December 2014

Exit Planning

In today’s show we welcome Mr. Stephen K. Ball MCN Podcast 130x130 Brownback to the program for a discussion about succession planning and how get the most value out of your business when you retire. Steve is a Partner in the accounting firm of Gross Mendelsohn – – 410-900-1308. Today’s podcast sets the stage for Steve’s February 17th seminar – “Exit Planning Strategies: How To Get Real Value For Your Construction Company“.

Steve had just returned from the AICPA Construction Conference and he wanted to start the discussion by relaying the underlying trend in all construction – better, faster, cheaper. This has become the norm for all construction companies competing in the post-depression era.

With the retirement of the “baby boomers” we are poised to see the largest transfer of wealth in history within the upcoming years. Proper planning makes all the difference.

What percentage of companies continue to operate beyond the retirement/passing of the founder?

  •  Approximately 30%
  • Less than 20% survive into the 3rd generation


  • Lack of planning
  • Improper structure
  • Liquidity issues
  • Family & estate issues
  • No plan at all

Why is exit planning important?

  • It defines personal, business, family, & financial objectives
  • Most of the owners wealth is tied up in the business
  • Facilitates retirement and financial security
  • Identifies goals
  • Develops new leaders
  • Satisfies stakeholders (sureties)

Why do owners avoid exit planning?

  • Possibly don’t like to think about death
  • Unwilling to schedule to relinquish control
  • Do not want others to know financial details of the business
  • Working in the business instead of on it
  • Other things are more vital and important at the time

What are the obstacles?

  • Not enough money
  • Not enough time
  • Personnel
  • Family members

What are some exit strategy options?

  • Close the doors and sell whatever you can for whatever you get
  • Continuation
  • Total outright sale
  • Partial sale
  • Gradual transition

When you are selling a constriction company you are basically selling any assets plus the assembled workforce and the current book of work. To get the best price it is often advantageous to have a trained and qualified person/persons assembled well in advance of the exit date. Since 30/40 year olds rarely have the capital to purchase outright, it is imperative to have nurtured a team that can successfully carry-on the business, thereby allowing a gradual buyout to complete the transfer.

We hope you will join us on February 17th for Steve’s full presentation of “Exit Planning Strategies: How To Get Real Value For Your Construction Company“.

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Rob Bertazon - Host and Moderator of The Maryland Construction Network

Rob Bertazon – Host and Moderator of The Maryland Construction Network

I recorded another MCN podcast on December 10th with Steve Ball, a partner with Gross Mendelsohn CPA’s. We were taping a segment about succession planning to help make people aware of the importance of this vital, but often overlooked, part of the business plan.

Steve will be giving a seminar on February 17th for anyone interested in learning more about the reason for having an exit plan, variables to consider, different types of exit strategies and many other aspects of the process. Let me simply say that if your company does not have a succession plan in place at this time, there is no better place for you to be on February 17th than at this presentation.

Steve and I have recorded podcasts together a few times before and I always enjoy going to the GM offices because it affords me an opportunity to talk about the construction industry with an extremely knowledgeable and well-informed individual who is not a construction person. I get a whole different perspective on the industry and Steve always brings to light new information from the technical side of his profession (accounting) that I may have never considered.

Reflecting upon the time spent with Steve made me realize what I really enjoy about podcasting and why I have been drawn to it. It is that I get a chance to relay quality information to construction professionals which is not always readily available, and to do it in a very relaxed and easily accessible manner. And since it doesn’t cost anything to listen, everyone gets to learn without breaking the bank. That’s especially nice.

Sometime in the future I think I will do a program (in a little different format) where I will show the people not familiar with the different ways to access podcasts how to take advantage of this media. It really is as easy as turning on a mobile device.

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Arbitration Clauses in ConstructionMCN Podcast 130x130 Brown Contracts

Christopher C. Dahl joins the MCN podcast today to discuss the use of arbitration as a dispute resolution process for the construction industry. Chris is an associate in Ober|Kaler’s Litigation Group and handles general and commercial litigation, particularly with respect to construction, business, tax controversy and administrative licensing matters. He co-authored, “Statute of Limitations in an Arbitration Clause,” for the Maryland State Bar Association’s, Maryland Bar Bulletin in 2013.

Listen and hear Chris give his thoughts on the following topics:

What is arbitration?

  • Arbitration is a voluntary dispute resolution process, enforceable under state and federal law, by which disputes are decided by a private arbitrator rather than by a court.

Why would parties want to arbitrate?

  • Faster Process
  • Specialized Decision Maker
  • Less Expensive
  • Limited Appeal Rights
  • Arbitration Agreements Can Discourage Small or Frivolous Claims

So why would someone not want to take advantage of arbitration?

  • Usually No Discovery Aside from the Exchange of Documents
  • Powers and Procedures Available in a Court Case for Compelling the Testimony of Non-Party Witnesses are Generally Unavailable
  • Limited Appeal Rights – Bad If You Lose

What to Consider When Agreeing to an Arbitration Clause

  • Tremendous Variation in Types of Arbitration Provisions
  • Scope of Disputes to be Arbitrated
    • All Disputes Arising Under the Contract
    • All Disputes Between the Parties
    • Or, Very Limited Instances
  • Whether Arbitration is to be Governed by Federal or State Law
  • Circumstances in Which an Arbitration Clause Might be Unenforceable
  • Inclusion of Statute of Limitations

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