Thoughts on Business Law Topics
February 22, 2015: Family business succession planning usually requires a multitude of skills and disciplines. It is common for such planning to include elements of financial planning, organizational development, executive coaching, law, mediation, accounting, among other elements. Also, the execution of that planning often occurs over the course of several years, which adds to the complexity of such planning and uncertainty of outcome, even under the best of circumstances.
It should not be surprising therefore that sometimes all the King’s horses and all the King’s men cannot prevent such planning from failing. One factor in such failures is typically ineffective execution. But often there is another problem at work: the failure of the planners to acknowledge that planning rests on multiple assumptions, the validity of which cannot possibly be known or determined at the time planning is being done. For example, one assumption may be that family members will cooperate as necessary for the best interest of the business, or in the case of a multi-generational family business, develop the critical sense of stewardship that Jack Moore and Terry Phinney have identified (see http://www.msbdcse.com/tag/family-business/). Another may be that the financial projections for the business (such as the cash flow from the business, necessary to achieve certain operational and buyout goals) will be met. If at least one of those assumptions proves to be incorrect, the succession plan is almost certainly doomed, regardless of the quality of other planning involved.
Unfortunately, many plans are do not contain the flexibility necessary to account for the possibility that some or all of those assumptions may be wrong. Thus, the one indispensable element of many plans (and unfortunately a missing element as well) is modesty. Where there is modesty, there are alternatives, fail-safes, work-arounds and contingencies. Those characteristics reveal a planner’s acknowledgement that not all things are known or can be known, and that the highest achievement of planning is to modestly admit that.
January 9, 2015: My friend and colleague Mariana Martinez and I co-authored an article which appears in the January/February 2015 issue of “Family Business” magazine. This article addresses the impact that restrictive gifts and other similar devices have on multi-generational family businesses.
October 6, 2014: Today Hewlett Packard announced it will split into two companies, one that contains its PC and printer businesses, and the other consisting on its enterprise business, which sells computer servers, data-storage gear, software and other services to corporations. The move appears to be designed to give each of those companies a more concentrated focus as they attempt to compete in a rapidly-changing tech environment.
Whether the split produces the benefits the HP Board is seeking or not remains to be seen. Nonetheless, the split is a useful reminder to all boards and owners to periodically review the structure of their business(es) to ensure the structure meets the relevant operational, financial and strategic goals. Truly separate lines of business — particularly those that have different financial needs or present different liability risks – should always be housed in separate corporate vehicles. That is only one of many circumstances which should lead to corporate reorganizations such as the HP split.
Recent speeches, appearances and articles:
Peter served as a judge for the Startup Hoya competition on March 25, 2015. The competition was sponsored by and conducted at Georgetown University.
On October 26, 2014, Peter Bloom gave a presentation on legal topics at the quarterly meeting of the members of Early Childhood Music and Movement Association.
On March 8, 2013, Peter taught a seminar on negotiation techniques to MBA students at the Robert H. Smith School of Business at the University of Maryland.
Peter was quoted in a February 25, 2013 article posted on the Business on Main website that addressed compensation of non-family members in family businesses.
Peter served as an advisor at the Dingman Jump Start program held at the Dingman Center of the University of Maryland on August 21, 2012.
On April 11, 2012, Peter and other members of Washington Venture Mentors reviewed business plan presentations made by entrepreneurs seeking pre-venture financing.
Peter Bloom served as a judge on March 20, 2012 for a round of the business plan competition sponsored by the Georgetown University Entrepreneurship Initiative.
Peter authored an article on succession planning which appears in the September 2011 edition of SmartCEO magazine (www.smartceo.com).
The Kogod School of Business at American University (http://www.american.edu/kogod/) held a business plan competition on February 12, 2011, and Peter Bloom served as one of the judges.
On December 22, 2010, Peter presented a teleseminar for the Professional Education Broadcasting Network regarding the business and tax aspects of joint ventures.
Peter presented a seminar on the legal and business issues a business owner has to consider before taking on a partner at the Affinity Lab in Washington (http://www.affinitylab.com) on November 3, 2010.
On July 21, 2010, Peter Bloom co-presented the seminar “Helping Clients with Succession Planning” at the Greater Washington Society of CPA’s (http://www.gwscpa.org/) with David Gage of BMC Associates.