Legal and business options to reduce your business's costs from sickness, improve resistance to getting sued, avoid cash flow problems that can sink your venture, and clear away obstacles to business growth.

1. CLEARING THE
UNDERBRUSH
Lincolnwood Chamber of
Commerce
August 22, 2014
Speaker: William A. Price,
Attorney At Law

2. I. GETTING SICK
The Obamacare Dilemma: Individual Market
Providers More Expensive, Smaller Networks
The Business Dilemma: Key Employee and
Insider Relationships Depend on Good
Benefits
The Business Dilemma II: Obamacare
Mandates, Adverse Selection, and Small
Business Market Premiums All Increasing

3. SOME HEALTH CARE OPTIONS
Self-Insurance: Businesses That Self-Insure not
subject to specific Obamacare coverage mandates,
just must provide “adequate” insurance
Variations: Private Health Insurance Trust, Association
Captives, Individual Company Captive Insurance Entity
Common Theme: Carry and manage or hire
management of claims to high deductible, then buy
reinsurance for amounts above deductible amounts –
much cheaper than primary coverage insurance

4. II. GETTING SUED
Cook County experiences more than 2/3 of the
litigation in Illinois, with only 40% of the population
 More than half of all doctors trained here move
elsewhere, in part because of our adverse litigation
climate
Your business or profession probably is experiencing
premium increases, since stock market and other
asset returns are down, so both loss experience and
investment income produce pressures for cost
increases to insured persons and entities.

5. RISK MANAGEMENT OPTIONS
 Separation of Family Assets From Operating Businesses:
Once high litigation risk business profits are earned, US (not
international, those have tax risks) asset protection entities like
Alaska or Delaware trusts with more than individual
owner/professional ownership designed for family estate
planning may be appropriate to reduce jurisdictional,
bankruptcy, and litigation risks.
 Separation Of Asset Holding Entities: Real estate and key
equipment ownership entities can operate at “arms length”
from high litigation businesses. Economically separate
businesses (e.g. low risk cattle vs high risk hotel/resort on
ranch) can be separate entities.

6. III. GETTING SUNK
 Cash Flow troubles, not lack of profitability, are what kill most
businesses.
 Typical Sources Of Cash Flow Problems:
a. The Infernal Revenue Service, with tax collection
process powers (or Ill. Dept. of Revenue, or cities)
b. Disappointed Creditors, who sue and freeze
accounts, or, if banks, cut off financing
c. Greedy Life Or Business Partners
d. Deadbeat Customers, Like The State of Illinois

7. CASH FLOW SOLUTIONS
 1. Get paid in advance: The Dell business model
 2. Pay The D—n Taxes, Especially Those Your
Employees Owe. Estimated taxes and other late pay
periods for income, property, and sales taxes look like a
cheap loan, but they can shut you down, and hurt your
credit.
 3. Partner With Vendors And Customers For Longer
Payment Terms, Reduction Of Middlemen You Have To
Pay Off
 4. Refinance To Take Advantage Long Term Of Current
Low Prime Rates

8. IV. SURVIVING
Business Value Increases With Size: 1x EBITDA for
solo practice, less than $1 million, 3-4X EBITDA up to
$10 million, 5-6 X Private Or 8X P/E Exit From $10-50
million, Industry rates for $50 million plus
What Underbrush Is In The Way Of Reaching The
Next Valuation Level/Exit Event? Old round minority
shareholders? Inefficient equipment? Unproductive
partners/employees/sales channels? Ancient business
processes?

9. UNDERBRUSH CLEARANCE
 For Minority Shares: Create Reverse Stock Split Or Other
Expulsion Events, Giving Them A Happy Fair Value Exit
 For Inefficient Equipment: Use New Vendor Cheap Or Zero
Interest Financing Terms To Dump Inefficient Production
Equipment. Or Find New Contract Manufacturing Relationships.
 For Unproductive Partners/Employees: Put profit milestone-related
incentives in your Buy-Sell Agreements. Drop the idiots
overboard.
 For Ancient Business Processes: Improve your margins by direct
customer relationships through real time feedback and online
value creation relationships, in tax-efficient jurisdictions

10. QUESTIONS?
William A. Price
Attorney at Law
www.growthlaw.com
P.O. Box 1425
Warrenville, IL 60555
Tel/Fax 1-800-630-4780
Email: wprice@growthlaw.com