promise with ongoing medical research, preventive healthcare emphasis, global healthcare accessibility improvements, and efforts to address environmental and social health determinants, potentially extending human life expectancies further.

We predict that by 2050, the US will have a life expectancy at birth of between 80-85 years, and that longevity increases in other parts of the world will be even greater than they will be here, more than 10%, for example, in Africa, Latin America and parts of Asia.

Conclusion: A Bright Outlook

The journey of human longevity reflects a blend of interpretations, scientific advancements, and societal progress. While challenges persist, the trajectory toward longer, healthier lives offers hope for a brighter future, both literally and symbolically.

For more information or to discuss scaling an innovative health technology, please contact Landmark Advisors to get started.

Reimagining Your Dream Business: Transform a Failing Enterprise into a Market Sensation

Thu, 04 Apr 2024 22:13:51 GMT

Author: C aleb Nickel

Transforming a struggling business into a success story requires vision, precise execution, and deep insight. It demands strategic choices and a thorough understanding of the market.

This Landmark Advisors LLC guide equips you, the aspiring entrepreneur, with the necessary knowledge to navigate the challenging yet rewarding journey of revitalization. Commit to turning around the fortunes of an underperforming entity and pave the way for its success.

Choosing the Perfect Venture

Identify floundering companies with a solid foundation as your first step toward entrepreneurial triumph, focusing on sectors where your passion and expertise align to fuel motivation and market insight. Seek out companies ready for revival with the proper strategic adjustments.

Evaluating financial stability, customer loyalty, and operational efficiency is invoice template crucial to ensure you're seizing an opportunity for transformation, not stepping into a quagmire. Your mission hinges on finding these hidden gems, setting the stage for a successful turnaround.

Financing Your Dream

The quest for capital is a critical phase where your business plan plays the hero. It's your tool to woo banks, angel investors, or the crowds on crowdfunding platforms.

Your plan must radiate confidence in the business's growth potential, painting a picture of profitability that's too compelling to ignore. This step is about selling the vision and the concrete steps you'll take to make that vision a reality, demonstrating your commitment and strategic insight to potential financiers.

Crafting a Magnetic Marketing Strategy

In today's market, your voice must echo across digital and traditional landscapes to capture the attention of your intended audience. Creating a marketing strategy that blends the art of storytelling with the precision of digital targeting is crucial. By establishing a powerful brand identity and active engagement on social media, content marketing, and SEO, you lay down the tracks for reaching potential customers and building a community around your brand.

Streamlining Cash Flow through Invoicing

To establish swift payment in your fledgling enterprise, adopt an effective invoicing system that encompasses unambiguous payment conditions, instant invoicing, and various payment channels. Utilizing an invoice template facilitates polished invoices that showcase your emblem.

Choose from an array of ready-made templates and tailor them to your identity, logo, brand hues, and pertinent particulars. This method simplifies monetary dealings and fortifies brand image with each dispatched invoice.

Negotiation Mastery

Acquiring a business at a price that reflects its current value while leaving room for the growth you'll drive is an art form. It's essential to dive deep into the business's financials , understanding every asset and liability, to negotiate a deal that benefits both parties.

This is your foundation stone, and getting it right sets the tone for the journey ahead. It’s about finding balance — ensuring the deal is as good for the seller as it is for you — and paving the way for a smooth transition and a strong start.

Conducting Due Diligence

Before any papers are signed, a rigorous due diligence process is your safeguard against hidden pitfalls. This investigative phase is your chance to peel back the layers and examine financial statements, operational efficiencies, and potential liabilities. It’s essential to confirm that your investment decision is sound , ensuring no surprises could derail your revitalization efforts post-acquisition.

Adapting for Market Relevance

The final piece of the puzzle is ensuring that the business not only recovers but thrives in its market. This may involve rethinking the product or service offerings, embracing new technologies, or reshaping the customer experience to meet current demands. Adaptability is the name of the game, with your finger always on the pulse of the market to steer the business toward areas of growth and opportunity.

Conclusion

Reviving a struggling business requires creativity, strategic thinking, and dedication to making it a market leader, emphasizing operational efficiencies such as setting up an invoicing process to preserve vital cash flow. This guide serves as your beacon, navigating you through the intricacies of business revitalization toward profitability.

With determination, embrace the challenge of transformation. Let the journey of turning around a business commence with you at the helm. Reach out to the professional team at Landmark Advisors today to assist you in transforming your business from a struggling incubation project to the peak of tomorrow’s entrepreneurial mountain top.

Innovations in Soil Health: Growing Food with Less Toxins

Wed, 27 Mar 2024 19:53:33 GMT

Author: Andrew Thompson

Healthy soil is the bedrock of sustainable agriculture. As we face the challenges of feeding a growing global population while minimizing environmental impact, innovations in soil condition improvements are crucial. In this article, we explore cutting-edge strategies that enhance soil health, reduce toxins, and promote sustainable food production.

1. Regenerative Agriculture Practices

Regenerative agriculture focuses on restoring soil health rather than depleting it. Key practices include:

Cover Crops: Planting cover crops during fallow periods helps prevent erosion, improves soil structure, and enhances nutrient cycling. These living roots keep the soil active and reduce the need for chemical inputs.

No-Till Farming: Minimizing soil disturbance by avoiding plowing or tilling preserves soil structure, reduces erosion, and promotes beneficial microbial activity.

Crop Rotation: Alternating crops in a field prevents soil depletion and reduces pest pressure. Different crops have varying nutrient requirements, which helps maintain soil fertility.

2. Soil Sensors and Precision Agriculture

Advancements in technology allow farmers to monitor soil conditions in real time. Soil sensors measure moisture levels, nutrient content, and temperature. This data informs precise irrigation and fertilization decisions, minimizing waste and optimizing crop health.

3. Biological Soil Amendments

Biochar: This carbon-rich material, produced by heating organic matter in a low-oxygen environment, improves soil structure, retains nutrients, and sequesters carbon. Biochar also reduces the leaching of toxins into groundwater.

Compost and Vermicompost: Organic compost enriches soil with essential nutrients and beneficial microorganisms. Vermicomposting, using earthworms, accelerates decomposition and enhances soil health.

4. Mycorrhizal Fungi

These symbiotic fungi form partnerships with plant roots, aiding nutrient uptake. Mycorrhizae extend the root system, enhance water absorption, and improve resistance to pathogens. Incorporating mycorrhizal inoculants benefits both soil health and crop productivity.

5. AgroIntelli Robots

AgroIntelli, a Danish company, designs robots that work the land gently. These autonomous machines reduce soil compaction, minimize chemical use, and precisely plant seeds. By minimizing the ways human impact can negatively impact soil heath, they contribute to more productive and sustainable conditions.

6. Soil Frost Sensing Systems

Understanding freeze-thaw cycles is critical for soil health. Researchers at the University of New Hampshire are developing wireless sensors and ground-penetrating radar systems to track soil frost. This knowledge informs planting schedules and prevents damage to soil structure.

7. Radon Measurement Wireless Testbed

Georgia State University’s project aims to measure radon in surficial soil using wireless sensors. Radon exposure poses health risks, and this innovative approach helps identify areas with high radon potential. By addressing soil contaminants, we protect both crops and human health.

Now let’s take a look at how a few great startup companies are making an impact in the market with soil improvements .

1. Terrapure Environmental:

Solution : Biosolids-Based Soil Amendments

Description : Terrapure Environmental, a Canadian startup, focuses on environmental solutions for land reclamation. They offer biosolids-based soil amendments that replenish soil nutrients, enhance organic material, and increase soil porosity. By reducing farmers’ dependence on chemical fertilizers, these customized solutions improve crop yields and soil health. Terrapure’s applications extend beyond agriculture to mine and industrial site rehabilitation .

2. Allied Microbiota:

Solution : Microbial Remediation

Description : Allied Microbiota, based in the United States, specializes in microbial products and enzymes. Their approach involves using microbes to degrade organic contaminants or bind heavy metals in the soil. By revitalizing existing microbial communities (biostimulation) or introducing specific strains (bio-augmentation), they contribute to soil health and toxin reduction .

3. Carbogenics:

Solution : Carbon Sequestration

Description : Carbogenics focuses on carbon sequestration techniques. By capturing and storing carbon dioxide in the soil, they reduce the carbon footprint of farming. Their innovative solutions contribute to soil health while mitigating harmful aspects of climate change .

4. Biomede:

Solution : Soil Restoration

Description : Biomede, an emerging startup, aims to restore degraded soils. While specific details about their technology are not provided, their focus on soil restoration aligns with the broader goal of improving soil conditions for sustainable food production1 .

5. Remsoil:

Solution : Soil Remediation

Description : Remsoil is another promising startup working on soil remediation. Although further information is not available here, their efforts likely involve innovative methods to detoxify and rejuvenate soil for healthier crops1 .

These startups are demonstrating how the power of technology and innovation is addressing soil health challenges. By leveraging their expertise, we can create a more sustainable and toxin-free food system. For connections to these companies as a customer, investor or collaborator, please contact Landmark Advisors today for an introduction or more information on how we can help.

Innovations in soil health are essential for sustainable agriculture. By adopting regenerative practices, leveraging technology, and understanding soil dynamics, we can grow food with fewer toxins. As stewards of the land, let’s prioritize healthy soils for a better nourished creation.

How to Use a Deferred Sales Trust to Limit Capital Gains Tax When Selling Your Business

Wed, 20 Mar 2024 20:15:51 GMT

Another Great Tax Savings Tool

By Dan Schmoll

Introduction

A Deferred Sales Trust (DST) is a tested means to defer capital gains tax and reduce the overall tax burden on the sale of real estate, businesses, and other highly appreciated assets.

Background on Deferred Sales Trusts

Most business owners who are able to sell their businesses have significant capital gains exposure.  In most cases, they are hoping the proceeds of the sale of the business will largely fund their retirement.  The DST is perfect for these owners because they can generate income based on the sales price as opposed to the net proceeds of sale minus the lump sum taxes they would otherwise pay.

The DST was created as a vehicle under section 453 of the Internal Revenue Code can be used with any kind of entity, e.g. LLCs, S corporations, or traditional C-corps as well as by individuals who own real estate, rental properties, vacation homes, commercial properties, hotels, land, industrial complexes, retail developments or raw land. In fact, there are very few limits on the type of assets that might qualify for tax deferral using a DST.

Over the long run, the Deferred Sales Trust has the ability to generate substantially more wealth than a direct and taxed sale. It may be superior to the Charitable Remainder Trust, installment sale or like-kind property exchange in many respects. Consult your tax advisor to ascertain the potential benefits of this option.

The three Most Common Uses for the Deferred Sales Trust

An exit strategy including the sale of appreciated Real Estate, a Business, Collectible, or other high value asset & not repurchase the same asset class. 
This is an option for the 1031 exchange alternative instead of a trade into more real estate. With a DST you can park your sales proceeds indefinitely or wait for the right deal. Also if you are transitioning away from real estate this is an excellent approach for you. 
A DST can be used as a 1031 Exchange Rescue. This is a way out from an exchange that has no suitable upside available in time or is in jeopardy of failing.

Advantages of a Deferred Sales Trust

Tax Deferral: The primary advantage of a DST is the ability to defer capital gains taxes on the sale of appreciated assets. Instead of paying the full tax liability at the time of the sale, the seller can defer the taxes and potentially spread them out over several years. This can provide significant cash flow advantages and allow for increased investment potential.

Diversification and Investment Options: A DST provides the seller with the opportunity to diversify their investments. Instead of being tied to a specific property or business, the seller can invest the proceeds in a variety of assets, such as stocks, bonds, mutual funds, or even other real estate properties. This diversification can help reduce risk and potentially increase overall returns.

Estate Planning Benefits: By deferring capital gains taxes through a DST, the seller can potentially reduce the size of their taxable estate. This can be beneficial for estate planning purposes, as it may help minimize estate taxes and provide more wealth for future generations.

Flexibility in Timing: The DST offers flexibility in timing the receipt of funds. The seller can choose when and how much money they want to receive from the trust, allowing for strategic planning based on their financial needs and tax obligations

Legacy Planning: A DST can provide a vehicle for charitable giving or leaving a legacy. The trust can be structured to include charitable contributions, allowing the seller to support causes they care about while potentially receiving additional tax benefits.

Are Capital Gains Holding You Back from Selling?

With over 4,000 DST Transactions totaling $200 Billion in total volume along with a proven track record, this makes the DST a great solution for seller’s business or of highly appreciated assets. The DST should be offered exclusively through a proven Estate Planning Team. These professionals should be vetted and help sellers of highly appreciated assets replace income or invest in growth with Tax Deferred proceeds from the sale.

Discuss your specific situation with knowledgeable representatives that are in the industry or that have used a DST. They should be able to help you determine how a DST can help if you selling your business or other highly appreciated assets. Ask if they can provide you the solutions and help you keep more of your hard earned money and allow it to work for you with a wide range of investment tools based on your needs and risk tolerance.

In the meantime, click on the link to here for more about the Deferred Sales Trust, this is a short explainer video. As always, please reach out to us at Landmark Advisors if you we can be helpful in connecting you with Dan Schmoll and the DST professionals who can take care of your needs.

The Evolution of Crowdfunding: Trends, Challenges, and Opportunities in the Digital Age

Mon, 18 Mar 2024 16:09:13 GMT

In the rapidly evolving landscape of finance and investment, crowdfunding has emerged as a revolutionary model, democratizing access to funding for entrepreneurs and offering investors new avenues for discovery and investment. This article, courtesy of Landmark Advisors , explores the multifaceted world of crowdfunding to provide a basic overview of its dynamic evolution.

The Essence of Crowdfunding

Crowdfunding represents a paradigm shift in the way individuals and businesses conceptualize funding. By leveraging the collective financial power of a diverse group of people, typically through online platforms, this innovative approach enables entrepreneurs to secure the necessary capital for their ventures. Simultaneously, it offers a unique opportunity for investors to support projects they believe in, potentially reaping rewards as these ventures grow. This transformation has democratized access to capital, making it more accessible than ever before.

Technological Synergy and Crowdfunding Trends

The digital age has propelled crowdfunding to new heights, with technology serving as both a catalyst and a bridge connecting ambitious entrepreneurs with a global audience of potential backers. The adoption of the internet for crowdfunding purposes has not only broadened the scope of fundraising campaigns but has also introduced a variety of funding models , each tailored to meet specific goals and preferences of projects and investors alike. This evolution reflects the dynamic nature of the digital economy, continuously reshaping the landscape of crowdfunding.

Blockchain: The New Frontier for Crowdfunding

Blockchain technology has significantly transformed the crowdfunding landscape by introducing a layer of security and transparency previously unattainable. Through its decentralized ledger, blockchain ensures that all transactions are secure, transparent, and tamper-proof, fostering a level of trust and efficiency that traditional funding mechanisms struggle to match. This technological leap forward has opened new avenues for funding, underpinned by trust and transparency.

AI Is Optimizing Crowdfunding Success

The deployment of artificial intelligence in crowdfunding platforms has revolutionized campaign management , donor engagement, and risk assessment. By harnessing the power of AI to analyze data and predict trends, crowdfunding platforms can now offer personalized campaign strategies, ensuring that projects not only reach but resonate with the right audience, thereby maximizing their funding potential. AI's predictive capabilities bring a strategic edge to campaign planning, enhancing outcomes for all stakeholders.

Navigating Crowdfunding Challenges

Despite its growth and popularity, crowdfunding is not without its hurdles . The digital marketplace is saturated with campaigns, each competing for attention and funds. Success in this crowded space demands not only a compelling proposition but also strategic visibility and engagement efforts to captivate potential backers. Overcoming these challenges requires innovation and persistence, crucial traits for success in the crowdfunding arena.

Global Reach, Global Challenges

Crowdfunding's ability to connect projects with a worldwide network of backers offers unparalleled opportunities for raising capital. However, this global platform also presents challenges, including navigating diverse regulatory environments, managing currency exchange issues, and addressing the varied preferences of an international audience. These global dynamics necessitate a nuanced approach to crowdfunding, balancing universal appeal with local sensitivities.

Opportunities in Crowdfunding

Crowdfunding presents a myriad of opportunities for both entrepreneurs and investors. It embodies a shift toward a more inclusive and democratic funding model, where ideas can flourish based on their merit and appeal to the community rather than their ability to secure traditional financing. This model opens the door for innovative projects, creative ventures, and social initiatives to find the financial support they need to come to life. The flexibility of crowdfunding allows for a variety of funding types , including equity, donation, reward, and debt, each offering unique advantages and attracting different kinds of backers.

As crowdfunding continues to evolve, it stands as a testament to the power of innovation and collaboration in the financial sector. With ongoing advancements in technology, such as blockchain and AI, and the ever-expanding global reach of crowdfunding platforms, the future of this funding model is bright. Yet, its sustained success will depend on overcoming the inherent challenges of competition and regulation, leveraging the opportunities presented by a connected world to redefine the landscape of investment and entrepreneurship.

Elevate your business's future today by leveraging Landmark Advisors' unparalleled expertise in startup counsel, acquisitions, and business advisory services.

Make Sure to Include Your OATS in Your AI Diet: A Framework for Ethical AI Advancements

Fri, 15 Mar 2024 22:46:16 GMT

The Landscape of AI Ethics

By Andrew J Thompson

Board Advisor, Ethicable.AI

In the rapidly evolving landscape of artificial intelligence (AI), most people recognize that ethical considerations should play a crucial role in ensuring that technological advancements align with principals of moral behavior and promote the well-being of individuals and communities.

One framework that encapsulates these ethical tenets, especially in the context of large language models, is OATS – Oversight, Accountability, Transparency, and Safety. This framework not only underscores the fundamental principles of ethical AI but also incorporates essential concepts such as Privacy and Security to create a comprehensive approach towards responsible AI development and deployment.

Oversight

The first pillar of the OATS framework emphasizes the importance of governance and regulatory oversight in AI development and deployment. Oversight mechanisms should involve multi-stakeholder collaboration, including government agencies, industry experts, ethicists, and civil society organizations, not to mention any and all users of AI technologies who desire to participate in the conversation. The stakeholders contribute diverse perspectives and ensure that AI technologies adhere to ethical guidelines and legal frameworks. Additionally, oversight bodies should establish clear guidelines for data collection, algorithmic decision-making, and accountability mechanisms to prevent misuse or harmful outcomes.

Accountability

Accountability is a core principle in ensuring that AI systems are held responsible for their actions and outcomes. This includes accountability for both the developers and users of AI technologies. Developers should adhere to ethical guidelines throughout the AI lifecycle, including data collection, model training, and deployment. They should also implement mechanisms for auditing and explaining AI decisions, especially in high-stakes applications such as healthcare and criminal justice. On the user side, organizations and individuals using AI systems should be accountable for the ethical use of these technologies, including mitigating biases, ensuring fairness, and addressing potential harms.

Transparency

Transparency is key to building trust and understanding in AI systems. Transparency encompasses several aspects, including transparency in data sources and collection methods, transparency in algorithmic processes and decision-making, and transparency in the intentions and goals of AI applications. Developers should strive to make AI systems explainable and interpretable, enabling users and stakeholders to understand how decisions are made and identify potential biases or errors. Transparent AI fosters accountability, facilitates informed decision-making, and empowers users to engage critically with AI technologies.

Safety

Safety is paramount in AI development, encompassing not only physical safety but also psychological, social, and ethical safety. AI systems must be designed with safety considerations from the outset, including robustness to adversarial attacks, mitigation of unintended consequences, and protection of user privacy and security. Safety also extends to ensuring that AI technologies do not perpetuate harm or discrimination, especially in sensitive domains such as healthcare, education, and employment. Robust testing, validation, and continuous monitoring are essential to ensuring the safety and reliability of AI systems.

Privacy and Security

Beyond the immediate OATS framework, Privacy and Security are integral components that intersect with Oversight, Accountability, Transparency, and Safety. Privacy entails protecting individuals' personal data, ensuring consent and control over data usage, and minimizing risks of data breaches or unauthorized access. Security involves safeguarding AI systems from cyber threats, ensuring data integrity and confidentiality, and implementing secure infrastructure and protocols. Privacy-enhancing technologies (PETs) and robust cybersecurity measures are essential to addressing privacy and security concerns in AI applications.

Some vital considerations already arising and appearing in cases that have come before courts in the US, include:

Misuse of AI as a resource to provide background research and citations for legal work and in academia, and
The potential to use AI in order to infringe upon the copyrights of artists in producing and publicizing images.
The impact of Github code sharing on the exploitation of data security with respect to generative LLMs.

As regards the former, the biggest problem as it stands today is AI’s underperformance in terms of its ability to accumulate research data. It’s worthy of note that legal databases contain much more and more readily accessible case and statutory data for use in understanding the precedents and reasoning behind court decisions.

The present LLM capabilities fall far short of those that should be available in coming months or years in terms of the deposits of data they will have the ability to access. But we will not know the degree to which AI will improve its reliability as a research tool in the law until we get there.

The second concern is not only valid, but poses a much more serious, early threat to privacy and security when AI is generating images, in particular, and all visually produced data in general. Cases are in different stages of litigation that will seriously impact the boundaries around the use of AI to create depictions of figures in online formats. This is one area where collaborative oversight, government working with the private sector, will be vitally needed to protect content creators from the exposure of their property rights to machine learned access to them.

Both of the above are heavily impacted by the existence and ubiquitous usage of Github, which enables the sharing of pre-exisitng software code, no matter who created it. The secret sauce in software is no longer the lines of code, it is the knowledge, understanding and capacity to manipulate code, as a tool, rather than as an outcome in and of itself.

As AI technologies continue to advance, it is imperative to uphold ethical standards and values to harness the potential benefits of AI while mitigating risks and harms. The OATS framework provides a structured approach for integrating Oversight, Accountability, Transparency, and Safety principles into AI development and deployment, with Privacy and Security serving as foundational elements. By adhering to these ethical tenets and promoting responsible AI practices, we can foster trust, fairness, and community benefit in the AI-powered future.

This is a moment where every one of us has the opportunity to participate in the conversation that will certainly impact the next generation of software technology and users’ ability to take advantage of the great new frontier of technology AI brings to bear.

Andrew Thompson is the founder of Landmark Advisors , providing consulting, educational and other advisory services to technology-based startup companies providing AI, medical, healthcare, agricultural and manufacturing services to their customers worldwide.

How Can You Achieve Nonprofit Career Success?

Wed, 15 Nov 2023 22:00:27 GMT

The Extraordinary Value of a Good Mentor

The first question to ask is how do you define success? Career success can include any or all of several things: compensation, title, desirable work/life balance, reputation, recognition, peer respect, accomplishments and more.

For me my definition of success changed over time. When I first began my nonprofit career, I wanted to learn skills and to have experiences that would lead to progressively more important positions at more important employers. It was vital to feel that my work was important and beneficial for other people (and sometimes animals). It was important to me to feel good about my work, who I worked for, and who I worked with. I wanted to make enough money and benefits to feel comfortable and have enough free time to enjoy it. At the beginning, I had no delusions of accumulating great wealth or having celebrity. I wanted to learn more about managing people, projects, and my time. Learning how to lead was vital. However, I was young, inexperienced and incredibly naive.

As time inched forward, my definition of success changed – mostly out of necessity. Having a family required me to make more money and have better benefits. I wanted to live within a certain geography. I wanted to work with successful people on important ventures. I wanted my work to have purpose. But I needed help. At that time, I did not have a career goal. It was impossible to say that what ultimate position, organization, compensation or achievement was my objective.

Then my advisor/mentor miraculously appeared. Fortunately, he was also my boss. He saw something in me that I did not see in myself and decided to make it his mission to give me opportunities to manage people and projects. He made sure that I met important people doing important work. He helped me to improve my presentation skills. He taught me how to present myself as confident and competent – without coming across as aloof and arrogant. He encouraged me to participate in and take leadership roles in industry groups. He introduced me to people that I could learn from and people that would benefit from working with me. He taught me the importance of developing and cultivating relationships. He pushed me. He dispassionately and honestly evaluated my work. When I failed or fell short, he used criticism and encouragement to motivate me to do better. He delighted in my achievements - especially those he did not participate in. From him I learned nonprofit finance, budgeting, how to make a speech/presentation, how to hire, how to fire, and how to recruit. He showed me how to lead. He showed me how to negotiate and how to ‘close’. He gave me the confidence to sell just about anything from a budget to a vision to board participation. He baptized me in the waters of organizational politics. From him I learned that I could be tough and demanding without being a… (choose your appropriate anatomy). He showed me how to solve thorny problems. I also learned the importance of a measurable mission goal for a nonprofit and that nonprofit goals are often markedly different than those in business – but not always. He helped me define what success looked like for me. Then when he thought I was ready, he recommended me for a position like the one he had… but at a larger nonprofit.

Any success that I have enjoyed in my nonprofit career I owe to his counsel. He stood as my enthusiastic endorser for every key position I have ever had. His endorsement carried significant gravitas.

After his relatively brief tutelage I was prepared to make my own successes. I was ready to learn from other managers, colleagues and staff and in time - develop my own vision. But… I continued to seek his counsel and input on things. I’ve had a great deal of success and a few notable failures. But even today I continue learning.

Most people working in nonprofits don’t have the luxury of their successful boss taking a personal interest in their career success. They are figuring it out on their own day by day. I was lucky that way. Some people are more gifted. They possess the intelligence, motivation, polish, knowledge, education, relationships and experience to successfully plot their successful career paths. All I know is that in my case, I would not have had the same success without confidential personal guidance and coaching.

Today I am in the enviable position of being able to apply more than three decades of nonprofit experience to assisting current nonprofit organizations, executives and board members in having successful careers. I have been a nonprofit staffer and executive. I’ve been a nonprofit board member and board chair. I know how the nonprofit economy operates. My experiences include large national organizations as well as smaller community operations. I’ve been an employee and an employer. I’ve led boards and been led by them.

Perhaps I can help you, a promising staff member or your board? I can be the unseen confidential advisor on issues related to your nonprofit work and career. I can use my experience so that nonprofit participants are happier, more fulfilled, more secure, more confident, and more successful. I can help you plot your career path and provide you with the tools required to complete the journey.

I am selective in whom I choose to work with. If I agree to work with you, your team member or your board member it is because I believe that there is potential. I’m not interested in just potential for improvement but I’m sold on potential for significance. Please contact me to learn if we can work together for making you and/or your nonprofit a significant success.

Rob Mitchell

Nonprofit Lead

www.Landmarkadv.com

Addendum: This post has great personal meaning to me. Rob was a mentor to me in the days I worked for him at the American Cancer Society as well as to many other young professionals who worked under him. I have incredible gratitude for the guidance he's provided me over the years.

Andrew Thompson,

CEO Landmark Advisors

Seed Round Investing: Form D, Risk Disclosures and the PPM

Fri, 29 Sep 2023 21:00:10 GMT

The Importance of Securities Compliance in Early Stage Fundraising

The quick response is that it depends, but generally speaking, it is advised and occasionally necessary. Look a little closer.

What is a PPM?

Let's first talk about what a PPM is. A PPM is a document that provides details about the business looking to raise money from investors. It resembles a business plan in several respects, but it has extensive modifications for securities legislation clauses, investment risk elements, and suggested terms of investment. PPMs are referred to by several names, such as offering memorandums and confidential information memorandums (CIMs).

To comprehend the usage of PPMs and when they are appropriate, one must have a fundamental understanding of securities legislation. A firm, commonly referred to as an "issuer," is not allowed to sell securities (such as stocks and other types of debt) unless the offering is registered or meets an exemption from registration requirements under federal and state law. It is important for an issuer to meet an exemption since it is costly and not appropriate for the majority of enterprises to register a securities offering.

The esoteric nuances of the law point us to the Securities Act of 1933's Section 4(a)(2) as the most widely used exception to registration of securities. For deals that don't include a "public offering," it offers an exception. That text of the law may not seem, well really isn’t, particularly helpful at first glance.

Nonetheless, the SEC has offered a number of safe havens for the "public offering" requirement. If your offering satisfies one of the safe-harbor requirements, it has fulfilled an exception and complies with Section 4(a)(2) and does need require registration with the SEC. But exemption from registration does not impute exemption from filing, nor exemption from state law documentation requirements.

Two of the most popular safe harbors are described here, along with recommendations on when using a PPM is suggested.

504 Safe Harbor Regulation

An issuer may sell up to $5 million worth of securities over any given 12-month period according to Rule 504. Accredited and non-accredited investors may participate in the offering, but the issuer may not use any kind of “general solicitation”. Rule 504 does not supersede state securities laws, in contrast to Rule 506. As a result, an issuer must verify that a state exemption is met in each state where an investor resides. Rule 504 is frequently the preferred exemption if the issuer intends to sell securities to non-accredited investors because it does not demand that certain particular information (such as audited financials) be given to non-accredited investors.

Safe Harbor Rule 506(b)

Because Rule 506(b) eliminates the requirement for an issuer to satisfy a state securities registration exemption in each state where an investor resides, it has historically been the most frequently used securities registration exemption. An issuer may sell as many securities as they want to accredited investors and as many as 35 securities to non-accredited investors under Rule 506(b). Sourcing in general is prohibited. Rule 506(b) allows issuers to sell to non-accredited investors, however because of the onerous disclosure requirements, i.e. the dissemination of audited financial statements, it is often best to steer clear of non-accredited investors.

When a PPM is Needed

If the issuer is onboarding non-accredited investors under Rule 506(b)—note that Rule 506(b) is generally not encouraged for non-accredited investors—a PPM is necessary. In theory, Rule 506(b) offerings to accredited investors alone and Rule 504 offerings to both accredited and non-accredited investors will not trigger the need for a PPM.

Even in situations when it is not technically necessary, a PPM is frequently advised. The PPM should be regarded by the issuer as a kind of insurance. It does not totally insulate you from liability, but it does provide a significant layer of protection. When the PPM is properly and thoughtfully drafted, it guarantees that every investor receives written notice of all relevant information about the issuer.

This is a great defense against future investor lawsuits, especially if the investment does not perform as expected and if the investors are not close friends or relatives of the issuer (i.e., more inclined to sue). PPMs are fairly standard in some industries: small manufacturing, real estate (syndications), restaurants and food service, some tech, entertainment and film, any places where the field of investors becomes fairly widespread in the earliest stages of fundraising.

Securities law presents tricky waters for you to navigate. You are well advised to seek experienced advisory council through groups like Landmark Advisors . As soon as you are seriously contemplating raising seed capital, contact us to schedule an appointment.

Seed Round Funding to IPO: Is this the Best Strategy for Your Startup

Mon, 25 Sep 2023 17:58:17 GMT

An Overview of Funding Rounds and Means to Exits for Startup Founders

A successful startup requires much more than a brilliant idea. It requires a significant amount of time, self-control, commitment, and cash, above all else. Approximately 60% of businesses need outside capital rounds to get off the ground, according to a 2016 British Business Bank Survey. So without further ado, let's talk about the many stages of startup funding that each and every entrepreneur needs to be aware of.

Stages of Startup Funding You Should Understand

Pre-Seed Financing: The phase of bootstrapping

Seed Funding: Initial phase of product creation

First VC round of funding for series A

Series B Financing: VC's second round

Third VC round of funding for series C

Over the past few years, startup investment rounds have dramatically changed the corporate landscape. There weren't many choices for startup fundraising available not too long ago, but recently, there has been an increase in startup funding available at various stages. As a prospective startup owner, you need to assess the state of your business and the amount of capital you can secure from outside investors.

Here is a summary of the main startup funding stages before we go into the specifics of each funding level.

The Phase of Pre-seed Funding

This early level of seed money is so important that it isn't even categorized as startup capital. This phase, known as pre-seed funding, typically describes the initial stages of a startup's existence.

During the pre-series stage, investors are unlikely to provide money in exchange for stock in the firm. This phase may extend for an extended period or you may receive pre-series money quickly. It is dependent upon the type of company and the upfront expenses that you have to account for while creating your business plan.

A typical term for the pre-seed funding stage is bootstrapping. To put it plainly, it refers to scaling your startup with your own current resources, including co-founders, first in employees, friends, family, etc. Entrepreneurs aim to grow themselves as efficiently as possible by investing money out of their own pockets.

Pre-seed capital enables a fledgling company to efficiently develop and market its product or services. Entrepreneurs often evaluate the feasibility of their ideas during the research and development stage. They may already have a functioning product prototype and are looking for suitable capital to enable them to grow their firm on a full-time basis.

Many entrepreneurs also look to founders who have been there and experienced similar things as them for advice during this phase. It enables users to ascertain the expenses that will be incurred by their project or idea, create a profitable business plan, and gather suggestions for expanding their concept into a real company.

Since comparable difficulties are best resolved during this time, entrepreneurs should also work out any relevant copyrights, partnership agreements, or other legal issues during the pre-series stage. They could eventually become costly and perhaps insurmountable. Furthermore, no investor will give money to a firm that has legal problems before it launches.

Typical pre-series investors include:

Business Owners

Family and Friends

Venture Funds for Early Stages (Micro VCs), allow we suggest holding off on these.

People who already know you should ask. Friends, former colleagues, relatives, etc. That is your finest opportunity—almost your only one. If that doesn't work, ask wealthy and well-connected industry figures.

To finance their company, entrepreneurs could have to spend all of their money and even take on additional employment. Putting your own money into a company comes with a lot of risk, therefore success is not assured, thus you need to be really committed and hardworking. Nevertheless, when executed well, bootstrapping can offer advantages over typical investments, such as preserving corporate ownership and possibly yielding higher long-term returns on investment.

Startup Assessment in the Early Phase

Entrepreneurs value their firms ranging from $100,000 to a few million during the pre-seed investment phase.

2. Stage of Seed Funding

It's time to sow the seed after the pre-seeding phase. "Seed funding" is the first step of startup fundraising. Given that nearly 29% of companies fail due to a lack of funding during the bootstrapping phase, seed money is essential for launching and growing a business.

The biggest mistake founders typically make is waiting until they have too little money to seek funding elsewhere. You may think of the seed funding phase as being similar to planting a tree. The initial funding is ideally the "seed" that makes it possible for any firm to succeed. With the right resources, such as a sound business plan and the commitment of the founder, a company can eventually develop into a "tree."

Startups are required to give investors ownership in exchange for seed funding because they are taking a significant risk when they invest in the business. Because startups cannot yet guarantee a successful business model, the risks are significantly higher.

Seed capital enables a firm to finance product launch expenses, gain traction through marketing early on, make critical hiring decisions, and do additional market research to determine product-market fit.

Many entrepreneurs believe that all they need to do to launch successfully is a seed capital round.

Prospective Seed Stage Investors

Typical investor categories involved in seed investment include:

Family and Friends

Angel Capitalists

Venture Funds for Early Stages (Micro VCs)

Fundraising

Startup Evaluation and Seed Stage Fundraising

The startup needs to have a developed product and a steady stream of money from customers by now. It's now necessary for them to maximize their value offerings and choose series A funding. The chance to expand into new markets is fantastic for firms like this one.

It is important to establish a plan that will yield long-term profitability in the Series A investment round. Startups frequently have brilliant concepts that can draw in a sizable number of ardent consumers, but they often lack the knowledge necessary to successfully monetize them over time.

At this point, you have to start learning about the fundraising process and establishing early relationships with VCs and angel investors. To secure funding for your firm, you need to find investors that are willing to follow the 30-10-2 guideline. This rule states that you have to locate thirty investors that are prepared to put money into your venture. Of those thirty investors, ten may express interest in your plan, and two of them will really give you money.

Inform them that while you are not currently raising money, you plan to do so within the next six months. Express your genuine interest in them and your desire for them to receive an early glimpse, as this is what all investors desire.

Traditional venture capital firms and angel investors provide the majority of the Series A investment. They are not searching for "great ideas," but rather for businesses with a sound business plan that can transform their brilliant concept into a profitable venture that will allow investors to recoup their investment.

While a lone investor can act as a "anchor," it's easier for a firm to draw in more money when it has its first investment. Despite their preference to participate at this level, angel investors typically have far less sway than venture capital firms do.

Potential Series A Investors

Initiators

Super Angel Capitalists

Entrepreneurial Funders

Series A Company Valuation and Fundraising

Strategic Investors

Some funds who are actively investing in Series A and beyond:

Capital IDG

Brand-New Enterprise Partners

The Khosla Group

GV.

Stanford-StartX Fund or StartX

Next Stage: IPO

Offering company shares to the public for the first time is known as an initial public offering, or IPO.

While established corporations use it to enable startup owners to sell some or all of their shares to the public, growing startups in need of capital frequently employ this approach to raise money.

An IPO is a series of events that happen when a startup chooses to go public. They consist of:

Creation of a team for an external public offering that includes SEC specialists, lawyers, underwriters, and certified public accountants.

Information on the startup, including its financial results and projected operational trajectory, is compiled.

An audit of the startup's financial statements is conducted, leading to a recommendation on its initial public offering.

The startup chooses a date for going public and files its prospectus with the SEC.

The benefits of a public offering for entrepreneurs go beyond just raising capital for their firm. Other benefits include:

Since a public organization already has access to public markets, it can raise extra funds through secondary offerings.

Answers to Common Questions

How do you figure out how much money to raise in each round?

Paul Graham, CEO of Y Combinator, says you have to use this easy formula to figure out how much money your startup needs.

Take the number of candidates you wish to hire and multiply it by $15,000 times 18 (months).

For instance, you may use the previously given method as follows if you need to hire five employees:

The amount of money you'll need for the following 18 months of your startup is 5 x $15000 x 18 = $1,350,000.

The lowest amount of funding you may expect to receive in each cycle is roughly as follows:

Round of Pre-Seeding: $0 to $50,000

Seed Round: $3 million to $50,000 million

Funding for Series A: $3–$6 million

$10 million to $30 million in funding for series B

$30 million to $50 million in funding for series C

Funding for Series D: $50 million and above

A venture capitalist would generally be interested in 10%–20% of the stock in your startup at the capitalization presented when they invest.

An angel investor would prefer to hold 15–25% of the stock in a startup from a very early stage in the development of the company.

How can I obtain seed money?

You and the three traditional Fs—Favorites, Friends, and Family—are the only possible investors for your business idea, if you have launched or are going to launch it.

Venture capital firms and angel investors avoid making investments in the ideation stage since they don't know how committed you are to the project or how well it will turn into a successful business.

Based on the scale calculation, the startup funding stages will be as follows:

Round of Pre-Seeding: $0 to $100,000

Seed Round: $500,000 to $2,000,000

Funding for Series A: $3–$10 million

$10 million to $30 million in funding for series B

IPO: in excess of $100 Million

Whatever stage you find yourself, it is never too early to assemble the best team for meeting your needs as you present your case to investors. Please contact Landmark Advisors or schedule a time for a consultation with our team.

Qualified Small Business Stock: How Startup Investors can Minimize Capital Gains Taxes

Thu, 21 Sep 2023 14:18:05 GMT

One Thing A Founder Should Consider Prior to Raising Seed Round Investments

QUALIFIED SMALL BUSINESS STOCK (QSBS): WHAT IS IT?

Shares of a qualified small business (QSB) defined by the Internal Revenue Code (IRC) are called qualified small business stock (QSBS). A QSB is a domestic C corp. issued stock and worth more than $50 million based on the original cost of is gross business assets. 26 USC §1202.

Tax benefits available to qualifying persons who meet specific requirements, provided they own qualified small business stock (QSBS) surround these provisions:

• Shares of a qualified small business (QSB), as defined by the Internal Revenue Code (IRC), are referred to as qualified small business stock (QSBS).

• QSBS qualifies for special capital gains treatment and reduced taxes when all requirements for qualification are met.

• The holding period for the stock determines how much they will receive as a tax benefit.

• By using the proceeds to purchase QSBS from another company, investors who sell their QSBS before the mandatory holding term expires can postpone capital gains.

QUALIFIABLE SMALL BUSINESS STOCK (QSBS): AN OVERVIEW

Individuals are permitted by the federal government to invest in small enterprises in accordance with Internal Revenue Code (IRC) Section 1202. As previously mentioned, a QSB is any current domestic C corporation whose assets, at the time of stock issuance or thereafter, do not exceed $50 million.

Only specific kinds of businesses can be classified as QSBs. Only businesses in the technology, retail, wholesale, and manufacturing qualify. Hospitality, personal services, finance, farming, and mining sector businesses are not eligible to be QSBs.

Federal taxes are not applied to capital gains from eligible small enterprises under IRC Section 1202. The following conditions must be met in order to claim the tax benefits of the qualifying stock:

1. A corporation cannot be the investor.

2. The shares had to be purchased by the investor at the time of issuance and not on the secondary market.

3. The stock must have been held by the investor for a minimum of five years; • The investor must have paid for the shares with cash or other assets, or received it in exchange for a service. One or more of the issuing corporation's eligible crafts or enterprises must employ at least 80% of its assets.

QUALIFIABLE SMALL BUSINESS (QSB) STOCK TAX BENEFIT REQUIREMENTS

A QSB stock's tax status varies based on when it was purchased and how long it was kept. 1993 witnessed the enactment of Sec. 1202, the small company shares Capital Gains Exclusion, whereby a noncorporate shareholder avoids 50% of the gain from the sale of qualified small company (QSB) shares after five years of ownership.

The exclusion percentage rises to 75% for QSB stock purchased on or before September 27, 2010, but after February 17, 2009. The exclusion rate is 100% for qualified shares purchased before January 1, 2014, but after September 27, 2010.

Furthermore, pursuant to Section 1202, the annual gain allowance is constrained by a cumulative cap of $10 million and an annual ceiling equal to ten times the amount of QSB stock that is sold during the year. (This is applicable to each shareholder and each company.)

The policy goal of the exclusion was to encourage and reward taxpayers for making certain types of small-business investments.

There are holding requirements for the complete exclusion of net investment income (NII) tax and alternative minimum tax (AMT), which are supplemental tax benefits for investors in the QSBs.

The modified adjusted gross income (MAGI) amount over a predefined limit, adjusted from year to year, or the lesser of an individual's NII or NII tax, is subject to the NII tax. These are some examples of how exclusions work:

• A complete exclusion from capital gains for QSBS acquired after September 27, 2010. There is a 100% capital gain exception, which also covers exemptions from the NII and AMT taxes. A capital gains exclusion of 75% is available for QSBS purchased between February 18, 2009, and September 27, 2010. AMT applies to 7% of the excluded gain, though.

• For QSBS acquired between August 11, 1993, and February 17, 2009, there is a 50% capital gains exclusion.A MT applies to 7% of the excluded gain, as well.

Benefits to the Investor in Qualified Small Business Stock

Let us consider a taxpayer with $410,000 in ordinary taxable income who files as a single individual. Due to their income, they are subject to the highest capital gains tax bracket (20%). They achieved a profit of $50,000 from the sale of eligible small business stock that they had purchased on September 30, 2015. All of the taxpayer's capital gains are excludable, thus there is no federal tax owed on the gains.

Let's say the taxpayer bought the stock on February 10, 2009, and sells it for a $50,000 profit five years later. Capital gains would be subject to federal tax of 20% x (50% x 50,000) = $5,000.

Benefits also extend to shareholders who choose to sell qualified small business shares (QSBS) that they haven't kept for the required minimum five-year holding term. By reinvesting the profits from the sale of that qualifying small business stock (QSBS) into another QSBS within 60 days, they are able to defer the gain under Section 1045 of the IRC.

A qualified small business stock (QSBS) offering is a means of obtaining initial or additional funding for qualified startups and qualified established firms looking to expand.

These businesses can also pay employees in-kind, or with qualified small business stock (QSBS), which is a common way to pay employees for their services in situations where cash flow is scarce. Additionally, qualified small business stock (QSBS) could be utilized as a motivator for staff members to stay with the company and contribute to its expansion and success.

Securities Offerings: Rule 163 and Testing the Waters

Thu, 21 Sep 2023 10:12:23 GMT

Consider This Before Raising Money for Your Startup

In December 2019, the U.S. Securities and Exchange Commission (SEC) introduced a significant change to the landscape of capital markets, one that aimed to encourage capital formation and invigorate the public markets. This change came in the form of Rule 163B, which allows all registrants and their agents to "test the waters" with potential investors, both before and after filing a registration statement. This newfound flexibility represents a departure from the previous restrictions that limited such communications primarily to emerging growth companies (EGCs). So, what does "test the waters" mean, and how has Rule 163B reshaped the way companies approach securities offerings?

Test the Waters: A Dive into Rule 163B

Prior to the implementation of Rule 163B, corporations faced considerable challenges in gauging investor interest in a securities offering prior to submitting a registration statement with the SEC. It was difficult to reach out to potential investors during this vital pre-filing stage due to Section 5 of the Securities Act. The Jumpstart Our Business Startups (JOBS) Act of 2012, which introduced a new class of public corporations known as EGCs, changed the rules of the game. These EGCs were given the opportunity to "test the waters" both prior to and during the filing of registration statements, giving them an important resource for market analysis.

EGCs now have the option to submit draft registration statements in confidence for initial public offerings (IPOs) and certain follow-up offers. The registration process for was sped up by this private submission procedure.

Navigating the Waters with Rule 163B

Companies should bear in mind a few important aspects of Rule 163B as they use their newly acquired capacity to gauge investor interest:

1. Investor Type Restrictions: Qualified Institutional Buyers (QIBs), Institutional Accredited Investors (IAIs), and Investors Reasonably Believed to be QIBs or IAIs are the only investor types to whom communications are restricted under Rule 163B. Although the rule does not specify how to go about forming certain kinds of beliefs, it does provide latitude in selecting suitable techniques. Companies must also take reasonable measures to guard against test-the-waters information being shared with unqualified parties.

2. No Filing or Legends Needed : Test-the-waters communications do not have to be filed with the SEC or have any particular legends included, in contrast to some SEC communications. Nonetheless, if Division of Corporation Finance Staff members examine registration statements, they have the right to request these communications.

3. Responsibility : Under Securities Act Section 12(a)(2) and the federal securities laws' anti-fraud provisions, companies test-the-waters statements may expose them to liability. This emphasizes how crucial it is to treat these correspondences with the same attention to detail as securities filings.

4 . Non-Exclusivity : Rule 163B is not exclusive, so businesses may utilize other Securities Act communication exemptions and regulations in addition to it. Although this flexibility has its limitations, each rule's requirements must be met in order to benefit from it.

5. Regulation FD: According to Regulation FD , which requires the public disclosure of important non-public information purposefully communicated to particular securities market professionals and shareholders, test-the-waters communications are not exempt from Rule 163B. Confidentiality agreements between QIBs and IAIs are recommended in order to manage this.

Closing Thoughts: Entering the New Capital Market Era

Because Rule 163B gives businesses the chance to "test the waters" with possible investors, it has completely changed the manner that corporations approach securities offerings. More enterprises are encouraged to explore accessing the public markets as a result of this regulation shift, which increases flexibility and lowers uncertainty. It is imperative that businesses exercise caution when navigating these waters, taking into account the limitations, liabilities, and compliance obligations associated with Rule 163B. Rule 163B represents a major turning point in the continuous endeavors to boost capital creation and the U.S. capital markets as the financial landscape changes.

Five Signs its Time to Sell Your Business

Tue, 19 Sep 2023 11:39:32 GMT

By Andrew Lowery

Deciding when to sell a business is a critical decision for any entrepreneur or business owner. Timing is crucial, and recognizing the right moment can be challenging. This paper explores five key signs that indicate it may be time to sell your business. These signs encompass financial, personal, and market-related factors that should be carefully considered to make an informed decision. By understanding and evaluating these indicators, business owners can navigate the complex process of selling their businesses effectively.

Declining Financial Performance : One of the most prominent signs that it may be time to sell your business is a sustained decline in financial performance. This includes declining revenues, shrinking profit margins, or rising debt levels. A consistent pattern of financial deterioration may indicate that your business is facing challenges that are unlikely to be resolved in the near future. Selling the business during a downturn can help you salvage its value and avoid further financial losses. Prospective buyers are often more interested in businesses with a strong financial track record, making it essential to act before financial issues become irreparable. But selling your business in a downturn will be challenging and most buyers will not pay a valued amount due to the decline. When selling a business one of the biggest pieces of advice we give to our clients is “do not take your foot off the gas”. We say this to mean, keep the growth going, if a business is in decline, the potential buyers will have concerns over where is the bottom? Rightfully so, their concerns will have to be addressed.

Burnout and Personal Stress : Owning a business and entrepreneurship can be demanding, and it's common for business owners to experience burnout or excessive personal stress as they manage their companies. If running your business has taken a toll on your physical and mental well-being, it may be a sign that it's time to sell. Chronic stress can negatively impact decision-making and overall business performance. Selling the business can provide an opportunity for you to regain a healthier work-life balance and pursue other personal or professional interests. You should try and take a much needed vacation to see if this will reduce your stress. If this works, you can decided then with a more clarity about if it’s time to sell or not.

Market Changes and Industry Trends : Another critical factor to consider is the evolving market and industry landscape. Industries can go through cycles of growth and decline, and staying attuned to these changes is essential. If your business operates in an industry that is facing structural challenges, such as increased competition or technological disruption, selling before the situation worsens may be wise. Additionally, identifying market trends and or political strategies that may diminish the long-term prospects of your business can be a compelling reason to exit the market while your business still holds value. Advisory firms like Landmark Advisors keep track of industry trends and the market environment and can help you assess how current circumstances are likely to affect your business in the coming months and years.

New Opportunities or Interests : As a business owner or entrepreneur, your interests and aspirations may evolve over time, especially if you have been successful and held onto a lot of your financial success. If you've identified new opportunities or interests that you are passionate about pursuing, selling your business can free up resources, both financial and time, to invest in these endeavors. Entrepreneurs often have multiple business ideas throughout their careers, and selling a current business can be a strategic move to fund the next venture.

Attractive Acquisition Offer : An attractive acquisition offer is perhaps the most straightforward sign that it's time to sell your business. If you receive a compelling offer that aligns with your financial goals and business valuation, it's worth serious consideration. Potential buyers may include competitors seeking to expand, private equity firms, or strategic investors who recognize the value of your business. When evaluating an offer, consider not only the sale price but also the terms, conditions, and any potential impact on your employees and customers.

What to Do Now : Deciding when to sell your business is a complex decision that requires careful consideration of various factors. Recognizing the signs that indicate it may be the right time to sell, such as declining financial performance, personal burnout, market changes, political changes, new opportunities, or an attractive acquisition offer, is crucial. It's essential to approach the sale process strategically, seeking professional advice when necessary, to maximize the value of your business and ensure a smooth transition. Ultimately, selling your business should align with your personal and financial goals and pave the way for your future endeavors. Be sure to contact Landmark Advisors when you are ready to sell or need advice on what to do next.

How Much Should my Startup Expect to Raise in Seed Round Financing

Tue, 19 Sep 2023 11:17:17 GMT

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Why Mission Matters The Nonprofit Thing That We Don’t Really Want to Talk About…

Mon, 11 Sep 2023 17:35:20 GMT

Defining the Problem

By Rob Mitchell

How many nonprofit brands can you name? How many of these do you really understand what their mission is? How many of these nonprofits provide a regular tangible measurement of how they are achieving their mission?

Some (but certainly not all) have operated for decades with rather ‘squishy’ missions and fill their annual reports with activity reports rather than objective measurements of how much progress they’ve made toward meeting their mission goals. They have great difficulty in telling their supporters how dollars donated directly relate to eradicating a disease, ending hunger, slowing climate change, providing education for those who can’t afford it, ending poverty, etc. Sure, they’ve been busy. They’ve spent a lot of money on activities and projects. They have made a difference. They can cite lots of good work. But what many can’t do is show us how any of this notable activity is having a measurable effect on actually achieving their stated mission – if we even know what that mission is.

The first question to ask is “what exactly is the mission?” Is the mission bold and audacious? Is progress toward the mission measurable? If not, why not?

Time is Vital

Often the most important omissions in defining missions is the element of time… or in another word, urgency. Capital Campaigns are excellent examples of how missions can be defined and achieved before an established deadline. Campaigns specifically define what the needs are, what the benefits will be, how much money is needed, and when the campaign will need to be completed. Organizational missions should be viewed similarly. Let’s tell our constituents what we are going to do, how we intend to do it, how much time it will take and how much money is needed and why the investment is needed now. Next, let’s regularly show them how well we are doing in achieving our plan. Let’s provide a report card that we are proud of. If our mission needs to change, let’s change it and tell everyone what we’ve done and why.

We can look to the business world for notable examples. Entrepreneurs raise billions every year to fund their bold business visions. In order to successfully raise money from investors, these avaricious visionaries need to provide a business plan showing what the end game is, what specific accomplishments need to be achieved, how much money is needed, what the impediments are, and most importantly how all the participants will profit in an acceptable time frame.

Winning

Americans love winners and will support them. Americans are also often quite forgiving. Some of the best examples are found in sports and politics.

Mike Tyson was the undisputed world heavyweight boxing champion from 1987-1990. In 1992 he was convicted of felony rape and sentenced to 6 years in prison. He was released after serving three years in the Indiana correctional system, and in 1996 before a paid crowd of millions, won back his heavyweight titles.

Even more noteworthy perhaps, is that while he was in prison, Mike Tyson learned to read beyond a very elementary level and even became a mentor to other young men to try to help them avoid the many pitfalls that might befall them in their lives. Iron Mike turned his incredible life hurdles into an opportunity that makes him, even today, one of the most sought after celebrity guests around the globe.

In the political realm, in the next presidential election, I may be moved to cast my vote for someone who has a reprehensible personal past but nonetheless, whose policies I can support, who I can give credit for his many accomplishments and can see his potential for making Americans’ lives better.

In business, Walmart, then Amazon became winners, in part, because Sears could not or would not adapt to changing technology and changing consumer behavior.

The universities with the largest endowments find themselves in the position of winners not because they need money so badly, but because their alums are the most successful, powerful and oftentimes, visionary. These alums lead the biggest companies, make incredible scientific breakthroughs and are among the most successful individuals in their fields.

The above examples are merely a slice of a greater story taken from the strata of both fame and success, but they all started out just like you. Every one of them, however, began their adventure with a vision: a vision to win a world championship belt; a vision to help America to its true greatness; a vision to become the most dominant company in its space; or a vision to educate the leaders of the next generation.

They all had to build to achieve their success. Your nonprofit is really no different than them. What then will it take for your nonprofit to become a great winner?

I can say with certainty that it will start with a clearly defined vision, executing your mission and ways of measuring your success. Actualizing your vision means taking what you dream of and formulating the means of making it happen in a way you know, and everyone else can see, it succeeds.

You need to build a support system around you. “Cheerleaders” (who are much more important than you might realize) who believe in you, mentors, advisors, managers and role players for many different jobs. If you believe in it, there’s a reason why. And when you believe, you can achieve! But initiative and persistence are your allies. Delay and pessimism are your adversaries.

Time is a commodity that you cannot afford to waste. Resolve today to do what is necessary for your nonprofit to be the winner it is meant to be. Let us know how we can help !

How AI Detection Software Enhances Academic Integrity

Mon, 04 Sep 2023 02:38:56 GMT

In an era marked by technological advancement, maintaining academic integrity has become a paramount concern. The proliferation of AI-generated content has introduced new challenges for educational institutions striving to uphold the principles of honesty and authenticity. Recognizing the need for a robust solution, companies like CatchGPT Inc. have emerged as trailblazers in the field, developing cutting-edge software that not only identifies AI-generated writing but also minimizes false positives, providing a vital tool for educators and students alike.

CatchGPT Inc., an AI Detection SAAS company, stands at the forefront of this innovative stride. Their groundbreaking software solution has revolutionized the way academic institutions tackle the rising tide of AI-generated content infiltrating classrooms. This technology has demonstrated exceptional accuracy, effectively detecting AI-generated essays and written materials, while maintaining a false positive rate of less than 1% in preliminary testing.

Since its inception, CatchGPT has made significant strides in providing its services within high school and college classrooms during the Fall 2023 term. With an eye toward the future, the company projects rapid expansion into K-12 and higher education classrooms over the next 12 months. This projection underscores the immense potential and urgent demand for this technological breakthrough.

"At CatchGPT, our mission is to empower users by providing them with the ability to distinguish between human-written and AI-generated content," says Alvin Lu, CEO of CatchGPT Inc. The company's live AI text detection service enables users to seamlessly determine the authorship of content through various means, such as copy/paste, document upload, or even online text scanning. Unlike competitors, CatchGPT offers its users an accessible pricing model, with a simplified version available for free and a broader analysis for a modest monthly fee of $5. This affordability democratizes access to the technology and ensures that users at all levels can benefit.

Notably, CatchGPT's prowess extends beyond individual users. The company also caters to the needs of educational institutions through its B2B sales model. Schools can access CatchGPT's comprehensive services at a rate of $2 per student per campus, ensuring the scalability of this solution for both secondary and tertiary learning environments.

CatchGPT's journey from its inception to its present success has been marked by unwavering dedication and a commitment to excellence. "Our team hosts a wealth of experience from tech giants like Google, Amazon, Microsoft, Tesla, and Kaggle," Alvin proudly notes. This confluence of expertise has been instrumental in refining the AI approach and keeping pace with the rapid evolution of language models and chatbots. CatchGPT's internal testing showcased an impressive 95% accuracy rate in detecting Large Language Models (LLMs) and AI-generated text, setting it far ahead of competitors like GPTZero, which achieved only 63% accuracy on the same dataset. Moreover, the company's stringent focus on minimizing false positives resulted in a remarkable 1% false positive rate, significantly outperforming competitors' rates, which averaged above 15%.

The inception of CatchGPT can be traced back to a deep-seated concern for nurturing critical thinking and writing skills in modern education. Co-founders of the company shared this vision and recognized the challenges posed by AI-generated content. Alvin Lu, the driving force behind CatchGPT, discovered the need for such a solution firsthand when his own pre-GPT era academic essays were mistakenly flagged as AI-generated. This revelation underscored the urgency to preserve academic integrity and empower both students and educators with the tools to distinguish genuine work from AI-generated material.

As CatchGPT continues to make strides in transforming the academic landscape, it's worth noting the support it has received from partners like Landmark Advisors LLC . Landmark Advisors , a pioneer in facilitating business acquisitions and investor partnerships, has recognized the significance of CatchGPT's mission. Landmark Advisors bridges the gap between angel investors and early-stage ventures, providing a platform for innovation to flourish.

It is becoming increasingly difficult for the human eye to distinguish between AI generated and human written text. For example, can you tell if this article was written by an LLM? Try out CatchGPT's flagship product, TrustWrite , and find out for yourself!

In a world marked by unprecedented technological advancements, the rise of AI-generated content demands innovative solutions to maintain academic integrity. CatchGPT Inc. has emerged as a beacon of hope, offering a sophisticated yet accessible solution that empowers both students and educators to distinguish between human-written and AI-generated content. As this visionary company continues to expand its reach, its impact on education and integrity is bound to be profound, reshaping the landscape for generations to come.

What Startup Founders Need: Vision, Commitment and a Wingman

Mon, 28 Aug 2023 20:58:42 GMT

In the fast-paced world of entrepreneurship, startup founders are often portrayed as daring visionaries who possess an unyielding commitment to their goals. While these qualities are undoubtedly crucial, there is another element that often goes overlooked but is equally significant for a founder's success: having a reliable wingman. In this article, we delve into the core attributes that startup founders need – vision, commitment and that additional person whose most needed to navigate the turbulent waters of launching and scaling a new business.

The Visionary Foundation

Every successful startup begins with a visionary idea. This vision is the driving force that propels founders forward, motivating them to overcome obstacles and embrace the challenges that lie ahead. A startup founder's ability to craft and communicate a compelling vision is instrumental in attracting investors, customers, and talented team members.

1. Visionary Ideation

At the heart of every groundbreaking startup is a visionary idea that challenges the status quo. Founders must possess the ability to identify gaps in the market, envision innovative solutions, and foresee trends that others overlook. This foresight allows founders to position their startups at the forefront of industry evolution.

A bold vision not only serves as a blueprint for the startup's future but also fosters excitement and commitment among stakeholders. Investors are more likely to rally behind founders who exhibit a clear understanding of where their startup is headed and how it will disrupt the market.

2. Effective Communication

A brilliant vision alone is insufficient; founders must also communicate it effectively. The ability to translate complex ideas into easily understandable narratives is a hallmark of successful founders. Whether pitching to potential investors, delivering a keynote at a conference, or simply conversing with team members, founders need to articulate their vision with passion and clarity.

In the age of information overload, founders who can distill their vision into a succinct and compelling story are more likely to capture the attention of their target audience. This skill not only attracts investors and customers but also helps in building a loyal community around the startup's mission.

The Commitment to Persevere

Launching a startup is not for the faint of heart. The journey is fraught with uncertainties, failures, and unexpected challenges. It's the founder's unwavering commitment that enables them to weather the storms and stay the course.

1. Resilience in the Face of Failure

Failure is an inherent part of the startup journey. Whether it's a product launch that falls short of expectations or a strategic decision that doesn't yield the desired results, founders will encounter numerous setbacks. What sets successful founders apart is their ability to view failure as a learning opportunity rather than a roadblock.

Resilience is the bedrock upon which commitment is built. Founders who are resilient approach challenges with a growth mindset, continuously adapting and iterating until they find a winning formula. This perseverance is a testament to their commitment to realizing their vision, no matter the obstacles.

2. Long-Term Dedication

The startup journey is often glamorized, but the reality is that it's a long and arduous path. Overnight successes are exceedingly rare; most successful startups are the result of years of dedication and hard work. Founders must commit to the long game, embracing the daily grind and maintaining their enthusiasm even when the initial excitement wanes.

This commitment extends to the people founders bring on board – from co-founders and early employees to investors and partners. The ability to instill a sense of purpose and foster a shared commitment within the team is crucial for building a cohesive and motivated workforce.

The Impact of a Reliable Wingman

In the high-stakes world of startups, founders often find themselves juggling multiple responsibilities. This is where the concept of a "wingman" comes into play – a trusted partner who complements the founder's strengths and fills in the gaps.

First, a quick note on what a Wingman is not. A Wingman is not a COO. A Wingman can play many different roles actually, including CFO or General Counsel, but it is not a role that should be limited to these traditional lanes. The Wingman needs to be versatile and capable of doing many different things that overlap between a traditional COO role and others in the C-Suite.

1. Complementary Skill Sets

Founders cannot singularly possess all the skills necessary to propel their startup to success. While they might excel in areas like product development or marketing, they might lack expertise in financial management or operations. A wingman brings a different set of skills to the table, effectively acting as the yin to the founder's yang.

By aligning with a wingman who has complementary strengths, founders can ensure that all critical aspects of the business are addressed competently. This partnership allows founders to focus on their core strengths while having the peace of mind that their startup's other facets are in capable hands.

2. Physical and Emotional Support

The startup journey is taxing. There are moments of self-doubt, high-pressure decisions, and the constant fear of failure. A reliable wingman provides emotional support, serving as a sounding board for ideas, a source of encouragement during tough times, and a partner to celebrate successes with.

The symbiotic relationship between a founder and their wingman can significantly impact their mental and emotional well-being. Having someone who understands the challenges, shares the vision, and is equally invested in the startup's success can mitigate feelings of isolation and burnout.

Conclusion

In the challenging world of startup launches, founders need great vision and unwavering commitment. But they also need a multi-faceted approach that incorporates the skills of a reliable wingman, whose always got the founder’s back, along with visionary ideation, effective communication, resilience and long-term dedication. Combining these elements ensures that founders are equipped not only to survive but to thrive in the competitive landscape of 2020’s entrepreneurship.

As the startup ecosystem continues to evolve, the importance of these attributes remains constant. Whether one is a seasoned entrepreneur or a budding founder, embracing this holistic approach can lay the foundation for a successful and fulfilling startup journey. To keep the process moving ahead at the pace you need, contact Landmark Advisors today.

Should Planned Giving Be A Part of Your Fundraising Plan?

Thu, 17 Aug 2023 19:25:46 GMT

Fundraising management has been my career for more than three decades. My jobs have been to manage and blend all sources of charitable giving for several large nonprofits. My experience includes direct mail, capital campaigns, e-giving, grant writing, special events, corporate giving, tribute gifts, recurring monthly and annual memberships and legacy giving. My jobs have included overseeing fundraising strategy, staff management, and budget management.

I didn’t plan on a fund development management career when I was in my 20s. I graduated with a business degree in Marketing and Computer Information Systems. While looking for my first job after graduation I met a wonderful development professional. He showed me that people could do well by doing good. He showed me that individuals and their families could plan their charitable giving in ways that would provide income for them, avoid income tax, avoid capital gains tax and avoid estate taxes. He could show donors how to give more than they ever believed possible to support the missions of their charities and churches. He had my complete attention. Most people call what he showed me Planned Giving or Gift Planning or Legacy Giving but whatever you call it, it is wonderful, effective and financially foundational. In spite of learning and managing all the other methods of raising money, no success was as personally satisfying or financially impactful as orchestrating the creation of plans that helped people provide financial fuel for their philanthropic passions. This also providing them with personal tax benefits and sometimes a new source of secure income. After decades of experience in all types of fundraising, I remain an unabashed promoter of Planned Giving – because it works for the giver and the for the nonprofit.

Through the years I’ve trained and mentored dozens of people to become successful gift planners. They represent all kinds of nonprofits and churches as they sow the seeds today that will become the financial harvest of the future for the organizations that they represent. During these years, I have often encountered the real barriers that we seemingly always face in performing our roles as gift planners and also those faced by our nonprofit leadership. As a nonprofit executive I consistently encountered two questions that impede or destroy the opportunity of success.

The Question Most Frequently Asked

Why should a nonprofit invest money, time, and talent today into a Planned Giving program that won’t pay a return for 10 or 20 years or more?

The most effective planned giving officers are very much like gifted sales professionals. They know how to connect with people. They are good listeners and excellent communicators. They know the value in asking for a commitment and how to secure it skillfully. They are not intimidating or pushy. They are trustworthy and honest to a fault. They are the faithful face for advancing the mission of the organization. They regularly interact with other fundraising staff and activities. They thrive on measurable results and often are competitive by nature. They are enjoyable people to be around. They are both likable and professional.

Sadly, some planned giving jobs in some organizations are filled with people who seem to believe that their value is their knowledge. They view themselves as consultants. Many of them believe that their value is tied to their knowledge. They know the difference between a Charitable Remainder Unitrust, a Charitable Remainder Annuity Trust, and a Charitable Gift Annuity. They often view themselves as influential content experts. They would like to be the person other fundraising staff call when proven donors are aging and should be presented with continuing their philanthropic support in their remaining years and after they are gone. They often know how to operate the software that calculates and models trusts, annuities, and estate plans. They spend most of their time in their offices. These are NOT the people you want filling your planned giving positions.

Job one for a planned giving staff member is to secure bequests. Simple bequests make up more than 90% of planned giving results. Successful planned giving staff use direct marketing (mail and email), existing donor lists, the organization’s website, the board of the organization, annual giving staff and a network of CPAs, estate attorneys and investment advisors to identify prospects. They orchestrate the creation of bequests, trusts, and annuities with other financial and legal professionals. They are not ‘order takers’ or legal practitioners. Trusts and annuities are tools to be implemented in special circumstances and these pros know what those circumstances are.

Measuring results is not difficult. You must start with how many documented legitimate visits a planned gift staffer has with prospects and professionals. It is vital that these visits be defined and recorded. The credit for these visits must be weighted to encourage contacts that will produce the best results. A casual encounter at the grocery store doesn’t count as a legitimate visit. A brief phone call also won’t qualify. The volume of real meaningful face to face visits is the most important measurement of success. You won’t catch fish if your bait isn’t in the water.

So how do you put a value on bequests, trusts, and annuities? There are a variety of ways to calculate value of a bequest. The key to putting a dollar value on a future commitment is a Net Present Value Calculation. I will not get into the details here but it can be done. Documentation in a CRM system is vital to this process. The current value of new annuities and charitable trusts are fairly simple to calculate – if you have proper documentation. It accounts for life expectancy and the value of funding.

The ACS Planned Giving Unit quickly became successful because we hired wonderful, talented and enthusiastic people-loving individuals. We provided these pros with everything a planned giving officer requires to be successful… leads, marketing materials, technology, legal guidance, mission education, camaraderie, financial rewards (including the first ever incentive plan approved by all profession fundraising federations), and recognition in an incredibly energizing, supportive, and competitive culture.

Now is the time to insure the future of your nonprofit

There has never been a better time to launch or restructure a planned giving operation. We are in the midst of the largest generational transfer of wealth in history. Huge amounts of wealth are held in securities, crypto currency, businesses, commodities and real estate - the owners of the wealth won’t live forever. Many people have reached the stage of life where they would like to give back, help more, and spend their remaining years with a financially secure source of income. Technology offers profound opportunities. The Artificial Intelligence era is underway. Apps make things possible that we only used to dream of. Meaningful information for identifying, targeting, and reaching prospects has never been better. We can easily and less expensively improve results. Upping your planned giving game today will insure a financial foundation for future accomplishments. Endowments built with bequest, trust, and annuity dollars during the coming years will make charitable missions more achievable than ever. Cures for medical conditions like Alzheimer’s, cancer, and diabetes should be expected. We will have new success in solving vexing societal issues like homelessness, hunger and pollution. Don’t miss this wonderful opportunity.

- Rob Mitchell

Why Business Valuations Arrive at Different Values for the Same Company

Tue, 03 Jan 2023 22:19:00 GMT

Every investor, business owner, and potential buyer understands how tricky valuing a business can be. The heart of this challenge surrounds two key variables: 1) the earnings of the business, projected over time in the future, and 2) the risk associated with buying the stream of earnings of a business, as calculated based on a discount rate.

To the current owner of the business, the arithmetic is very simple. He is solving for the amount he wants to get when he sells the business by using his present estimated earnings multiplied by an industry-accepted multiple of earnings to come up with a sales price valuation for the company.

So, for example, he may be estimating his current year’s cash flow based earnings at $800,000. He then applies the multiple he’s heard or read that other businesses in his space have received in the recent past. Let’s say that number is in the range of 5-8, and he’s convinced the halfway point between them, 6.5 is a good compromise. Voila! His business is worth $5,200,000 ($800,000 * 6.5). Now if he can just find the buyer who will pay him that amount for the business, everyone will be happy.

It just happens there is at least one searcher out there looking to buy a business that is much like the seller’s. He’s looking for stable, growing earnings, long-term, renewing contracts as receivables, and a seller who is ready to exit. The buyer’s goal is to get into this business for a long time horizon (10-20 years). In terms of what the parties are looking for, these guys are a good match.

To the buyer, however, the arithmetic is a bit different. He sees a company that reports $250,000 a year, consistently, on its tax returns, operating in an industry with sales multiples of 4-6 times average annualized earnings over a period of years. He knows there are some reasonable adjustments to be made to the cash flow of the business to account for certain expenses that fall outside the ordinary and necessary realm of the business’s operations.

But when he looks at industry standards and averages of companies this size in terms of add-backs to net income, he doubts if there can be more than another $250,000 in sustainable net cash flow, over and above what is reported on the seller’s returns. This, the buyer concludes he is looking at a company with sustainable earnings of no more than $500,000, with a reasonable multiple to apply to those earnings of five times, and concludes he should pay $2,500,000 or less if he is to buy the company.

So we have two interested parties who are a long way apart from where they would be willing to meet and make a deal. $5,200,000-$2,500,000 =$2,700,000 to be exact. Can they get together on a price? It’s possible, and part of it depends on how motivated each of them is, as well as how the deal will be financed.¹

But it wouldn’t hurt either of them to have a certified valuation professional look more closely and help either or both sides determine the price the deal should really be closed on. Take this all a step further. What if we’re not looking at the issue of a willing buyer or seller, but rather what if this is a business owned by someone in the middle of a divorce? How would that impact the value?

Or what if the business was part of a much larger estate, which was comprised largely of substantial tracts of valuable real estate, about to be passed, at least in part, to the living descendants of the owner? What would the valuation for tax purposes look like?

There are other examples where different conclusions of the value of the company may come into play as well: bankruptcy, liquidation, taking a company public or choosing to market the company to investors through a private offering.

You might want to assume that a company has one value on any given day and that is what it is worth. But that’s probably a bit of a short-sighted conclusion. When you consider all of the different possibilities and reasons for a valuation, perhaps you can see how what the company is worth on a given day is truly dependent on why you are valuing the company.

This is counterintuitive to the point that, without deeper thought, it might even seem dishonest. But it’s actually closer to the pinnacle of honesty than vice versa. Granted, there are many values a person could assign that are just wrong and indefensible, but there are several value conclusions that would be correct, depending on the purpose of the valuation.

In our example above, the buyer and the seller came up with two very different values for the company, presumably as of the same date for each. In no way does this mean that the seller’s value was wrong, nor the buyer’s. The higher value was what the seller would assert the company was worth to him on that date. Meanwhile, the buyer would tell you he is calculating what he thinks the company is likely to be worth to him, on the same date.

In other words, the seller is telling the buyer and anyone else in the conversation, what he is prepared to sell the company for – what he believes it is worth, and what you could write him a check for and he would turn over the keys to the company. The buyer, however, is telling you what he is already prepared to pay for the company, not necessarily what he would ultimately be willing to pay.

Both parties may be willing to move from these numbers, and eventually, even agree on a price. If and when they do, then we know the true transaction value of the company, that is the agreed-upon price for that particular transaction, but even that may not be based on the most reasonable conclusion of the fair market value of the company.

What? I’m sure that last sentence is more than a little confusing. But remember, fair market value is a function of what a hypothetical, willing, and reasonable buyer and seller would agree to as the price for the company. This is frequently different (frankly, often a bit less, but could be more) than a transaction price. Just because these two, particular willing parties agree on this price, it doesn’t mean that every willing buyer and seller, nor that any other buyers and sellers would agree on the same price.

It is frequently the case in M&A transactions that when a deal does not work out, the price for which the company ultimately sells will be very different than the price agreed to the first time around. If an actual transaction price reflects fair market value, which actual price is it then? Fair market value, like most forms of valuation, is not dependent on the parties involved. It exists independent from the transaction, and, once the rules of valuation are properly applied, it is also an objective (albeit actually arbitrary in some respects) measure of the value of the company.

Perhaps some analogous examples would be helpful to better illustrate what we’ve explored above. Let’s say, for example, you have a 2015 Corvette, that you would have no intention of letting go for less than $80,000. You’d rather keep it for yourself than sell it for less – or at least that’s what you think when the day begins. The best sources of market value, however, say that in a pure street sale, the car should bring about $70,000.

An IRS agent has been assigned to audit your assets, which is never good news, and she has suggested that because the car has low miles and is in incredible condition, it ought to sell for $90,000. Thankfully for you, you have a Certified Valuation Analyst who is able to counter the IRS, based on some limitations on marketability, liquidity and the fact that the car is actually owned by a club you are just a 40% minority partner in, and informs the IRS she believes the proper value to assign to the car is $50,000.

While you’re showing the car at a show, an interested buyer approaches you. He’s been looking for a deal on the exact model of the car you own, hoping to pay no more than $60,000 to get it. After checking out all of its features and its condition, and knowing you’re not going to let it go cheap, he offers you $68,000. You tell him what you’re prepared to take for it, at which point he counters, and eventually, the two parties agree on a price of $75,000, with the approval of the club owners, of course – done!

So what is the value of the car? The correct answer is always – it depends. But it’s no different with the value of a business. It depends. Interestingly, going back to our car analogy, this issue of value was recently adjudicated for the car in question in a divorce case.

The husband/owner, the same one who wouldn’t part with his precious toy for less than $80,000, had his IRS valuation expert testify that the value he had in the car was right around $50,000. Meanwhile, the wife also had an expert who was more aggressive than the IRS itself and suggested it was worth at least $95,000.

So what value did the court assign to the car? Well, it could have done what a judge in Indiana once did – ask the husband’s attorney which valuation to rely on and then turn around and ask the wife’s attorney whether she wanted half of that in cash or the car. That will keep a valuation expert focusing on what is reasonable.

But in this case, the judge decided to do what is most common, but not universal, in divorce cases and split the valuations down the middle, assigning a value of $72,500, 40% (the husband’s share in the club that owned the car) of which was part of the marital estate. The husband then paid one-half of that amount to the wife, so she received a net amount of $14,500 for 50% of his interest in the car, on top of the other assets she received from the distribution of the marital estate.

Now let’s analyze some comparative data from this hypothetical situation.

In descending order, we have valuations from:

The wife’s divorce expert - $95,000
The IRS - $90,000
The Seller’s ask - $80,000
The sales price - $75,000
The court-assigned value - $72,500
The Blue Book FMV - $70,000
The Buyer’s opening bid - $68,000, and
The husband’s divorce expert - $50,000

So let’s talk about these numbers consequentially. First of all, it isn’t necessarily common for the experts on divorcing spouses to be so far apart on valuation numbers. But it is very common for the expert of the spouse who does not possess the property to come up with a somewhat higher value on assets. The wide disparity between those numbers in our example just makes for an easy illustration of the points we’re trying to make.

The wife’s expert could reasonably be expected to be even higher than the IRS’s number since the IRS needs to allow for certain discounts of value for lack of control and lack of liquidity. While a seller might wish to get even more than the IRS or his wife’s expert would assert, his knowledge of the actual market might inform him that he wouldn’t be likely to sell to anyone at those prices.

The actual sales price, of course, was merely the price agreed to by the buyer and seller, but it’s quite interesting, and common as well, that the sales price was just a bit higher than either the court-assigned value or the Blue Book value. What’s the explanation for this?

The most interesting thing about the court-assigned value is that it is so close, and wedged between, the sales price and the Blue Book pricing. Thus, there’s a good sanity check on the court’s work, but it’s a check the court couldn’t perform until the sale actually occurred.

On the other, there is another, less widely used, tool an analyst can use to validate the sanity of these numbers. While there is no general consensus on the psychology and motivations of buyers, there is considerable data that shows it is more likely for an actual, willing buyer and seller to agree on a price that is slightly higher than FMV than it is for the price to be lower than FMV.

Why is that? My own perspective on this question is that the dealmaking instincts of a buyer and seller dictate that the seller already knows what price he will walk away from a deal at, while the buyer is only thinking he is there to make a deal. In other words, there is always more pressure for the buyer to move up in price to keep the deal open than there is downward pressure on the seller who stands ready to walk away and keep what he already has rather than lower his price too much.

Another way of looking at it is to recognize that the buyer will walk away with his money, but nothing to show for it if a deal doesn’t get done, while the seller will drive away in the car he keeps if the deal doesn’t happen.

We’ve taken a fairly extensive walk through the maze of basic valuation concepts in this post, with the goals of helping our readers better understand the need for high-level valuation work and also how many different valuation numbers can be valid and legitimate, as long as the rules for the type of valuation being conducted, are followed.

Whatever questions you have left in mind, please contact Andrew Thompson of Landmark Valuation Advisors .

¹ This post stops short of trying to explain the process of how a buyer and seller come together on price, if in fact they do. It’s common for either or both to have intermediaries negotiating terms for them until the find a price where it makes sense for them to move ahead with a Letter of Intent and the due diligence process. All of that is subject matter for another day. To simplify, however, for purposes of this post, you might think of the seller having an Asking price and the buyer offering a Bid price.

How to Succeed with Seed Round Funding

Mon, 28 Mar 2022 05:00:00 GMT

With the economy weakening, it may not continue, but there has never been a better opportunity to start a business. Over the previous four years, the number of seed-funded businesses has quadrupled. Over 200 micro-venture capital firms have recently raised over $4 billion to invest in startups at their infancy. This all adds up to a fantastic environment in which to launch a business. While raising a seed round used to take weeks or months, we're now seeing some rounds raised in only a few days. Companies are being pushed out of incubators and accelerators in greater numbers, with many receiving term papers within hours after coming off the demo day stage.

Ironically, I feel that the present "Seed Surge" is unintentionally worsening the Series A Crunch. Many founders are getting a false sense of security going into their Series A because of the present unrestricted flow of seed-stage finance.

This is a common story I've heard from many founders and startups both inside and outside the First Round ecosystem. I feel that the extraordinary levels of seed money accessible to entrepreneurs early on, throughout our industry, is setting them up for a harsh reality check at Series A. You may call it a "crunch" or whatever you want, but it's having a substantial influence on the long-term success of businesses. Looking at this pattern, I believe the trick is to remain slim and deliberate once the money is in the bank.

Here's why I think this is so important, and what founders may do to avoid being killed in the process.

What's Going On?

Today, seed capital is more abundant and easier to raise than it has ever been in my career. Ironically, this means that everything becomes much more difficult. It establishes a strong expectation — especially for young, first-time entrepreneurs — that what they believed to be difficult will be relatively simple the next time they do it. The issue is that the number of A rounds has remained constant. The amount of Series A capital has remained unchanged. So, if there are four times as many startups with seed capital, there are four times as many competitors fighting for the same money... Raising an A round is now four times more difficult than it was five years ago.

When I ask founders about their Series A experience, they frequently express surprise at how difficult it was to get a term sheet, how lengthy the process took, and how complicated the dialogues became. "Whereas seed investment is all about your idea and people, Series A is all about the numbers," as one CEO put it. We weren't keeping track of cohorts or anything like that. I had no idea what LTV or CAC were, or how to respond to concerns about scale economics. We entered into an interrogation that we had not anticipated."

One explanation for this is that founders misinterpret casual conversations with venture capitalists as genuine interest. Founders receive a slew of emails or phone calls from venture capitalists, and they feel compelled to begin the financing process right away or risk missing out. This can (and frequently does) result in a lot of hurried pitching before companies are ready. On the VC side, the deal is that both partners and associates get paid to go out and meet with promising emerging companies, but there is no obligation. Investors want to make sure they get "the call" from founders when they start fundraising, so they're encouraged to transmit "positive vibes" to stay in the game. A founder's "happy ears" pick up on these positive sensations, leading to erroneous assumptions about the genuine extent of possible VC interest.

Series A investors are always on the lookout for companies to invest in before they go through the formal process, as it's virtually always in their best interests to avoid a competitive fundraising situation. This indicates that they are aggressive in their pursuit of early meetings. When first-time founders see their inboxes fill up with emails from venture capitalists, they sometimes wrongly believe that the amount and intensity of VC interest will translate into a

quick funding round, and they begin the fundraising process too soon.

The true risk of pitching earlier than intended is that you haven't met all of the necessary milestones and haven't had time to develop a fundraising strategy.

Following a seed round, every firm should think about the inflection points in growth, revenue, and other areas where they need to demonstrate traction

(consumer acceptance, virality, revenue, engagement, and so on) in order to acquire a Series A. It's more critical than ever to meet those objectives, as

Series A investors have more options than ever before for filling each general partner's 1 to 3 annual commitments.

Many startups overlook the tremendous risk of raising money too soon. A corporation might be considered a "shopped bargain" once it has taken more than a few meetings. In the startup world, information spreads quickly.

Great fundraising methods are meticulously planned and executed, much like a tactical mission. For entrepreneurs, the ability to contain knowledge is a tremendous benefit. If a VC knows that 20 of her peers have previously looked at her and passed, she is sending out some very negative signals. How many people go to a restaurant after 20 of their pals say it's disgusting?

Of course, some VCs are able to avoid the herd mentality, but even with them, you'll almost certainly start with a deficit. That isn't to say you won't be able to raise funds in the future; it just means you're putting yourself in a lot more difficult position. After you've shopped a deal, you'll usually need to show more traction by focusing on solid execution for 9 to 12 months before you can try again. A startup's chances of getting a second opinion are slim to none.

Another trend we've noticed is that entrepreneurs are looking for bigger and bigger A rounds. Despite the fact that the market clearly cannot support it, we continue to see firms raising $15 to $20 million Series A rounds just a few months after raising their seed round. An investor must have three times the conviction of a $5 million investment to invest $15 million. I believe that a number of factors are contributing to the desire to raise $15 million or more in a series A round.

Founders frequently notice a few data points and assume that a new normal has emerged. For example, when a founder sees a friend raise a large Series A and reads a few tech news pieces about large Series As, they assume they can accomplish it too. Of sure, it's a possibility. It is, however, far from typical. I've also heard a lot of later-stage investors offering terrible advise to early-stage companies. For instance, at a first meeting on Sand Hill Road, a founder suggests a large target round size. When the investor doesn't blink, the entrepreneur begins to believe it's possible, even if it isn't.

A simple piece of advice: it's far easier to increase than decrease the size of a round.

The most successful founders I've met wait to raise money until they've demonstrated traction and reached proof-points that signify a significant move forward for their businesses, and then they ask for a lower range. You never want to call a VC and say, "Hey, I know I promised you last month that I was raising $15 million, but after talking to a bunch of people, I'm going to raise $6 million." Every investor will understand what this means, and it will raise concerns about you and your business. It's far better to call and say, "So, I was hoping to raise $6 to $8 million, but given the high investor interest, it looks like we'll be able to raise $12 million."

I can't tell you how many times I've heard about rounds that failed because the founders raised too much money too soon. It's a phenomenon in the industry, but founders' perspectives are only now beginning to shift.

I believe that founders significantly underestimate the danger of financing failure.

So, What Should Entrepreneurs Do?

The good news is that businesses are not required to fall into the Series A trap. There are other ways to capitalize on such trends and use them to your benefit.

Some of the sharpest startups I work with, for example, are using the seed fundraising boom to raise larger early rounds, giving them more time to get more done and hit more important inflection points. If you're only new and sparkling for a short time, make the most of it.

You're raising seed money based on the strength of your vision. There's nothing like numbers to muck up a good story, as I usually say. That is precisely what occurs at the Series A. You're now graded based on the data you should have been gathering all along to demonstrate traction, growth, and potential. So, instead of $1.5 million in startup money, why not raise $2.5 million to offer yourself the best chance of perfecting this data? After Series Seed, you should aim for 18 to 24 months of runway. When you don't need follow-on capital, the optimum moment to raise it is when you don't need it, and having two years of runway provides you the highest chance of landing in that circumstance.

Another advantage of raising seed capital in today's market is that more companies can choose which seed investors they want to engage with. There's an opportunity to be more selective about the investors you seek.

My recommendation is to do your research and discover which companies and individuals have a history of working hard to assist their startups succeed.

While some super-angels are extremely valuable, there are others who are neither super nor angelic. Rather than a "party round" of VC firm logos, I believe that founders are better served by investors who will roll up their sleeves and open doors, help source and hire exceptional personnel, provide feedback on a Series A pitch, and call in favors to make things happen. Also, be sure your investor is willing to put in actual effort in exchange for a seed investment. It's difficult for a company that writes checks worth $250K and $25M to provide the same level of service and support.

Once you have the money in the bank, you must take a step back and carefully plan your next steps. It never ceases to amaze me how many entrepreneurs fail to budget realistically. When it comes time to raise your A, it's critical that you have a clear image of the traction and proof points you'll need to present investors. And these proof points must show a considerable increase in valuation as well as de-risk your notion. Given the high cost of good personnel and the present real estate market in the Bay Area, this is more difficult.

It's a lot easier to spend $1 million than you may expect. Maintaining a low burn rate until you achieve product-market fit will give you the best opportunity of growing a large business.

"All right, we have a year's worth of funding, let's debut in 11 months," many companies remark. This isn't a sound strategy.

Even if you think you'll ship on time (which seldom happens), if you take 11 months to construct your product, you'll run out of runway before you truly understand what it's like to be out in the market collecting data. Nothing beats a successful launch followed by clients who adore what you've created when it comes to increasing your chances of a successful A round. The months that follow a successful launch define its success. Let's imagine you're an eCommerce business that knows the Christmas season will account for 40% of your total revenue. You don't want to find yourself in a situation where you need to raise money in November. You'll want to make sure you have enough funds on hand to raise following the milestone in February.

These turning points shift from year to year, so make sure you're up to date on what's now fundable. Given the danger of bringing hardware to market, investors are now requiring pre-sales in the millions with a product that is either functioning or currently in production.

When it comes to timing, keep in mind that a successful fundraising campaign will take between 4 and 8 weeks. When you include in the time it takes to prepare and close, you're looking at a few months. When considering a timeframe and proof points, keep this math in mind. It's risky to cut things too close together.

Keep in mind that simply collecting this information isn't enough. Your Series A pitch should be far more professional and practiced than you believe. While it's an unpleasant task that's easy to avoid, your fundraising pitch is a make-or-break situation. I've seen entrepreneurs spend more time on weekly payroll than on their pitches. Once you begin the process, you must make it the most essential, if not the only, priority.

In conversation, founders must be able to exhibit command of their figures.

Preparing for a Series A should take no less than four weeks. We've even created a First Round inside staff called "Pitch Assist" that works with our entrepreneurs to craft the best fundraising story possible.

All of this may make it appear as if you should begin restricting funds right away. But there's no need to go to such lengths. You don't want to put yourself in a position where you can't create and grow quickly. Raising a larger seed and measuring your progress against the milestones you need to meet will put you in good shape.

Get input from your advisors and other entrepreneurs on the proof points they believe you'll need to demonstrate. Prioritize recommendations from people who have worked in a similar industry or who are the most familiar with your business approach. If you're a SaaS company, seek out consultants or seed investors who are well-versed in the industry. They should be aware of the specific market parameters that are creating a lot of interest from follow-on investors.

Depending on your industry, aggressive client expansion rather than monetization may generate more company value. When it comes to persuading investors, progress in all aspects is not the same. I strongly advise you to conduct due diligence on the companies you actually want in your A round. Find out what they often want or expect from other entrepreneurs who have pitched them or seed investors who are familiar with them. When it comes to what companies want to see from entrepreneurs, the list is long. The more information you have, the more you will be able to adjust your plan to each encounter. Adversity isn't always a negative experience. "All the difficulty I've faced in life, all my troubles and obstacles, have strengthened me," Walt Disney famously said. You might not realize it at the time, but a kick in the teeth could be the best thing for you." It is not easy to start a business. Building an awesome product, hiring talented employees, and raising financing are all difficult tasks. Don't be fooled by the series Seed Surge into assuming that future financings will be easy.

The Most Important Takeaways:

The Complete Series A financial crunch is affecting the entire sector, causing fundraising rounds to collapse and restricting the potential of businesses. However, there has never been a better time to be a startup seeking initial investment. It's 4 times more accessible.

Only begin a Series A fundraising campaign when you've achieved important milestones to avoid a time crunch. It's dangerous to begin too soon.

Consider the size of the round you'd like to raise. It's usually easier to make a bigger round than it is to make a smaller one, so let the market bid you up.

Consider raising a larger seed round so you have more time to rack up proof points before your A.

During your seed phase, take your time to find the proper investors to assist you raise the following round.

Understand the critical inflection points that must be reached in order to demonstrate successful step change.

Allow enough time in the market to collect the data you need and determine what information is most enticing to present with potential investors. Stay engaged and make yourself ready for the next round even as you successfully complete this one.

Goodwill: The Most Important Asset in Small Business Valuations

Tue, 22 Mar 2022 05:00:00 GMT

Business value is a combination of tangible and intangible assets, not just tangible assets like property, equipment, and cash flows. Goodwill is a crucial intangible asset to understand as a small business owner. It's critical to understand what goodwill is and how it affects your company's value. It is frequently the most expensive component of a small business' purchasing price.

What exactly is Goodwill?

The percentage of your company's value that cannot be traced to anything specific is known as goodwill. When a company sells, the price is usually higher than the value of the company's identified assets; this discrepancy is known as goodwill. The gap between the business's purchase price and the fair market value of the specified tangible and intangible assets is known as goodwill.

Intangible Assets Examples

Copyrights, trademarks, and patents are all examples of intellectual property rights.
Reputation and brand recognition
Contracts with customers and suppliers
Domain names and websites
Recipes and trade secrets
Processes, software, databases, and training that are all unique
Articles published in the trade press

Case #1: Brand Recognition and Secret Recipes Build Goodwill

Assume you own a small restaurant that you are looking to sell. Tables, chairs, and cooking equipment may be included in the transaction. These assets are just worth a few thousand dollars, but your company is worth far more. Goodwill is any monetary amount that exceeds the value of these tangible assets. In this situation, goodwill includes the brand, consumer loyalty, recipes, and so on. These intangible assets provide a corporation actual value.

Case #2: Goodwill with a Website

When someone sells a domain name, this is another example of goodwill. Aside from the modest yearly registration price, the website itself is of little use. Companies, on the other hand, will pay hundreds, if not millions, of dollars for a memorable domain name. For instance, in 2017, Walmart paid $9 million for the website shoes.com. While the additional intellectual property was included in the deal, goodwill accounted for nearly the entire purchase price.

Case #3: Customer Database and Goodwill

Assume your business has a growing database of information about present and potential clients. This understanding of your target market provides you with a competitive advantage. Email addresses, details of various commercial encounters, and marketing efforts are all included in the database. Future earnings and recurring income can be aided by a database containing proprietary information. As a result, this intangible value is considered a component of goodwill.

How much is Goodwill worth?

The worth of your firm is heavily influenced by goodwill. Finally, goodwill might increase a company's appeal to potential buyers. Although goodwill is difficult to quantify, it is a vital factor to consider when negotiating the purchase or sale of a company. When getting a business appraisal, it's crucial to express the value of your company's goodwill. This will almost certainly result in a higher price. Peak Business Valuation recognizes the value of goodwill and would gladly answer any queries you may have.

If you are interested in learning more about business valuation or exit planning for your business, please schedule a time for a consultation here .

Startups, Seed Rounds and SAFE Notes

Wed, 16 Mar 2022 05:00:00 GMT

Using SAFE Notes Effectively In Early Stage Funding

If you are a startup founder, after developing your business plan, your primary focus moves to raising capital to meet the demand for expenditure that follows. Once you go to your closest colleagues to contribute what they’re able, the next step is the “Seed Round” to raise the capital that enable the development of your prototype product or service. While immediate, direct equity is a desired and idyllic goal, SAFE notes are a powerful tool for raising the first dollars needed to set you on a path for future success.

What is a SAFE Note?

Startups frequently employ SAFE (simple agreement for future equity) notes to help them raise seed money. A SAFE note is essentially a legally enforceable commitment to allow an investor to purchase a defined number of shares at a predetermined price at a later date.

Convertible Notes vs. SAFE Notes

SAFE notes are a type of convertible security of multiple types, whereas convertible notes are strictly a type of debt that can be converted into equity if certain conditions are met. Convertible notes, as a result, usually have a set maturity and an interest rate. SAFE Notes offer greater flexibility in their terms. Though convertible notes are more complicated, both SAFE and convertible notes include both 1) tools for startups looking to expand or scale their operations, and 2) eventually conversion to equity.

What Are SAFE Notes and How Do They Work?

There is often very little historic, financial data when a company is just starting out, making it difficult to assign an accurate value to it. SAFE notes work by allowing you to defer the valuation of your firm until a later date. They are not based, then, on an actual valuation of the company. Here's a rundown of the essential processes involved in using a SAFE note for your startup:

An investor contributes seed capital in exchange for future equity.
The original investment is used to grow the company.
Once you've made progress, you'll need to find other investors to enable a post-money valuation.
With this information, you can calculate the company's new price per share.
You can convert the SAFE note into the appropriate number of shares, as calculated pursuant to the terms of the note, in the company and distribute them to the SAFE investor once you know the price per share.

The Essentials of a SAFE Note

There are a few key terms in SAFE notes that affect how they finally convert to business equity:

Discounts: SAFEs may offer discounts on future converted stock, often ranging from 10% to 30%. This means that the investor will be able to get a discount on future financing when purchasing shares. For example, if the company offers a 20% discount to SAFE note holders and achieves a valuation of $10 million, with shares available to new investors at $10, SAFE note holders will be able to purchase their shares at $8, saving 20%.
Valuation Caps: A valuation cap is another technique for an investment to earn a greater price per share than future investors. In SAFE notes, valuation caps refer to the highest price, or cap, that can be utilized for determining the conversion price.
Most Favored Provisions: If there are numerous SAFEs, this term requires the corporation to notify the first SAFE of the change, as well as the conditions of the succeeding note. If the first SAFE holder deems the terms of the second SAFE to be more favorable, they might request the same.
Pro Rata Rights: Pro rata rights, also known as participation rights, allow investors to invest more funds in order to maintain their ownership percentage during future equity fundraising.

SAFE Note Formats

You can typically choose from at least four different scenarios when issuing a SAFE note:

No discount, but there is a valuation cap.
Discount, but no valuation cap.
Discount plus value cap
No discount, no valuation cap

There are other rights on options, warrant rights, rights of first refusal, etc., that may be incorporated. With the many potential variables involved, perhaps it’s easier to see why these are issued in non-valuation rounds.

SAFEs have a number of advantages, including the following:

A: Generally Less Complicated than Other Options

One of the most appealing features of SAFE notes is that they are often less than five pages lengthy and easy to comprehend. This is owing to the fact that, unlike a convertible note, there are no maturity dates or interest payments, and thus they do not contain default provisions and representations and warranties that are necessary with a convertible note.

B. Include Vital Requirements

SAFE notes are included in a company's capitalization table, thus there are no complicated tax implications.

C. They tend to reduce the number of points available for negotiation.

Because SAFEs are so straightforward, there are fewer conditions to negotiate, making everything that needs to be discussed easy to understand. In truth, the discount rate and the valuation cap are the only items that need to be agreed.

D. Give founders more power.

As a business owner, you'll have a lot more freedom and flexibility if you don't have any payback commitments or maturity dates hanging over your head.

E. Provide Investor Benefits as well.

Investors have a lot of motivation to use SAFE notes because they can be converted into preferred stock at a discount. Investors may end up with benefits that are actually superior to their initial investment.

The Problems with Using SAFE Notes

SAFE notes have a number of advantages, but they also have certain drawbacks, such as the fact that they:

A. Risk Factors

Because the outcome of a SAFE note is dependent on the company's development, investors cannot be certain that it will ever convert to equity.

B. Investors Don’t Receive Regular Interest Payments

Convertible notes provide investors interest on a regular basis. Because SAFE notes aren't loans, investors don't get any interest or payments. As a result, investors may make less money over time.

C. Dividends should not be paid out

When a firm performs well, it often pays out dividends to members/shareholders in the form of cash or new shares. SAFEs generally do not pay dividends to their investors. Investing in a SAFE, on the other hand, does reward an investor with equity.

SAFEs are a new tool with many unknowns

SAFEs weren't created until 2013, when a team at Y Combinator, a Silicon Valley incubator, decided that a financial mechanism to make seed investing a little easier was needed. This new financial tool is efficient and effective in the short run, but we still don't know what the long-term ramifications will be for business owners and/or investors. Furthermore, because SAFE notes are new, investors and lawyers may be less familiar with them and, as a result, less knowledgeable or willing to use them.

Pre-Issuance Valuation is Sometimes Necessary

SAFE note fair valuation, commonly known as a 409a, to determine the fair market value of your company stock.

Minimum Requirements

The lack of a minimum equity threshold for conversion in SAFEs can have a negative impact on future investments. Minimum criteria allow you to change the terms of the note, allowing smaller investors to compete.

Potential for Reducing Future Company Valuation

Because they fail to account for prospective dilution, founders may unwittingly find up holding fewer shares in their company in the future. As a result, investors will be less likely to put money into the business.

Summary

Finding finance as a startup is generally one of the most difficult tasks you'll encounter. You can make the best selection for you and your company by understanding your alternatives and learning about their benefits and drawbacks. While still relatively new, SAFE notes offer a wonderful opportunity for you to grow your business without the worry of looming interest obligations.

For a free assessment of the benefits and risks of a potential SAFE note offering for your firm, please schedule a consultation with us here .

Family Office Investments in Small and Mid-Size Companies

Thu, 20 Jan 2022 06:00:00 GMT

Selling your Business to Financial Buyers

Capital has been very inexpensive for over a decade. During that time, individual buyers, angel investors, private equity and venture capital firms have all jumped in to the acquisitions market with both feet, but family offices, who are certainly active players in the marketplace, have shown a bit more reservation about deploying capital in these times of high business turnover.

Why? A conversation I had recently with another family office thought leader is instructive. There are a few basic reasons family offices have been less active than other players:

Family offices are generally a bit more conservative than other buyers in their approach. The dynamics involved in family office decision making often dictate that it will go through extra layers of consideration before a final green light is given on any deal. The needs of individuals within the family are often given significant consideration. There might be a step in the process to dig deeper into the question of whether a particular company and its place in the market really fits the family’s vision and its mission statement. The personalities of the individuals involved may dictate a slower, more reflective process as well.
Deployment of capital comes with a very different set of calculations. Family office investments are often made from the pool of past earnings and asset accumulation from the original business of the family. This is quite different than it is for other buyers. Individuals frequently go to the SBA looking to borrow for a deal. Private equity shops raise funds intended for deployment into new deals. The same is not commonly true of the family office. While SBA funding may sometimes be readily available for a deal, the borrowing covenants often feel riskier to a family office because they may have to put more assets at risk through personal guarantees. Most family offices, though some do, do not have private equity funds to dip into in order to make an acquisition. Thus, one way of another, the family office is likely to put a lot more at risk with any acquisition than alternative buyers would.
The structure of most family offices is built around the management of liquid assets. Investment managers are focused on the stock market and that’s where most family office money is placed and where it is intended. It’s not at all that family offices aren’t also active investors in private companies, but it’s natural and easy for the family office to make investment decisions within the stock market, but to be much slower to make a large investment in a smaller company.
Finally, the strategic decision to buy a private company takes a level of concentrated energy it is difficult to garner from within a family office team. If you have one decisionmaker it’s much easier to target, identify and move forward with a buy decision and everything that involves than if you have five or six decision-makers who have different ideas of what the best company to buy would be

If you represent a company that is on the market and you’re seeking a buyer, the fact that there are large pools of cash available within the family office network makes them an attractive place to go to seek out a prospective buyer and it’s wise to look in their direction. If there is real interest, almost by definition they are going to be qualified. But by no means is it a guarantee that you will find a buyer from within that circle. Many times, interest is genuine but tepid. Decision-making can take a very long time.

I would never steer a seller away from the family office pool of potential buyers, but I would also advise gaining a good understanding of what it takes to get a deal done within a family office versus other buyers.

The overall pool of potential buyers has never been larger than it is today. Do everything you can to find the right one, the ideal match to fit your needs. The best and most likely buyers are those who are already doing something very much like you are, at least having an understanding of the space you work within.

Family offices tend to make both great partners and buyers when they are the right fit. Deals move along fairly quickly and without hiccups whenever your buyer is well qualified to begin with. But if the deal never gets to an LOI, it won’t get to closing. Be very clear and intentional in your conversations with a family office prospect. Both sides will be glad you did as you move forward.

If you are contemplating the sale of your company to a family office, Landmark's expertise with these types of transactions can be a great asset to your effort. Please contact us today if we can be of assistance. Feel free to schedule a time here .

How Sales and Use Tax Impacts the Value of Your Business

Tue, 11 Jan 2022 19:38:00 GMT

Sales and Use Tax Planning for 2022

A very simple axiom I follow is that not all tax savings are beneficial to your company. The oddity of the federal income tax is that the more money you make, the more you pay in taxes. Thus, any time you increase your income, you also pay out more in income tax, and this reduces your overall net cash flow. If you try to minimize taxes, as most small business owners do, you have to be able to report less income to lower taxes, and most of the means you have for doing so also reduce cash flow.

In short, income taxes are basically a trap to most businesses that cost them needed cash flow and distributions to owners that deprive them of resources to grow the business or take more profits for personal use and benefit. The income tax system is designed to take away from profits and use it to redistribute earnings as the government sees fit. It’s a tax on success – quite literally.

The longer-term trap for moderately successful small businesses who carefully manage their tax bills from year to year is that it reduces the long-term value, or the going concern value of the company. Whether the owner accomplishes through the redirection of cash outside the business, as many do, through the maximization of certain expense items that have questionable benefit to the company’s growth or profitability, as most do, or just through sound tax planning practices, anytime income taxes drive decision making, the business must decide to trade off valuable cash flow, which in turn affects the long term valuation of the company, in place of increasing profitability and net company valuation.

The correlation between net reported earnings and enterprise valuation is simple and direct. An average of net cash flows over a period of years is used as the base line for company valuation at any fixed point in time. The number is factored by an industry multiplier that tells the company how much it actually worth based on a number of “turns”, i.e. years the type of business should take to earn all of the profits that justify its total cost. Thus the higher the cash flow, the greater the company value, and the lower the cash flow, the less the company value.

Of course then, if you are pulling money out to avoid higher taxes, the cash flow and valuation both go down. But it is also true that as you pay more in taxes, you lower cash flow. Taxes are, after all, an expense of the business.

But what if there are types of taxes you could reduce without conversely harming your bottom line? What if there are taxes that are, more strictly speaking, just dead weight on your P&L (as it feels as if all of them are), and you could unload them without simultaneously hurting after-tax cash flow – or better yet, actually improving it?

Because sales and use taxes are not taxes on your income, you do not trade off tax savings for cash flow when you minimize them. Said differently, reducing exposure to sales and use taxes, ends up increasing net cash flow and you and your company are better off all the way around.

So if your only income and expense were: $1,000,000 in gross revenue, $100,000 in sales and use tax, and a 10% income tax on net income. Then you can see the following is true:

Lowering income tax requires a reduction in cash flow and company value: If you incur other expenses to lower your income tax to zero, the business's net cash flow would also have to be zero ($0 = 10% of $0). While you may be able to enjoy some travel and entertainment as part of the tax reduction effort, the long-term value of the business will suffer nonetheless.
General increases in cash flow also increase income tax exposure: Simply stated, if you go from $1,000,000 to $2,000,000 in gross revenue, but your expenses do not change, your income taxes will increase by another $100,000. Does anyone want to pay that?
Lowering sales and use taxes, however, create a direct increase in net cash flow, and actually cut your overall (not income tax but overall) tax expense. As an example, let’s say you could eliminate sales and use tax altogether - $100,000 back to your bottom line. Now your pretax cash flow is $1,000,000, income tax actually does go up to $100,000 (10% of $1,000,000), but your overall taxes are down from $190,000 ($100,000 +90,000) to $100,000, and this after-tax cash flow is now improved by the $90,000 savings you’ve accomplished on your total tax bill.

If these were actual numbers, you would be receiving a 9% cash flow increase just by properly addressing your sales and use taxes. While real business savings may be considerably less than this amount, in every case, you will increase net cash flow, decrease overall tax burdens and enhance the long-term value of your company by properly addressing sales tax issues within your company.

It's something most businesses can ill afford to ignore. But once you realize cutting your sales and use tax expense is a win-win-win proposition, you still have to do the actual planning and execution, of course, in order to accomplish that goal.

In our next installment, we’ll discuss some ways you can accomplish this goal, without incurring any extraordinary expense in order to do so, and here’s a teaser: because the formulas for sales and use tax are so mathematical, using the right software to accomplish your goal can make it much easier than you might think.

As always, contact Landmark Advisors if there's anything we can assist your business with today!

What Class Actions Suits are Most Likely in 2022?

Thu, 06 Jan 2022 06:00:00 GMT

False Advertising Particularly Flavored Food

Flavored food lawsuits are on the rise, with class actions alleging that many vanilla-labeled items aren't genuinely flavored with vanilla beans or extract, but rather with other substances. The Ninth Circuit upheld the rejection of a putative consumer class action alleging that Trader Joe's mislabeled its store brand honey as "100% New Zealand Manuka Honey" when testing revealed that only 60% of the honey was produced from Manuka flower nectar. No. 19-16618 Moore v. Trader Joe's Co. (9th Cir. July 15, 2021). The importance of the "reasonable consumer" criterion and the context in which information is supplied to consumers in determining whether advertising is liable to mislead was emphasized by the court in reaching its ruling.

False advertising claims are now challenging undefined "Green" claims such as "sustainable," "eco-friendly," or "ethical and responsible." While litigation over "natural" and "non-GMO" products continues due to the FDA's unwillingness to provide guidance on the meaning of these terms, false advertising claims are also challenging undefined "Green" claims such as "sustainable," "eco-friendly," or "ethical and responsible." Both the FTC and the FDA have stated that regulating labeling, standards of identification, and advertising are priority priorities under the present administration. The FDA has been asked by the House Appropriations Committee to prioritize certain of these labeling and product requirements in order to help consumers comprehend them and, perhaps, give more clarity in litigation. Each year presents new legal horizons, and 2022 will be no exception.

Privacy Rights Under 'TransUnion v. Ramirez'

The United States Supreme Court's decision in TransUnion v. Ramirez may have dramatically weakened the effectiveness of various privacy regulations. The decision revisits the issue of standing and privacy harms under the FCRA, which was first raised in 2016 with Spokeo. In TransUnion, the Supreme Court considered whether members of a class can claim damages if they lack Article III standing. "No concrete harm, no standing," the court stated emphatically in its decision. "Every class member must have Article III standing in order to collect individual damages," says the court. When a matter goes to trial, the plaintiff's bar and class representatives will be obliged to prove a specific injury for each member of the class. The Supreme Court left the question of whether and how this ruling should be applied to class certification unresolved until 2022. Furthermore, federal standing laws have a habit of trickling down into state court judges' minds.

As a result, TransUnion may have ramifications beyond the federal government.

'Facebook v. Duguid' , Autodialing and Do Not Call or Text

The Supreme Court resolved a circuit split on the definition of an ATDS under the TCPA in April 2021. "Congress' definition of an autodialer requires that the equipment in question use a random or sequential number generator in all situations, whether storing or creating numbers to be called," the court said. In plain English, the ruling overturned precedent (including from the 9th Circuit) that had established liability for platforms that made calls or texted from a pre-generated list of phone numbers. Though some courts have allowed cases to proceed without pleadings, the trend at summary judgment now appears to favor defendants, and courts at both the district and circuit levels are expected to spend the next few years elaborating on and interpreting the Facebook decision.

While Facebook is great news for defendants facing (or potentially facing) ATDS claims, the TCPA is far from dead, and plaintiffs' lawyers will likely focus more on non-ATDS statutory claims, as well as claims based on claimed violations of analogous state laws, in 2022.

Web Content Accessibility Guidelines

The number of cases filed in state and federal courts against small and medium-sized enterprises whose websites are allegedly in violation of the ADA increased in 2021. Since the Department of Justice withdrew its support for the Web Content Accessibility Guidelines (WCAG) 2.0 in 2017, it has been unclear whether businesses are obligated to make their websites ADA compliant, and whether WCAG compliance is a mandatory component of compliance. Because of the lack of guidance, some courts have ruled that a company's website qualifies as a "place of public accommodation" under the ADA, even if the company does not have a physical location that offers a "nexus" to the website. Some courts are finally beginning to push back against the torrent of litigation. For example, the Eleventh Circuit ruled in Winn-Dixie in April 2021 that websites are not "places of public accommodation" under the ADA. In September 2021, the California Court of Appeals affirmed a jury verdict in favor of the defendant hotel management corporation in Omni Hotels Management, after the jury determined that the plaintiff lacked "bona fide intent" to use the defendant's services.

Without substantive participation from federal and state legislators and regulatory agencies, the trend of appellate courts deciding consequential decisions about the ADA and the Unruh Act in 2022 is almost certain to continue.

The biggest class action settlements that remain open going into 2022 are cataloged and listed here.

Conclusion

Courts across the country are expected to hear many new cases and address the implications of recent Supreme Court judgments on consumer class action litigation in 2022.

In 2022, businesses should keep tabs on new developments in the areas mentioned above, as new cases come to the courtroom. For assistance, in risk management, litigation planning, litigation support, investigations and/or research, contact Landmark Legal Services or schedule an appointment with one of our trained attorneys today.

What are the Qualifications and Skills You Should Look for in Hiring a CFO?

Mon, 03 Jan 2022 20:06:00 GMT

Chief Financial Officers (CFOs) are a vital teammate in the success of a growing, middle market business. Among their various roles, they oversee the economic risks and growth opportunities within an organization.

They are imperative to the success of the company. It is their job to manage for high quality enterprise ventures, put together financial reports, and work with different executives to make sure that they are on the right track in attaining the company’s goals. In order to accomplish their duties properly, CFOs must have the proper skills.

CFO Skills Needed

The skills of an effective CFO vary from company to company. However, there are some simple requirements for all CFOs. First, the candidate needs to have at least a Bachelor’s degree in Business Administration, accounting, finance, economics, or a different associated field. Additionally, a CFO should have valuable working experience in accounting and finance with other companies. Finally, a CFO should have strong managerial and decision-making experience.

Aside from these, a CFO ought to have a broad set of “soft skills” including strategic vision, team orientation, a disposition to work collaboratively with the CEO and other managers, the ability and willingness to delegate and internally driven ethics that demand that he always chooses the honest and complaint response over a response that will yield an immediate result, or at least the appearance of a particular desired outcome.

Let’s take a look at the competencies and skills that a CFO needs to possess to help your company thrive.

Problem Solving

A CFO will need make important decisions nearly every day that affect the future of your company. One of the talents the CFO must bring is to be a “quick read” to see problems others might not notice, and to offer solutions to those problems. Sometimes the solutions may be as simple as something he can provide with a spreadsheet. Other times it may require the engagement of internal team members, and still others might involve looking to third parties to resolve, as in the case where a software conversion might be the only to achieve the outcomes desired by management.

Leadership Skills and Strategic Vision

Whereas a Controller or managerial accountant may be able to provide sound numbers, analysis and financial reports, the CFO needs to be able to use all of the above in order to advise the CEO and Board on the important strategic decisions the company should consider. The CFO should guide these decisions, both in terms of deciding what the options might be, and then pointing out the best way to pursue the particular option chosen by the management team. At all times, the CFO is a primary influencer. She is not in the room to be the final arbiter, but instead to be the primary advisor on the most important decisions the CEO and Board will ever make. Trust then, is essential between the management team and their Chief Financial Officer.

Cash Management, Financial Accounting, and Corporate Finance Competence

Down the list from problem solving and leadership, core competencies for a good CFO include a solid understanding of financial accounting, the ability to oversee cash management (or treasury) of the enterprise, and all aspects of corporate finance. This set of skills is inherent with the job of CFO.

Strong Work Ethic

Similarly, it is equally inherent that a CFO will be a person possessed of a strong work ethic. In a marketplace where remote and fractional CFO work is rapidly becoming the norm, the definition of “strong work ethic” has to expand beyond the old notions of long hours in the office. Instead, productivity is absolutely tantamount. Productivity for the CFO is measured against comprehensible metrics. There is also a vital component of determination to get the job done. So for example, if the company has decided it needs to obtain a $5,000,000 line of credit, the CFO should stay the course, be involved late at night or early morning, whatever it takes to get the financing needed for company growth in place on a timely basis.

Trustworthiness

A CFO is a primary, financial fiduciary for the company. There is an investment of trust that comes with the role. Any breach of that trust is immediate cause to terminate the relationship. But this rarely happens. Why? Because CFOs tend to be among the most trustworthy business people you can have on your team to begin with. Moreover, as time goes on in working with your CFO, the things he accomplishes for you become the past measure of his ability to succeed in the future. Each small success begets more trust as the relationship moves ahead. While high turnover is common in many corporate roles, for the CFO, even if he is fractional and remote, it is quite common that the only time you would see him leave the organization is when there is an exit, or buyout of the company.

Conclusion

While the foregoing does not endeavor to create an exhaustive list of the skills you should seek when hiring a CFO, it certainly comprises the most important of those skills the trusted financial professional you hire should come to you with. If you can use help assessing your needs for CFO level services, please use schedule a time for a conversation with a trained professional at Landmark Advisors today

Blockchain, Cryptocurrencies, NFTs and Smart Contracts

Fri, 03 Dec 2021 06:00:00 GMT

The Intersection of Fintech and the Law

While the club of elite tech leaders continues growing in its understanding of the use and value of the blockchain, even among the most skilled and seasoned business owners and investors, the learning curve around blockchain technology remains very steep. It's important to understand how its many parts work together, as they all have incredible value in the marketplace today. So among many questions that surround all things fintech (and cryptocurrencies), the question of what exactly is the blockchain is one that is screaming for an answer that everyone can understand.

Blockchain

So what is the blockchain? Blockchain is a shared, immutable ledger for tracking assets, recording transactions and creating a trustworthy environment for market transfers via parties’ chosen medium of exchange. Blockchain comprises a list of transactions that can be viewed and verified with complete transparency. The blockchain technology, when coupled with media for exchange, usually cryptocurrencies, make it possible to transfer value online without the need for any middleman like a bank or card processor.

When you think about this for even a second, you can see the awesome power that lies behind the technology. No intermediary, complete transparency – suddenly transaction velocity becomes extraordinary. There’s just one thing missing – ubiquity. As soon as we reach a point where it is commonplace for people to transact business on the blockchain, we will eliminate the need for traditional banking. But until that day arrives, monetary exchange continues to be delayed and exposed to fraud in the banking system.

But if there are risks from the traditional system of exchange, aren’t there also risks on the blockchain? Yes, since the markets have yet to prefect a way to make or exchange currency without exposure to some risks, they still exist. Put another way, there is always, at least in the present time, some kind of risk-reward trade off.

On the blockchain, risks arise from the very benefits they bring. “Anonymity, immutability, and distributed control make blockchain a disruptive technology. They are also its greatest vulnerabilities.” The Risks and Unintended Consequences of Blockchain. Hmmm. What does this mean? According to Stuart Madnick, Profess of Information Technology at the Sloan School of Management at MIT, over $1,000,000,000 in loses due to fraudulent transactions on the blockchain occurred between 2011 and 2018. At the time, this was disproportionately higher than losses occurring in the traditional banking system. That is changing, but the data to analyze the relative security at this point is a bit sparse and complicated to interpret.

While the trend in data security on blockchain versus traditional exchanges has changed trajectory with the advent of greater security and control in the blockchain, by no means is it gone. The blockchain today offers more safety, even to the banking system itself than historic means of protecting transactions. But a balanced understanding of the distributive nature, immutability and anonymity it provides is vital to balancing the risks and benefits of blockchain usage. The most important things to know about the blockchain, at this moment, are that it is out there, is highly sophisticated, and is enabling transactions of a type and at a volume we have never seen before.

Cryptocurrencies

In order to make the blockchain viable, it needs a viable medium of exchange. Cryptocurrencies have more than filled this void. Today, the market capitalization of Bitcoin exceeds $1 Trillion, Etherium is approaching $500 Billion, and the third most capitalized cryptocurrency, Binance Coin will exceed $100 Million any day. To those who remain in doubt about the future of cryptocurrencies, they are not going anywhere anytime soon. They are safe, albeit volatile investments, that should be expected to appreciate in value over time. As central banks continue to devalue their own currencies, the alternative to them is the cryptocurrency markets, and the banks have shown they are willing to watch their own worth plummet, all to the benefit of cryptocurrencies and their investors.

Investopedia defines cryptocurrency as:

… digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

As the world’s central banks are increasingly less stable, and as the US dollar declines in its perspective as the world’s currency, cryptocurrencies are gaining in relative value. More slowly, but necessarily, they are also gaining in terms of acceptable use in the marketplace. And this will continue, organically and practically. The organic growth in crypto may be slowing a bit as merchants realize and recognize the challenges with the various tax implications and accounting issues. Practically speaking, however, this is not likely to inhibit or prevent the use of cryptos in less conventional ways, i.e. in marketplaces of exchange of personally owned property and on the various cash apps that already exist.

With respect to the cash apps, think of it this way. The value of a transfer in dollars always has a corresponding value, in say, bitcoin. While this value can change quite rapidly, whatever it is can always be measured at a set point in time. Thus, if you send your niece $100 on Venmo, and the current valuation of bitcoin is $50,000, you have also used .002 bitcoins to make the purchase.

One of the interesting consequences of the rapid increase in value of bitcoin and other cryptocurrencies is that it this will likely ensure the dollar will continue to be used as the baseline to calculate the store of wealth, or account values of electronic accounts. Ease of calculation, i.e. $100 vs. BC.002, familiarity with the dollar, consistency across platforms and the elimination of the regulatory headaches associated with the government’s tight noose around profiting from crypto usage, all mean the dollar has, in a sense, protected its own longevity for the foreseeable future.

In no way, however, does that mean, that cryptos won’t continue to increase in value, nor that they won’t normalize as trading currencies through the wider marketplace over time. Sheer demand for their use will continue to force valuations higher.

NFTs or Non-fungible Tokens

NFT stands for non-fungible token. NFTs are tokens that we can use to represent ownership of unique items. Merriam-Webster defines fungible as interchangeable, freely exchanged or readily traded. Non-fungible then means something that is, in and of itself, not ripe for exchange or challenging to trade.

NFTs, however, permit the tokenization of things like art, collectibles, even real estate in ways that enable their assigned values to be freely traded in. They can only have one official owner at a time (like a financial security) and secured by the Ethereum blockchain. Yep, Ethereum has a bit of a monopoly on the NFT market of today. No one can modify the record of ownership or copy/paste a new NFT into existence. Ethereum Definition of NFTs.

The concept is rather simple on its face, but it can get confusing very quickly if you deviate from core principles on how they work. So to understand them better, let’s look at how NFTs compare to the traditional uses of the internet:

1, Permanently Unique: Where a .pdf, .jpeg or .docx can be copied and reproduced with very little restriction, an NFT is non-duplicative, the one you see is the only one that exists, anywhere. This is different for the internet. Generally, as long as you have a password, you can duplicate anything you find. Not so with NFT’s. Blockchain security protects them from being used in different places. Have you ever been subjected to fraud over a ticket for a game or a concert. NFT technology can prevent this. If a ticket is set up as an NFT, the only ticket that will get you in the game is the one with the unique identifiers on the blockchain corresponding to the seat number you pay for.

2, Record of Ownership: Ethereum’s design of blockchain architecture has essentially created a unique, digital asset registry. So if you create content, place it on the blockchain as an NFT, you own it. You can sell it, gift it or otherwise exchange it, but it will always and only have one owner. In short, you have created the most secure copyright you could ever imagine.

3, Breadth of Exchange Markets for :

a. Trading different types of NFTs – this just means that if you wanted to exchange blog article for digital artwork, now you can! And if you want to fractionalize (that is divide the NFT into unit shares), you can do that too.

b. Newly created content of all kinds – back to the previous example, written material, artwork, music, household goods, food, crops, livestock, acreage, building materials, services, you name it – all of it can be converted to NFTs.

4, Platform for Exchange: The blockchain replaces the need for secondary platforms, i.e. Spotify, YouTube, TikTok, etc.. But the blockchain is not an intermediary platform like any of those, or even like Robinhood or E-trade. It is merely a secure place to store your information. You are the one who receives all the royalties, you do not pay subscriptions and you cannot have your content censored – it’s yours to treat exactly as you wish.

5, Digitization of Material Things: Above, I mentioned artwork, food, acreage, etc. – all of these can be converted, not just into securitized assets, but literally into digital asset representations of the real thing. So it is now possible to own a 2% share of someone else’s house, or dog, or coffee mug. Perhaps you’re beginning to see both the extraordinary benefit and the potential for complexity NFTs create. The world is changing, and NFTs are enabling the change at a faster rate.

If you haven’t already deduced this, the opportunities are endless with NFTs. To give you an extreme example, you could fractionalize units of the lint you pull from your dryer. As long as you create a unique identifier for it, it goes from non-interchangeable to completely interchangeable on creation. This is an amazing step forward in the marketplace. And yes, the markets will have to come to appreciate that some things really won’t sustain as a lasting value – just as there are companies on Wall Street that go bankrupt, so too will some NFTs. They will always be worth exactly what the market for them will bear.

And just as there are Tik Tok videos, or Tweets, today, that in and of themselves seem to be highly valuable, a day will come when they are valued at something close to zero. At the same time, some will sky rocket in value, and yet there will be others that maintain a relatively static value. I’m not going to dive into investment strategies or predictions of what kinds of NFTs will breakout, but I will suggest to you that there will be many surprises to look for.

Smart Contracts

Before looking closely at smart contracts, let’s do a quick review, or better yet, offer some parallels between the concepts we’ve discussed above and their counterparts in this advanced world of fintech.

The blockchain compares in a sense to a vault, a safe or a safe deposit box. It is a place for securing what you have.
Cryptocurrencies are the medium of exchange used on the blockchain. They represent the currency of the blockchain environment. Cryptos can be used elsewhere, but non-cryptos are not useful, in general, on the blockchain.
Cryptos are blockchain-based currencies. The intersection of the blockchain and cryptos is the blockchain becomes much like the federal reserve bank for cryptocurrency, especially Ethereum. Thus, other currencies are not directly interchangeable on its blockchain.
NFTs are more like the stocks traded on the blockchain. They fractionalize digital assets in the way that stocks fractionalize company assets. You no longer need the SEC. You don’t need a Secretary of State’s office. You merely need the blockchain.

With this paradigm in mind, then, you can see something that might be missing – contracts that define whose rights are what - enter Smart Contracts.

A smart contract is a contract executed on a blockchain, or distributed ledger.

A payment in cryptocurrency would be made to receive a template contract and would then be available to all parties. Parties can update the contract by mutual agreement before it is executed, and changes would be reflected on the distributed ledger.

Then, once the contract has been agreed, the idea of ‘automatic actions’ can be used to enforce the contract (for actions taken online). For example, with an apartment rental a digital key could be released in exchange for the deposit and first month’s rent. The ledger would record that if a payment is made by ‘x’ date, the key will be released on ‘x’ date. If the renter pays the deposit three weeks early and the owner or renter then changes their mind, it is not possible to refund the money and end the contract. The ‘if-then’ clause has been triggered and will happen regardless of other factors, so the key will be delivered regardless of either party’s wishes.” The Lawyer’s Practical Guide to: Smart Contracts – Thread Legal.

From the above, you might presume that Shakespeare’s famous quote regarding “killing all the lawyers” is finally fulfilled without having to shed any blood. As a lawyer myself, I might be quick to reply, don’t get ahead of yourself.

Elimination of Over-lawyering: First, please note people have worked very hard to find ways to work around the use of lawyers for a long time. Let’s be honest, no one likes to pay legal fees. And when it comes to drafting, reviewing or negotiating contracts, it is quite common to think of a lawyer’s work as just work to add “legalese” to make documents more dependent on the lawyers now and in the future. I won’t deny that there are some lawyers, especially in big firms, with clients who have very deep pockets, who work hard to make sure nothing happens without consulting with them first.

Irreversibility Problem : But if you look at the example given by Thread Legal above, you can see one of the major problems with a Smart Contract. I call it, the “Hotel California” problem, except that instead of checking out any time you like but never be able to leave, you can leave any time you like but you can’t get a refund and there is no way to seize upon the chance to get the money back.

Developers are Imperfect too: That isn’t the only catch. In essence, the choice to use a smart contract is a choice to trade in the knowledge and skill of the lawyer, for the knowledge and skill of the developer. This might not be the best choice if there are any unobserved risks in what you’re doing with the contract, and there usually are. If bugs are included in the coding, those bugs flow through to the contract, and they may not be detectable until the contract is in full swing. If you decide you want to mitigate the risk of the smart contract using a lawyer, you are at least creating a partial duplication of labor, i.e. there are now two professionals working on your contract instead of just one.

Blockchain Effectiveness: A third problem with smart contracts is they can only be as good as the blockchains on which they live. This should make them very “secure” in theory, but you may not know whether that’s true or not.

There are lots of ways to approach smart contracts, just as there are many ways to approach NFTs, cryptocurrencies and blockchains. To discuss, explore or consult with our firm, please reach out to us here .

Negotiating Covenants Not to Compete in Employment Agreements

Sat, 16 Oct 2021 05:00:00 GMT

How Noncompete Clauses Work

It’s very common for employment agreements to contain covenants not to compete, These covenants are often called noncompete clauses or noncompete agreements. They may be included as part of a broader employment agreement, or they can be set up as an entirely separate agreement. In the latter case, they will usually be attached as an exhibit to the general employment agreement, and may even be incorporated into the broader agreement as well.

What is a “Noncompete”?

A non-compete clause or agreement is an agreement preventing an employee from working for competing firms after leaving a business. Covenants not to compete are used widely to apply to many different professional roles but are especially common relating to sales roles. Noncompete agreements are generally enforceable only to the extent they are considered to be reasonable both in terms of the time they will last and the geography they cover. See GFA Int'l v. Trillas, 3D21-619 (Fla. App. 2021). This is a general rule with wide application in the majority of American jurisdictions.

Reasonable Limits

What is considered reasonable, on the other hand, varies widely from state to state. In a majority of states, noncompete clauses are generally allowed, as long as the scope of the restrictions is reasonable. For example, in Wisconsin, a covenant not to compete is considered to fall within the parties’ freedom of contract. Its law expressly states that restrictive covenants in employment contracts are enforceable, if the restrictions imposed are reasonable, and the employee receives some independent consideration for the agreement before signing on as an employee.

Some states refuse to enforce almost every noncompete. California, for example, bars covenants not to compete in most situations. Meanwhile, Texas gives great latitude to the parties to a contract in entering noncompetes. So the first thing to be aware of is which state’s law governs the contract, then look at how that state treats the law. We have no intention of looking at the laws of every state in this article, as many of them are quite similar, but it’s vitally important to know what you’re dealing with before entering into such an agreement.

What Makes a Noncompete Reasonable?

Generally speaking, most courts are willing to enforce noncompete agreements that have time limits lasting no more than six months. But many agreements restrict the employee for more than six months and agreements for up to two years may be upheld, and frequently, they are upheld for at least one year. Once the restriction goes longer than a year, more and more agreements are either voided or “blue lined”. Blue lining is the means by which a court limits the term of the noncompete, so for example, it might take, a two year limit and reduce it to one year.

Next, the limits must be reasonable in terms of geographic enforcement. This is much trickier as it can often be limited to a local community, but the term may be expressed nationally or even internationally. How a court will treat the geographic limits depends on many factors including: the actual language of the agreement, the type of industry you work in, the kind of job you hold, the scope of the work you were doing and how competitors treat the regional limits around their own employees.

What Happens if You Breach a Non-Compete?

Typically, an employer holds a big advantage in terms of the money it has available to enforce employment agreements. This is why so many employees are cautious about breaching them, even when they may be confident they are unreasonable and unenforceable.

But if that is the case, why bother to sign an agreement to begin with? Typically, a noncompete is made a requirement to obtain employment. The employer will often treat the agreement as non-negotiable. So employees regularly sign them hoping they will be able to avoid enforcement later.

Sometimes they can. Many times employers will negotiate with employees as they depart and allow some parts of a noncompete to be amended, or pay the employee for a period of time to reinforce the noncompete, but this is less common than it is for the employer to seek direct enforcement of the agreement.

Injunctions and Temporary Restraining Orders

It is quite common for a noncompete to specify that, because other remedies are inadequate, the employer is entitled to use injunctions or restraining orders in order to enforce the noncompete. From the GFA, Int’l case cited previously:

"The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant." Surgery Ctr. Holdings, 318 So.3d at 1278 (quoting § 542.335(1)(j)). "Thus, 'a party seeking to enforce a restrictive covenant by injunction need not directly prove that the defendant's specific activities will cause irreparable injury if not enjoined.'" Id. (quoting Am. II Elec[tronics]., Inc. v. Smith, 830 So.2d 906, 908 (Fla. 2d DCA 2002)). "A party only needs to prove a violation of an enforceable restrictive covenant to be entitled to the presumption."...

Decisions like these place a very strong weapon in the hands of an employer. First, they do not have to show any actual harm in order to obtain an injunction, they only need to show that it was breached, which is often quite easy to show. But second, the discretion that is given to trial court’s means there may be no chance for an employee to even have the reasonableness of the agreement considered before an employer obtains an injunction against him. And if the employer obtains a temporary injunction or restraining order, it’s too late for the employee to do anything about it. The new job opportunity may be lost, and the old one is gone. Thus, where a noncompete is ultimately enforceable, it may provide such a great weapon of prevention against the employee, that few employees will ever challenge the agreement once it is signed.

Conclusion

The best time to seek enforcement of a noncompete, is before it is signed. Once a noncompete is signed, the enforcement power. It’s wise to consult with an attorney who is trained and skilled in the art of negotiating such terms with employers. Please contact Landmark Legal Services today to assist you as you go through the decision process and work to negotiate a covenant not to compete with an employer.

12 Ways Venture Funding Gets Angel Deals Done

Mon, 11 Oct 2021 19:20:00 GMT

Angel Deals: The Venture Capital Pipeline

Angel Deals come together in many shapes and forms. In this article, we provide an overview of many of the ways Landmark Advisors has helped companies find investment capital in the past. Below you can find 12 lanes for venture funding to help angel deals get the capital they need, and some thoughts on how relationships can develop with each. Please note, these methods assume a hypothetical situation where some money has already been raised from friends, family and founders. So we are now examining situations where additional capital is going to be necessary to keep the company moving ahead, so it is typical of what’s known as a Seed Round, or possibly Series A.

There are two absolute constants in finding investors: hard work and hope. Of course planning, strategy, marketing, team building, etc., are all involved, but when it comes down to your ultimate success, you will always have to work hard, and truly, you have to believe that the capital you need is around a corner. It may not be the next corner, but if you keep seeking, it will eventually be there.

Angel Investing Gifts

This is why we start with Unsuspected Angels, Secret Investors and even prayer. You will find the right investors because you are truly in the right place, business wise, at the right time, and of course, because you’re doing the right things. So we walk through these twelve avenues of opportunity for the least work on the company’s end toward the most. This isn’t linear, nor is it absolutely chronological, but be sure you can find plenty of startups who’ve walked through each one of these means of raising money until they finally reached their goal, and when they did, it likely followed a path similar to the outline of this article.

The Unsuspected Angel

What’s amazing with this type of funder is that the company s/he funds was probably working very hard and growing well organically before she got here. So you might ask, if that is the case, how does this type of funder even get involved with the company. There are many possibilities. Often, it’s a long time customer who just decides s/he believes in the business and wants to see it grow. It could be a strategic buyer in the same vertical as the company, but one who isn’t ready or has no expectation of actually buying the company out.

Another possibility is that it is friends or family who have watched the struggles an owner has gone through and sees the opportunity if the company just has enough capital to move ahead. The bottom line is hard work pays off. Stay focused on what you do well, and you don’t know who is already in your circle who might help.

Angels Who Find You

Similarly, there may be investors watching your work you don’t even know exist. The only difference between this category and the last is that, while you probably don’t know who these people are at present, they are keeping tabs on you nonetheless. Here’s an example: an investor in Florida has seen the work you’ve done developing new software code. They know about you because through industry publications. They don’t have a specific need for your product themselves, but they see the interest it generates and know it could go somewhere with the right capitalization. They reach out to you and now you have an opportunity you never thought existed.

Ask, Seek and Knock: The Founder’s Prayer

While this is not the specific subject matter of this article, actually it’s not even a category of investor as titled, in the future we will share stories of many people who have found their investors when their primary search tool had been nothing but hope and prayer. Granted, these are mostly smaller deals, but they are funded deals that became highly successful businesses once they had enough money to get off the ground. But don’t take for granted that your hopes and dreams themselves are entirely valid, and the right investor for you might be someone you could not even imagine would connect the dots. It happens more than you might think.

The Work of Fundraising

These first three categories are all categories that connect you to investors who find you rather than you finding them. If investors find you, you probably don’t need help. But in order to find investors yourself, you need some direction on how and where to find them. Here are the best categories Landmark Advisors has found from years of involvement with angel networks and investors and some ideas on how to build relationships with them.

Research Park Investors

If it’s not obvious, this category largely consists of investors in science and engineering startups. The innovation that’s come from this realm in the last generation is staggering. Normally, they are housed on the periphery of major university campuses. “College suburbs” some have called them. So many bioscience and engineering innovators have gained their start in these veritable incubator/accelerators of high tech startups, there seems to be an overabundance of wealth to go around.

One problem though is the competition has become incredibly stiff for these investors. Another is that the attraction and reach of research parks has become so ubiquitous that it’s hard to simply identify who a research park investor is today. They come in many different shapes and sizes from: institutional equity investment funds, corporate partners, private grant makers, governmental or quasi-governmental entities, on campus accelerator funders, venture focused funds, collaborative researchers and individual angels. In future articles, we will dive deeper into each category of investor and help you understand how to approach and raise money from them.

For today, we’re focused more on the “how” of getting to the investment funding you need than on the “who”, so even though a big part of what we’re examining necessarily involves the issue of who it is you’re seeking investment from, we’re looking at how you get to them for the moment.

The Grantmaker

Groups like the Local Initiative Support Corporation (LISC) take their from their pool of combined public and private resources, work with private partners to get capital deployed into local communities and businesses. While there is a lot of work in going through the process of obtaining a grant, the process helps the grantee to build a system of internal control and accountability that develops better long term business practices.

The Team Approach

The concept of a team approach focuses on the outbound effort more than the ultimate target investor. It depends on building a great team internally first, then going to the wider universe of potential investors. When you have a great team of officers and directors on your side, you can financially reward them with an ever increasing internal capitalization of the company, hence increasing equity value. Once you reach outside the internal team for support, as success will demand of you, you will have to pay for service as you go, so it’s very wise to leverage the internal team however you can in order to get as far as you can before you have to go out-of-pocket to pay finders, lawyers and/or brokers.

The Pitch Session

Pitch sessions have dominated the venture capital “ask” world for the past decade or so. Ultimately, all pitch sessions have the elements of The Shark Tank: an innovator presents a short pitch to a group of qualified potential investors, the investors bombard the innovator with questions and make decisions on whether to invest in their product. But then again, most pitch sessions are not televised to an audience of millions, and they also tend to be a beginning rather than a closed end opportunity.

The beauty of the more provincial pitch sessions, held by incubators, accelerators, tech hubs, etc., to connect startups with potential investors, but also to gain collaborative opportunities and enhance exposure to investors. As we develop the Angel Deals platform further, one of our goals is to create pitch related opportunities in many different places to help more startups gain great access both to angel investors and collaborators over time.

Roll Up Your Sleeves

You have a “rolodex”, an email list. Take it for what it’s worth. Of course, you don’t likely want to start by sending a blast email to all of them, but to conduct a “quiet phase” of fundraising where the only people who know that you are actively fundraising are the ones you make direct contact with, by phone or in person. After you’ve reached conclusions about how likely you are to get money from your highest dollar investors, it’s time to go back to the email list and start asking everyone else to consider an investment with you, or at least help identify anyone who’s a good candidate.

Targeted Angels

The next level of pursuit for angel investment is to map out a plan for targeting angel investments and reach out to them by levels of priority. Since we discuss similar approaches, the distinguishing characteristics of targeted angels are the sources where you find them. There is an abundance of angel investor networks, many of which are now online. You can develop carefully tailored search criteria to identify the right targets for investment with you. The other sources available for targeting investors are those that list deals, like yours, that have already been funded thanks to other angel investors. Your job is to find out if they continue to have the appetite for a similar angel deal.

Not Quite Cold Calling

Outside your current set of contacts, there is a wide world of potential investors. This is very much like targeting investors, except that now we are talking about people who haven’t self-identified as investors themselves. The best bets here, are companies in your vertical that may even become a buyer of your company at some point, but need to see you generating earnings first. This can be a great way to set the stage for negotiating a deal for a future buyer if you show them how well you run the company and how much it can earn.

Investment Bankers’ Network

If you’re still short of your goal, there are plenty of investment bankers with incredible access to institutional and individual capital. There is a cost, of course, to choosing this route, and it is frequently quite expensive. Many times the investment banker has required due diligence that must be done before he can engage in fundraising activity on your behalf, and the costs involved in getting that diligence completed can be extraordinary.

The Angel Finder

The place we finish is actually the place you probably should have started. Consider the time, energy, cost, failure and remaining unfunded portion of the project you still have. But if you work with an experienced Angel and VC Finder to bring investors to you, you will short cut the process considerably and it will lead to quicker, more efficient success. Again, there is a cost to make this choice. Finders cannot be compensated the same way investment bankers are. Case law interpreting existing SEC rules prohibits finders from being compensated directly as a broker, i.e. purely with a commission or success fee. The SEC has, however, proposed a rule that would allow for this type of compensation for finders, which would be great news for startups. Landmark Legal Services will be monitoring the progress of approval of this proposed rule.

Conclusion

There are truly many, many ways you can find and attract venture capital for Angel Deals. But it is a maze that has many pitfalls, obstacles and risks along the way. A great place to start is to contact Landmark Advisors and schedule a time for a consultation on the best way for you to succeed in your raise.

How to Finance or Get a Loan to Buy a Business

Fri, 24 Sep 2021 05:00:00 GMT

The stumbling block many people have in buying a business is that they do not have the money to pay cash for the business or perhaps even the money to make a down payment on a loan to buy it. This article addresses the vitally important issue of how to finance or get a loan to buy an existing business.

How Much Money Do I Need to Buy a Business

As a quick rule of thumb, most deals can be financed if you have good credit and 10% of the purchase price of the company to put down as the down payment on the business. This is a pretty standard rule and it’s used by the SBA, the Small Business Administration, which guaranties billions in small business acquisition loans every year. Banks are very willing, even eager in 2021, to lend money to buyers of businesses that have a good track record of earnings. Thus, the most important items in financing to buy a business, are cash, credit and credibility, as in the credibility of the old business to provide for the cash flow needed to service a loan.

Buying a Business with No Money Down

It has become very common for buyers to try to buy a business with no money down at all. Is this possible? Well, yes, but it’s difficult and like any other tradeoff, it comes at a cost. So, first it’s very wise to consider the difficulty in buying with no money down. The seller will either be predisposed to sell it with a “seller note”, or you will have to have a backer who will finance the portion of the deal for which the seller is requiring cash. The first scenario can make the deal much, much easier. It’s also highly uncommon. The second requires a great deal of diligence in seeking out and finding the right investor to make a deal happen. When you find such an investor, expect him or her to take as much control of the company as they desire, and to have terms available to them for financing the deal that work best for them rather than you. But don’t lose hope. It remains very possible to buy a business with no money down.

What Questions Should You Ask Before Buying a Business

It’s always important and right to have a good checklist of questions you ask when you are considering buying any business. When you’re considering financing a business you may buy, there are certain questions that emerge as the most important, and perhaps more than they would be in a cash deal. The first among these is how credible are the earnings that are being reported by the seller? You will want to why there have been significant fluctuations, if any, or why earnings dropped from a peak in previous years. You will also want to know how important the presence of the current owner is to the company’s sales and what impact the change in ownership is likely to have on the company’s bottom line earnings. There are many other questions you should ask, and the trained professionals at Landmark Advisors can help you with all of them.

What to Look for in Financial Statements When Buying a Business

The most important indicators in a selling company’s financial statements come in reviewing what personal expenses may have been run through the business in recent years. While these amounts are generally, properly treated as add backs in calculating the value of the business, but they may also be indicators of questionable management. Through the C-Suite Exchange, we can enlist the help of the right professionals to assist you in determining whether these expenses and other financial statement items pose risk factors to your decision about buying the business.

In all phases and across all areas of need, Landmark Advisors can bring the solutions to the table you need in all your decisions about buying your business. Contact us today to start the process of finding and preparing to buy the right business for you.

Finding Individual Investors for Your Small Business

Mon, 20 Sep 2021 05:00:00 GMT

“Always target the right investors for your own company.”

Finding investors is always challenging. Finding personal investors in unique. The first step you have to consider is the type of personal investor you want to attract. Are you looking for an active partner or partners in your business? Or do you want to attract investment from a passive investor, an angel investor perhaps, in order to fund your own management of the business?

The second vital step in the process is knowing and understanding how much you need to raise from your investors, as well as the type of investment capital you are seeking. While there is truly a big difference in raising $250,000 versus $10,000,000, fundamentally the process is quite similar. But you absolutely need to know your capital needs, and how you are willing to begin dividing the cap table for the company as investors are lined up.

Once the above questions are answered, there are two paths that need to be pursued to continue moving toward getting the financing you need. One of them, the legal and accounting framework, is outside the scope of this article so we will address it further elsewhere. The other is the actual finding of the investors you need.

In terms of actually finding those investors, let me commend the following: through all the no’s, not right now’s and no responses you will encounter, keep asking, seeking and knocking until you find your way to the right matches and yeses that will fund your future success. Whatever you do, keep up the effort until you succeed. Learn from mistakes you will inevitably make, be flexible, but do not give up. The gold in “the hills” is waiting there for the seeker who keeps trying.

Of course, there are tried and true systems and processes to help you find the right investors. So the next step I recommend is to think carefully about investors who have already placed capital with companies like yours, and also investors who are expressly showing interest in projects like your company is taking on. Whenever you find a prospect, research them carefully using Google searches, LinkedIn, and especially the networks they self-identify with. But you must take care to be directed in your search and not to grasp at dark, blank spaces.

Several years ago, I represented a sports equipment company that was founded by a very well connected CEO with a good network of his own contacts. He also had tremendous intellectual property surrounding his company’s product line. Everything looked great and it looked easy for their initial raise. They brought me in 18 months after they started the process. But they hadn’t raised a dime at that time. In the beginning, they thought of anyone with a check book as a potential equity partner. This meant they spent an inordinate amount of time courting investors who truly were not a match for them because they had little or no interest in their project.

When I came on board, we changed the strategy entirely. We spent a full day looking at their database of contacts, the existing relationships they had, the conversations that had been started and those that had not. In the end, we built a prospect list of the best 15 prospects we could find and a second list of the next 30 prospects with whom we knew we had a chance to obtain funding from. Truthfully, as I learn from my own experiences, I frankly thing these lists are still a bit too long. But where did these prospects come from?

No doubt you’re familiar with the “Friends and Family Round” concept of raising seed or pre-seed capital. To me, this is were it all starts. With each successive round after friends and family, all you should do is build concentric circles going out from the furthest edge you last touched. When you do that, there is always a warm connection to the person, and equally important, there is a warm connection to the investment itself – that is, the investment you’re hoping this person will make. Surely, what I’ve just said makes sense to most startups and small businesses.

But to be fair, the startup graveyard is filled with companies who did a good job with that closest inner circle of investors, had great connections with the next sphere of prospects and never got a dime at that level. So this is where some really savvy investment research and the help of a seasoned investment finder can make or break you in attracting personal investors to your small business.

Remember, always target the right investors for your own company. This may seem very obvious, but it bears repeating – often. If you fail to talk to the right people for your deal, you are wasting time with people who can’t or don’t want to be involved. So back to the question we began with, how do you find investors for your small business?

What you have to do is consider the following questions and go to the sources that answer them:
Who has invested before in the type of business you have?
What are there companies?
What type of investment vehicle do they use? Is it completely personal? An angel network? Family office? Work through their financial advisor(s)?
Who are the thought leaders people are following regarding the type of project you’re undertaking?
Who is investing in the companies they are talking about?
Who is looking for investment projects like yours? You may be able to glean a great deal of information from angel network resources to help you figure out this part of the equation, but it is not the only resource to use.

All things considered, the volume of work as well as the experience and expertise it takes to do what is necessary to line up the funding you seek, means you are well served to hire a skilled fundraiser for your business. We’re here to help when you need us .

Targeting Prospects Online when Buying a Business

Mon, 06 Sep 2021 05:00:00 GMT

“Kissing a Lot of Toads”

Recently I heard the process of finding good target prospects described as kissing a lot of toads. I think that’s a reasonable and accurate description of the typical process or targeting prospect companies online when buying a business. But if you’re prepared to make the right kind and amount of investment, you may not kiss more than a few before you find the right one. The key is in the type and manner of investment in the process you make.

The Challenges of Online Business Searches

There is an abundance of resources to find businesses online today. A quick Google search will turn up dozens of site directories listing businesses for sale. These are all right at your finger tips. For each site that lists companies for sale, there may be dozens or even hundreds that are listed on each site. But as one of the most knowledgeable advisors in the space told me recently, “85% of all companies listed for sale on the web do not sell while their listing is live.”[i]

If he’s correct, you have to ask yourself why. The simple answer is that most listed companies have not been prepared for sale and they cannot justify a saleable proposition at the price point they’re seeking. With the M&A market as hot as it’s been, the few that will sell are generally being courted by dozens of buyers at the same time. Some sites, like Buyer Seller Match have elevated the search process to a new level of refinement, making it much easier as a buyer to narrow down the targets you’re seeking and to be sure you’re looking at quality companies on the other side. But these sites are new on the scene and it will take time for them to build the audience and high quality listings you’re seeking. So, at least right now, if you’re spending your time calling on brokers or companies that are listed online, you are setting yourself up to kiss a lot of toads.

Other Options For Finding Prospects Can be Even More Difficult

But there is little you can do on your own to search for companies except by using online resources. Cold calling and door knocking may actually present viable opportunities, but you have to be willing and able to set aside the time to do it and even then, you also need to know who it is you want to target and where you can find them.

Using a Third Party to Conduct the Search for Prospects

The other alternative is to use a third party advisory firm to do the search work for you. This option has some key advantages for you. First, you no longer have to commit the time to a search it otherwise takes to find a viable target. Second, the expertise, experience and tools the advisor has at his disposal will help narrow down your search quickly and simply. Third, the advisor’s expertise goes beyond the search and he will help you be sure to be buying a company with the quality of earnings that enables your success once it is yours. The last advantage is perhaps the most important reason to bring on an advisor for your deal.

But it doesn’t come without cost. When working on buy side opportunities, an advisor is just a broker, not working for you, until and unless he is on retainer. The upfront work and commitment of exclusivity to your needs forces the issue. He has to be working for you, and not for anyone else on the same type of deal. The good news is that, after retainers are paid, buy side advisors typically work for 50-75% of the success fee percentages brokers charge, almost always reduce that fee by the amount of retainer paid and generally have much higher rates of success (70-90%), than brokers do. In fact, they succeed as often as brokers typically fail.

How Much Should it Cost to Use a Buyers’ Advisor?

Starting with the overall success fee that will have to be paid on completion of a deal, the “Lehman Scale” provides a starting point for the level of Success Fee your advisor will charge. After a minimum fee, the Lehman Scale simply charges a reducing percentage fee based on the total acquisition price, i.e. 5- 4-3%, etc. for each $1,000,000 of deal size. Most good buy side advisors flatten the fee to around 2.5-3% for larger deals over $5,000,000. Thus, if you were buying a small trucking company for $3.5 million, you might pay a total success fee that works out to $135,000 or 3.86% of the total on a Lehman scale calculation. On the other hand, if you’re buying a platform IT company for $7,000,000, you might expect to pay a fee of $210,000 to the advisor for that deal.

The normal practice is to reduce the fee for the amount that has been paid to the advisor on retainer. Retainers will typically run between $15-30K, often depending on the deal size, in order to get the front end leg work needed to make the deal work. So, on the first deal, if you paid the advisor a fee of $15,000 over three months for the initial search work, the net fee would be $120,000. On the second deal, if you paid $30,000 to the Advisor over six months, you would owe a net fee of $180,000 when the deal closes.

Finding the “Handsome Prince”

There are many ways to go about finding a seller to acquire. The most efficient and effective means of doing this is to retain an advisor who is skilled and experienced in the realm of buying businesses. Landmark Advisors is one of the few and most experienced advisors on the buy side of deals you can find. Schedule a time today to discuss how Landmark can help you find the ideal company to match your needs.

[i] Jeff Smith, long time buy-side advisor from Indianapolis.

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