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Kyani Review – Is the Kyani System a Scam?

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Kyani seems like a brand new network marketing company, but they arrived on the scene in 2005. Recently, they expanded Internationally as well. The company and the Kyani System seem poised to take the MLM world by storm. This article will reveal if Kyani and the featured blueberry product, will make you rich, or just make you “blue”.

Based out of Idaho Falls, Idaho, the company was regally funded by two Idaho families. In fact, rumor has it that the business had a backing of 300 million dollars before it was ever launched!

Gadzooks!

That kind of moolah explains why Kyani is taking off so fast. Sound financial backing is CRITICAL to the success of any network marketing business.

The primary market for the company products are health conscious baby boomers. They offer another in a long line of “muscle-bound” juices and Omega-3 supplements.

Nothing new.

The company does have a unique “spin” on the berry juice in that their product is derived from blueberries. That source is a first as far as I know. These are no ordinary blueberries, rather they are Alaskan wild blueberries. These mega-nutritious little dudes are the “Incredible Hulks” of the berry family!

It seems all those hard Alaskan winters have caused these blueberries to grow thicker skins. The skins are packed with “nuclear powered” anti-oxidants, which explains the relative health and longevity of Alaska’s native people.

Kyani also offers a product rich in Omega-3 fatty acids derived from Alaskan Sockeye salmon. Heart healthy, to say the least!

The creators of the Kyani System are the company co-founders, Michael Breshears and Dick Powell. Both of these gentlemen are experienced in a wide variety of entrepreneurial ventures, in addition to vast MLM experience. The company seems quite distributor “friendly”, offering multiple training call opportunities and nationwide meetings and events.

The cost of getting involved has two options. The starter kit costs 95.00 and allows an individual to buy the products wholesale, and sell them at retail. With this option, distributors cannot take advantage of the Kyani System,and the multi level marketing opportunity.

In order to take advantage of the 3X7 forced matrix compensation plan, the tariff runs 495.00. For that money you receive a business planner and a wide variety of products. The plan features matching bonuses that make it attractive to a new distributor. The beauty of the 3X7 matrix is it features no breakaways. The legs basically go on to infinity. Just for good measure, when a distributor reaches the “Executive” level, they are eligible to drive a paid for Cadillac Escalade!

In conclusion, the Kyani System is certainly far from a scam. In fact, the company seems quite solid both financially and in terms of the management team. Kyani seems to have a very agreeable company “culture” that gives good support to the distributor. The juice is not inexpensive, averaging between 55.00-75.00 for a 32oz supply. The testimonials for the products are impressive, which would make them well worth the investment. It was nice to hear that so many have benefited from the products offered.

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The New Capitalism

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It has been said that Capitalism, as an economic system, is not up to the challenges which face humanity in the 21st Century; that due to the emphasis on delivering a product at minimal costs to maximize profits do not take environmental and other factors into account. There is a cry out for more government interference into the business community to solve the problems of the environment and of ethical matters in general. I argue that government regulation is not only unnecessary but that it is also an impediment to solving the problems facing us today; business being monitored by a free press in an educated society is totally sufficient for solving these problems. This is because government regulation essentially involves forcing someone to comply with the governments edicts rather than using true leadership skills to achieve ones goals.

When I was a boy, my grandfather had given me a book about Abraham Lincoln. I read that book over and over again; I was amazed by how this man who was born in a log cabin became president of the United States. In the end I cried when Lincoln was shot and killed. I also wondered what happened to all of the Abraham Lincolns. I had been told that today if you were born poor, you stayed poor and could possibly even have to become a criminal in order to survive. The friends that I grew up with were all middle class as were there families. What had happened to the American Dream?

Buckminster Fuller (1895 – 1983) was an American architect, inventor and philosopher. When Fuller was a young man, he had experienced a personal tragedy where his young daughter had died of an illness. Fuller blamed himself, became despondent and was about to attempt suicide. Instead, with nothing left to loose, he embarked on a lifelong study to see how much of a difference one man could make for humanity. He then went on to create inventions and philosophies such as the Geophasic Dome, Dymaxian Car and Spaceship Earth. In 1980, Fuller had stated, “For the first time in history it is now possible to take care of everybody at a higher standard of living than any have ever known. Only ten years ago the ‘more with less’ technology reached the point where this could be done. All humanity now has the option of becoming enduringly successful.” (Fuller, 1980) In 1983, The Buckminster Fuller Institute was established to continue his work. “The Buckminster Fuller Institute is dedicated to accelerating the development and deployment of solutions which radically advance human well being and the health of our planet’s ecosystems. We aim to deeply influence the ascendance of a new generation of design-science pioneers who are leading the creation of an abundant and restorative world economy that benefits all humanity.”

The United States of America, in 2003, had begun an undeclared war on Sadam Hussein’s, Iraq. At that time I had begun an inquiry as to how humanity could eliminate was as a solution to its problems; we have used it since the beginning of time and it did not make sense to me. I was wondering what we could do to stop war. One night I woke up in the middle of the night with a thought blaring through my head, “It’s bad business to kill your customers, they can’t buy anything from you if they are dead!” I remembered how Ronald Reagan, on one hand called the Soviet Union an Evil Empire but on the other hand traded with them to the point of having KFC and McDonalds in Red Square. The Soviet Union then collapsed and the cold war ended without a shot being fired between the United States and the Soviet Union. My own conclusion to this is that world trade leads to world peace.

Key to a system of ethics is if it is rights based, utilitarian based or rights based on utilitarian principles. Utilitarianism is doing what works best for the most number of people.

Another point that is very important to me is that people have the freedom of choice rather than being forced into taking a particular action. An example of being forced into a particular action is how our government handles victimless crimes. They do not give someone the choice to do drugs or not, they try to force people to not take drugs by incarcerating people who use them. It doesn’t matter that the act of taking drugs itself hurts no one but the person taking the drugs, The Government would rather bear the costs of throwing them into jail or forcing them to go into rehabilitation then it would to provide the educational materials and let people decide for themselves.

Economics has been defined as, “The study of choice under conditions of scarcity.” (123helpme.com, 2009) This definition limits are thinking to scarcities but what if we took on the viewpoint that Fuller suggests that there is plenty of stuff to go around for everyone; the technology is available to harness the sun and wind for energy. With modern hydroponic technology you don’t even need to grow food. The internet allows us to communicate with someone in Mali just as easily as you can communicate with someone in Montana! In the twenty first century, no one need go hungry! So what part do businesses have in taking advantage of these new technologies so that they are a part of changing the world along with making a difference? That is what I call, The New Capitalism.

To best understand the New Capitalism, it is best to understand the difference between mercantilism, capitalism and socialism. Basically, in Socialism the mantra is “From each according to his ability, to each according to his needs.” This phrase was coined by Karl Marx in his book Das Kapital published in 1867. Das Kapital is the treatise on communism, a philosophy that was followed by mass murderers such as Joseph Stalin, Mao Tze Tung and Pol Pot to enslave millions or kill millions of people in Asia, Russia and Eastern Europe. The problem with communism is that when you don’t reward production there is no reason for anyone to produce anything, so in order to get anything done, you have to use threats and force so people will do their job. If one excels at their job they just get according to their need, if one does lousy at their job they still just get according to their need so someone has to say, “Do your job or I will blow your head off;” something that the Stalin, Mao and Pol Pot regimes said and actually did to millions of people.

Capitalism, on the other hand, is an economic system that was developed by Adam Smith in the late eighteenth century. Until Smith came along, the government licensed all business activities for the good of the government. This system was known as mercantilism, per Smith, mercantilism was a system whereby the economy operated for the good of the government. (LaHaye 2008) I would say that the system could best be described as, “from each according to his ability, to… the Government!” Some would argue that mercantilism went out of vogue in the nineteenth century, I disagree with that. If bailing out financial institutions and car manufacturers and having them owned by the government such as AIG, Chrysler and General Motors. The reason the Government bailed them out was because of the greater good of the country; those businesses were “too big to fail.” That viewpoint is classic mercantilism. Furthermore, since ours is a government run for, by and of the people, our twenty first century mercantilism is in fact, socialism, and if allowed to continue and expand will have the same results as socialism since force and intimidation will need to be used in order to get anything done.

Capitalism is an economic system where those who do the produce items that are of value to others are rewarded for their actions by the unseen hand of the market. The items have to be of value that others will exchange for. Today, you could toil day and night making buggies but the only ones who will buy them are a handful of Amish in Pennsylvania. For the capitalist economic system to work there needs to be numerous buyers and sellers who can freely enter and leave the market, who all knows what, each other are doing. The products in the market must be similar to each other; the buyers cover the sellers costs they all maximize their utility and there is no government regulation. Recently, Capitalism has been getting a bad name; people are blaming the current economic crises on insufficient government regulation; I’ll argue that there was in fact, too much Government Regulation.

Maurice (Hank) Greenberg had been the CEO of insurance company AIG for over 40 years; he had built the company from a small insurance company into an insurance giant. In 2005, New York State Attorney General Elliot Spitzer told the AIG Board that he would be indicting Greenberg and would also indict the board members if they did not fire Greenberg. Greenberg was fired and it was his successor who allowed the company to get involved with the credit default swaps which in 2008 would bring down the company along with the entire finance industry. Spitzer did not ever indict Greenberg nor anyone else from AIG. In 2008, Spitzer was forced to resign as the Government of New York State as the FBI had caught him patronizing high priced call girls.

What some people do not realize is that the United States of America has more of a mercantile economy than a capitalist economy. There are three car manufacturers, that is not numerous sellers. When someone starts a business, they can’t just open shop and start doing business; they have a bunch of legal and government paperwork to do. All buyers and sellers are not utility maximizers since a good percentage of the profits go towards taxes; businesses are even forced to take United States Currency, which isn’t even really money but a promise from the United States Government to pay you money. Capitalism has never actually been tried in the United States as the government has always somehow had regulations regarding business.

The New Capitalism has to do with placing long term profits on par with short term profits. If everyone in New York City were to die from a tidal wave caused by global warming, that is bad for business. If we underpay our workers and they have no money to buy anything that is bad for business. If we make cars that have exploding gas caps, people will buy cars from your competitor, bad for business! It can be argued that Adam Smith, the founder of modern capitalism, had the viewpoint that capitalism could transform the world. James Alvey (1998) argued that Smith did have such a view of the world and that his system would satisfy all the needs of human nature.

A population that is educated, especially in economics and a free press are essential to the success of The New Capitalism. With proper economic education, people would not be surprised when the value of their houses goes down because they would know about the cycles of the economy. With this knowledge they might not take actions like taking Adjustable Rate Mortgages on their homes, even if the chairman of the Federal Reserve Board says it is OK and they wouldn’t be expecting a bailout from the government when their risk failed. With a free and aggressive press, companies engaging in unethical behavior would be found out and the public could buy someplace else. Bernie Madoff was not brought down by any government agency but rather by his sons. Richard Nixon was brought down through the efforts of Woodward and Bernstein and the staff of the Washington Post, Congress then took action on their initiative.

Another criticism of Capitalism is that it concerns itself with profits and taking care of the environment may not be profitable. That is true only when the only thing that matters to people is making money and saving money. If this were true, however a differentiation strategy would not work. A differentiation strategy is when you market a product as to its unique features rather than its low cost.  If customers want products that are good for the environment and do not cause global warming they will pay for them, it is up to the companies selling the products to show people why the feature is important. In this method, you are allowing people a choice and giving them freedom rather than forcing the product on them, which is what essentially is happening with government regulation. Another question one might ask is what about discrimination? Let’s say you have a company that discriminates against a segment of the population. With a free press, this would be reported and that segment of the population, along with like-minded people could always protest and arrange boycotts against those companies that do discriminate.

The basics of The New Capitalism are firstly a paradigm of abundance rather than scarcity; with the technology of the twenty first century there are plenty of resources to go around to everyone. Also, there has not really been a capitalistic economy in the United States of America, at best we have a liberal form of mercantilism and with the economic bailouts, which were begun by former Republican President George W. Bush and continued under current Democratic President Barack Obama, that have been prevalent since October 2008, and we, along with both political parties, are actually moving towards socialism. Capitalism, when you equalize long term and short term gain provides the most freedom and choice to society while allowing the little guy or the big guy to succeed or to fail. A free press and a top notch educational system are the way to ensure ethical businesses in a capitalistic society without the slavery of socialism impinging upon all of our rights. I have shown that by having Free Ethical Enterprises we can have a society that operates on a paradigm of abundance rather than a scarcity can bring us a society where poverty is non-existent and everyone has the opportunity to excel. How can we know whether capitalism is up to the challenges of the twenty first century when we have in fact never actually tried it? Yes, the American Dream is still possible and The New Capitalism is a way to achievement.

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Sports Trivia – True Heroes of Sport

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Today’s generation often looks towards athletes as both role models and, in some cases even, heroes. Sadly, many of them fail to live up to the public’s expectations of them. Doping and cheating are becoming more and more common place as athletes strive to achieve greater and greater success. Fallen by the wayside in the competitive world of sports seems to be many of the traditions and morals that make an athlete truly note worthy. It is not just how an athlete performs in his or her chosen sport but the way in which they achieve their goals that really matters. Luckily, not all athletes fall into this category. There are still many who do deserve to be recognised and admired for their achievements both in and out of the world of sports. Consider these examples of people who really represent what the world of sports should be.

Lawrence Lemieux

Lawrence Lemieux was an Olympic sailor who gave up his chance to win a medal in order to save two fellow racers. Lawrence was competing in the Finn Class A sailing race during the Olympic Games in Korea in 1988. In the course of the race winds picked up significantly. As Lawrence passed close to a nearby racer, he noticed two sailors from the Singapore team in the water and in obvious distress. Lawrence who was in position to win a silver medal turned his boat and went to their aid. Once both sailors were aboard his boat he waited until a Korean rescue boat arrived. He then continued his race but finished in 21st. Although he did not make the podium, Lawrence was awarded the Pierre de Coubertin medal. President of the IOC had this to say of Lawrence, “By your sportsmanship, self-sacrifice and courage you embody all that is right with the Olympic ideal.”

Andre Agassi

Andre Agassi is another great example of a truly great athlete. Once considered one of the bad boys of tennis, Agassi remade his career and came back as one of the greatest players of all time. Andre’s achievements on the court include an Olympic gold medal and eight Grand Slam singles tournaments, but many of his greatest accomplishments were achieved off the court. Andre is considered one of the most charitable athletes of his generation. His charity, entitled the Andre Agassi Charitable Foundation, has raised over $60 million to help children in Nevada. He has participated in numerous events and fund raising campaigns and has personally donated large sums of money to various charities. In 2009, Andre, along with numerous professional athletes, started the Athletes for Hope. In 1995, Andre was given the prestigious Arthur Hale Humanitarian Award for his work.

Lance Armstrong

One of the most inspiring athletes had to be Lance Armstrong. Lance was on his way to becoming a truly great cyclist when he was diagnosed with testicular cancer. The cancer was already in stage three and had spread to his brain, lungs and abdomen. He underwent surgical procedures to remove the tumours in his brain and testicles. Lance also had to undergo chemotherapy. His last procedure was on the 13th of December 1996.

After his ordeal, Lance returned to the world of cycling in 1998. He went on to win an unprecedented “seven” Tour de France Races and has been named the athlete of the year by numerous different magazines and organizations worldwide. However, Lance’s achievements are not only in the world of cycling. He founded the Lance Armstrong Foundation. This charity works to help patients affected by cancer. It provides support and help before, during and after a patient’s treatment. The motto for his charity is “Unity is strength, knowledge is power and attitude is everything”. Lance is also one of the founding members of Athletes for Hope.

Records and medals are wonderful but maybe before we look at an athlete as a hero and a role model we should all look a little deeper. It is not only how a player plays the game but also how they live their lives that make them truly great.

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The Cisco 300-410 ENARSI Certification

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The Cisco 300-410 ENARSI is an examination that tests the Enterprise Advanced Routing technologies and Services. The applicant can showcase their ability in troubleshooting. Advanced routing services are also included in this. It includes Layer 3, VPN services, the services related to the infrastructure, automation, and infrastructure security. The certification further opens the opportunity to learn and earn the CCNP Enterprise certification. The Cisco 300-410 exam duration is 90 minutes. A broad variety of objectives are asked in the examination to ensure the applicant has a thorough knowledge. English and Japanese are the languages that are used to take the examination. A candidate willing to take the Cisco examination can follow the details mentioned below to secure good marks.

A Detailed Guide on Preparation Strategies:

Preparation is extremely necessary to get a good score in Cisco exams. This exam needs detailed study and preparation to pass. To make the process of preparation easy and clear, some points are suggested below:

â— Understand each topic of the Cisco 300-410 ENARSI Exam in-depth:

Visit the official webpage of the Cisco 300-410 exam to get the full syllabus. Check all the details regarding the exam and its policy. The information on the site will give you an idea about the certification and exam process. The Cisco 300-410 exam applicant should study topics like VPN Technologies, Layer 3 Technologies, Infrastructure Services, Infrastructure Security carefully and sincerely. These points(topics) are crucial according to the exam point of view.

â— Make the preparation notes wisely:

The preparation resources should be chosen wisely as the certification programs of Cisco are restructured. Various platforms offer various programs that help you prepare for the Cisco 300-410 exam. Read the exam objectives and then start finalizing the study material. By doing this, you can check on the tools used in the preparation that are suitable and relevant to the exam. The study guides, practice tests, training courses, videos, and articles can be followed to prepare for the Cisco examination. Cisco’s learning platform offers you complete preparation training materials that will benefit Cisco 300-410 ENARSI exam.

â— Earning Practical Experience is must:

A hands-on practical experience in exam technology will help to master the exam objectives. The practical knowledge will help you get more insights into the details of the technology. The Cisco training library provides all the practical knowledge needed for the exam. Also, some online available materials are beneficial and help in training.

â— Practice Tests of Cisco 300-410 ENARSI exam are a must:

Take the practice tests available for Cisco 300-410 ENARSI exam. It will help to track the mistakes and will help in eliminating them. Many websites provide free practice tests to examine your knowledge. NWExam provides a set of practice questions of full-length that is specially designed for the exam.

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Things to Know Before Buying A Business – A Buyer’s Perspective

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GETTING READY

FROM THE BUYER’S PERSPECTIVE

In the previous chapters, we talked about sellers who are in the process of considering a sale. The focus in this chapter starts instead with the BUYER, and then moves on to look at the big picture aspects of the PRICE.

A critical question worth repeating as we move on to rules for buyers is: Do you really have a willing seller? Or, is the seller so emotionally tied to the business that no buyer will ever actually be good enough to pass muster? Is the seller reluctantly willing to sell — but only if the price/terms are unrealistically high?

Potential sellers should think these things through very carefully before spending a lot of everyone’s time and money on a seemingly desirable deal that is unlikely to actually take place.

Once it becomes apparent to you as a potential buyer that the seller is not really ready to sell, then it’s time to politely walk away. Don’t burn your bridges though; the seller may very well be more ready at some point in the future and you can resurrect the deal at that point. Just don’t waste time and money before the overall timing is right.

Buyers

The following rules are presented from the buyer’s standpoint, but sellers should be acutely aware of these things too:

First:

The first rule for buyers is: Know what YOU are looking for. Buying a business is risky, expensive, and a LOT of work for the buyer. Do your homework first.

*Not every business is worth the same to you as it is to other potential buyers.

  • What business would fit the best with what you already own?
  • What can YOU bring to the table to enhance its value after the purchase?

In other words, what business can you buy that will result in a 1+1 = 3 scenario? (or even 4?)

  • This is so important, that if the resulting effect of 1+1 is not more than 2, then perhaps you should not buy it at all.

Second:

Another rule for buyers is: YOU are for all practical purposes “selling” yourself personally and/or your existing company to the seller at this point as well. That’s because if you really want to buy that target business, someone else probably does also. It’s about a lot more than just price and terms.

So, why should this seller sell to YOU?

*Be ready to sell yourself and/or your company as the most appropriate buyer for that particular business.

  • The seller is almost always looking for a buyer he or she feels comfortable with personally and believes will take proper care of the business, its employees and its customers post-sale.
  • If you fail this unspoken test, you can lose the opportunity before you ever get to issues such as price and terms.

Third:

The third rule for buyers: Be ready.

Be ready financially — a strong balance sheet, good banking relationships, and enough uncommitted cash flow with which to do the transaction are essential. Be ready with your own time — if your time is already fully committed, how are you going to handle the additional management burdens?

Fourth:

Another rule for buyers: Consider the basic steps in a business sale.

  • Is there a business broker involved, and if so, on which side does their allegiance lie? Which party pays the commission? If I as the seller sign a listing agreement, can I get out of it, and how long does it last? What if I bring the buyer to the table myself, do I still owe a commission to my broker under an “exclusive right to sell” agreement?
  • Can or should both sides use the same attorney or C.P.A. in order to save professional fees?
  • Should you sign a confidentiality agreement up-front? At what point?
  • Will this deal be seller-financed in whole or in part, or do I need to get a banker on-board early and see if financing is available beyond what cash I have for the down payment?
  • Am I willing to personally guarantee all or part of my company’s promissory Note to the seller for the balance of the purchase price, or to pledge additional collateral?
  • How much cash will I need for working capital until the cash flow situation in the new business settles down following closing?
  • Do I need a business valuation, and if so should it be a full-blown appraisal or just an opinion letter? Will my banker require an appraisal in order to loan me the down payment or all of the purchase price as the case may be?
  • What role does a letter of intent (an “LOI” or “terms sheet”) play? What kind of LOI should you create? Should it be binding on both parties or non-binding, or should only portions of it be binding?
  • Will the seller request a good-faith cash deposit up-front, perhaps paid into escrow? Refundable or non-refundable?
  • What due diligence is needed, and when, and should the other party pay part of the cost if they back out prematurely for no good reason?
  • What contracts are likely to be needed, and which side should have the subtle advantage of drafting first and controlling the documents (customarily the buyer, since it has the most risk in how the transaction is structured and written up)?
  • What should you expect at closing?
  • Will an independent third-party professional escrow be necessary for the eventual closing?

Fifth:

The fifth rule for buyers: Know the legal basics.

  • What are the crucial legal distinctions between an “asset sale” and a “stock sale” that will determine the overall structure of the entire deal?
  • What additional risks do I effectively assume if I buy the stock of the seller’s corporation, as opposed to buying the assets out of that corporation and thereby shedding most of those risks?
  • What to do with the employees?
  • What about a non-compete agreement with the seller entity as well as the individual owner(s) thereof, or with key employees of the target business who might leave following closing and go right into competition with the very business you just paid a lot of money for; or
  • Does the target company already have those crucial non-competes in place with key employees, and if so are they enforceable and transferable?
  • You need to know the basics, but you will definitely need professional help to get this right.

Sixth:

Another critical rule: Know the tax basics!

  • If I personally buy the company’s stock from the seller, I’ll have no tax deductibility on the purchase price. Does that matter to me, or would I rather have that higher tax basis and thereby pay less tax when I re-sell the company sometime in the future?
  • Or, should I have my own company buy that same stock instead? Can my corporation or LLC buy stock in another without causing serious tax consequences?
  • Am I comfortable with the hidden or unknown risks in this industry or this particular company that come along with a stock purchase format, including the risk of prior taxes unpaid or under-paid by the target corporation; or do I want to insist on an asset purchase format instead and thereby try to “shed” most of those potential liabilities? Can I mitigate that risk by having the selling stockholder indemnify me for all or part of those taxes, interest and penalties, or even other unknown and/or unexpected exposures?

Never forget, there are three parties to every business sale — the seller, the buyer and the IRS. A sale can be a lose/lose/win (guess who the losers are… ); or, the same sale can be re-structured to constitute a win/win/lose. If there is a “loser” in this deal, you want it to be the IRS.

  • The taxes on sale of a business can exceed 50% of the total sale proceeds if the sale is structured wrong!
  • The seller can even end up owing more to the IRS at the front end than he receives as the down payment from the buyer… a particularly unfortunate (and generally avoidable) result of poor tax planning.
  • You don’t need to be a tax expert; but you do need to know there are ways to mitigate this kind of tax disaster and also be able to point the seller in the right direction for professional help.
  • You need to be willing to work with the seller to resolve what may be critical issues to the success of the sale.
  • You need to know the basics, but you will need professional help to get this right.

Seventh:

The seventh rule for buyers: Know how to use your own professional advisors, and when to bring them into the picture (earlier is better, even up to a year or more under some circumstances).

  • CONTROL your professionals in order to keep expenses down and prevent them from killing your deal. It’s YOUR transaction, not theirs. Get advice from them, but do not let them renegotiate the sale.
  • Keep relationships cordial. You will almost certainly need help of some kind from the seller after the sale closes, so don’t let your professional advisors poison that well.

MOST IMPORTANTLY: The most important rule for buyers (and for sellers too for that matter): The sale must be perceived as a “win” on both sides. In most cases, neither side is compelled to do the transaction. If either side concludes that the sale is a “lose” for them, then the deal is likely off at that point.

Special Situations

Some special situations will be covered in more detail in later chapters but deserve a brief mention now:

Internal Sales

Many business owners would love to sell their company to their key employees, but they don’t think it’s possible. The most frequently cited reason is “but they don’t have any money.”

You work with these key employees every day. You probably already know they have the basic talent to run the business, or you would not even consider selling to them. They may already have been running it for many years already from a practical standpoint. Only money seemingly stands in the way.

The fact is, the money issue can almost always be handled to everyone’s satisfaction. The REAL key issue is instead, “Do they have the fire in the belly, and the risk tolerance, to be an entrepreneur?”

The heart of an entrepreneur is an intangible that can’t really be measured or pinned down; but if your key employees have what it takes to be one, then you can probably arrange win/win terms that work financially for them and give you a better long-term after-tax price than you could receive from an outside third-party sale.

As always, YOUR expectations need to be reasonable. Just as with a third-party sale, the price and terms must “pencil-out” for the buyers in any internal succession. The down payment is likely to be less, and the seller financing will probably run for more years. Terms are likely to include a way to split the fruits of future success.

We’ll discuss this more in subsequent chapters, but suffice it to say that if your key employees have what it takes to succeed after you are out of there, then internal succession can be your best exit strategy financially. It can also be an excellent way to attract and retain top-notch employees with an expectation of participating in the buying group and a way to ensure a satisfactory sale of your business when the time is just right in the future.

Family Sales

Family sales are a particularly difficult kind of internal sale. All the usual considerations of internal succession apply, plus uniquely complex tax considerations.

The IRS is deathly afraid parents will do something nice for their children. So an entire chapter of the tax code is devoted to making sure the IRS gets its “fair” share (they consider about half the total value of the business to be “fair”). Needless to say, this adds to complexity.

Intra-family dynamics can be even more complex. Just because a child has the talent, does not mean that he or she has the experience to run the business. And talent + experience still do not mean the child has the intangible heart of an entrepreneur. Even establishing the price can be more difficult than in an arms-length sale since a child can find negotiating with a parent over price and terms to be essentially impossible.

Price

What about “Price”?

Ultimately, the “Price” must be justified by (i) the future cash flow the buyer can reasonably expect from the acquired business, and (ii) the risk the buyer must take in order to receive that cash flow.

But “Price” is much more than just money to a seller. It can even be seen by him or her as a reflection of their individual worth as a person. A buyer overlooks this only at their great peril.

Starting the conversation with comments designed to push down the price can be fatal to an emotional negotiation like this. You are not haggling over the price of a car here. “It will have to pencil-out, of course, but it’s probably worth quite a bit…” is often a good starting point comment for you as a buyer.

Emphasize creating a “win/win” transaction overall. Remember, the seller most likely does not HAVE to sell, and likewise you do not HAVE to buy. As soon as either party perceives the transaction to be a “lose” for them, the sale will die.

An emphasis on AFTER-TAX cash to the seller is also extremely helpful. Thanks to our overly-complex tax laws, it is often possible to restructure a sale with a lower stated “price”, but more actual after-tax cash for both the seller and the buyer.

An “all-cash” deal is low risk for the seller, but much riskier for the buyer. Therefore, the price is almost always significantly lower in an all-cash transaction in order to compensate for this mismatch in the risk area.

What about payment terms?

Terms are not as emotional, but in a practical sense can be even more important than price. In fact, your authors are fond of saying “The price is not the price… terms are everything!” Terms determine how the sale will “pencil-out” for the buyer. For example, seller financing over a period of 10 years is much easier for the buyer to pay for out of ongoing cash flow from the business, and thus justifies a higher price.

Terms can also dramatically affect taxes for both sides. Since it only counts if you get to keep it, this consideration alone can be more important than price.

Terms affect the risk for both sides. Terms so stiff that the sale cannot possibly pencil-out will obviously raise the risk for the buyer. Less obvious, the seller may incur more risk from draconian terms like this as well. An upside down buyer is much more likely to look for an excuse to rescind a sale or some way to sue the seller for misrepresentation or a breach of the seller’s representations and warranties in the purchase and sale agreement.

Terms can be massaged to share the risk, thus lowering the effective risk for the buyer. Lower risk translates to a higher price. It is fairly common for part of the price to be dependent on future results and retention of business (called a partial “earn-out”), which is a great way to share risk and reward.

Other factors will affect the price as well. For example, do key employees have, or can you create at closing, enforceable non-competes (see our later chapter entitled NON-COMPETES)? What about major customer accounts? Will key vendors terminate their contracts when the “founder” of the business is no longer around?

What about the building occupied by the company? Does the target company’s owner also own that building? Is the Lease transferable, and/or how much longer will it run? Are there any options to extend or to buy the building and not have to incur major expenses in moving the entire business later on? Is the business owner a personal guarantor on that existing Lease, and will the landlord release him or her from that guarantee at closing or simply execute a brand new Lease with the new owner? Is rent likely to be raised post sale?

Finally, it’s not all about “Price” anyway. Price certainly matters; but is rarely the key to a sale.

A seller is likely to have other “hot buttons” that can make or break the deal. Some are obvious, such as how key employees will be treated post-sale in all respects. The seller may want to see to it that a couple of his “pet” long-term employees are retained for a number of years at the buyer’s expense.

Other hot buttons can be quite unusual. Your authors well remember a sale that hinged on providing a parking space on company property for the retiring seller’s yet to be purchased RV. The buyer initially balked, which would have killed the sale. It has been many years now since the closing, and the seller never did quite get around to parking his RV in that spot that seemed so crucial to him at the time.

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Finance

The Cyprus Real Estate Market

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On the 12/1/08 Saturday Mr Antonis Loizou has given a lecture at Ayia Napa on behalf of the U.K. Alzheimer’s Society, which was attended by 120 mainly foreign residents in Cyprus. The subject was the Real Estate Market in Cyprus. We provide a shortened version of the speak.

Real Estate Investment, be it a house, land income producing property or development, has been so far a “safe” investment in terms of security of capital. Since 1974 prices have been moving upwards at varying rates p.a. Upto the year 2001, prices moved upwards on average 7% – 10% p.a., but since the Cyprus Stock exchange crash, investors interest turned towards real estate. Cyprus’ inclusion to the E.Union, coupled with the most favourable tax system in the E.U. and the Russia-Cyprus double taxation treaty, has caused Cyprus to attract an increasing influx of European and Russian interest, which has helped real estate investment in Cyprus.

The lifting of restrictions regarding property purchases by E.U. companies and citizens, has widened the scope of real estate investment and now, it is estimated that foreign buyers in Cyprus real estate contribute around CP700 mil. This is just short of the biggest foreign exchange earner, the Tourist Industry and its CP1.200 bill. p.a. and far ahead from the third biggest foreign currency earner i.e. the offshore companies contribution of around CP350 mil. p.a.

This keen foreign demand, coupled with the local interest as well as the added taxation on real estate, such as V.A.T. of 15%, has caused prices to move at a rate between the years 2002 – 2004 of around 15%p.a., whereas the very recent years prices have shot up by almost 20% p.a.

This is particularly so regarding building plots and land and more recently towards agricultural land. With prices of development land being so expensive and with the planning laws allowing the development of a single house just about everywhere, the public’s interest has been diverted with an increasing volume towards agricultural land, where prices have shown increases in excess of 30% – 50% over the last year alone.

This situation of high development land cost, converts now to around 40% of the total development cost of any house/apartment, whereas a couple of years ago, the land cost on a building sales price amounted to 20% – 22% only. This unhealthy state of affairs will get worse with the introduction of VAT on building land from 1st August, 2008.

So, when it will end and more importantly are we heading for a real estate crash? I doubt it. Since so far these substantial increases in property prices, have been absorbed by the public, be it, it has affected the rate of sale mainly for the less competitive projects making in part, the market, rather unpredictable and somewhat uncertain.

To this negative picture one must bear also in mind that various positive/balancing measures that are now in hand. The reducing interest rates [as for 1.1.08 from 4.5% this rate it is reduced to 4.0%] and the longer repayment periods of loans that are now offered have helped.

The new Central Bank measures regarding own contribution in buying or developing real estate which has increased the original contribution of 20% to 40% [for non own users – permanent residents] is expected to affect the “by to let” market, since returns/fields in Cyprus are very low [around 4% p.a.] and it is one of the lowest in the popular holiday home destinations in Europe, whereas high cost of air tickets etc. makes letting not as easy as in other countries [some balance may be gained when low cost air fair airlines are in full operation in Cyprus].

The pending new infrastructure measures such as the pending development of the two airports in the Island, the pending development of the 4 new marinas [expected to come around the year 2012] now under offer, as well as the expected 7-8 new golf courses, will add to the island’s attraction, making Cyprus, perhaps, the most densely area in Europe in terms of golf courses per population. On the other hand if these projects materialise [i.e. golf/marina/Larnaca port projects] they will place in the housing market [mainly directed towards the foreign people] around 10.000 new housing units in addition to the normal number which are now produced [approx. 5.000 p.a.] With the existing demand of around this number [5.000 units] and even considering an increase in demand due to the above infrastructure properties, the supply will surpass demand in the year 2010 -2015 with possible negative affects on the holiday home market prices.

Buying / building real estate/homes in Cyprus is easy, since it is the most popular business. At this point of time “Property Development” is carried out by just about everybody independently of qualifications, financial status, honesty etc. For this reason we note an increasing percentage of delays uncompleted projects, projects without a permit etc. and as such, care is needed. For this reason I have prepared for your consideration our firms “10 Building commandments” which every potential real estate buyer should follow as much as possible.

Buying in Cyprus is easy, but selling your property is another matter however. One must compete with the aggressive and well connected developers, well organised estate agents [some of which charge in excess of the legal 3% -5% – rates reaching upto 15%] so you must take into account not to be in a particular hurry should you want to sell your property.

As I have said before, real estate prices have recently moved upwards at a rate of 20%. This is partly due to the foreign interest which represents approx. 20% of the total real estate acquisition in Cyprus. This is a very high percentage especially where it is concentrated in certain areas. So care is needed since if you chose to invest in such popular areas of foreign people concentration, you stand a higher risk of price adjustments up and down, since foreign people behave differently than the locals whose demand/supply is inelastic.

The following table is quite an interesting one illustrating foreign peoples concentration [on a % of the total demand of the area]

Pafos Limassol Larnaca Nicosia Famagusta

90% 40% 50% 5% 50%

What are we going to do with the Russians my dear friends? As this country becomes more stable and as oil prices move upwards so the middle/upper middle income, Russian people will become more and more financially able and to turn their attention to the holiday home destinations. The average sale prices per sq.mt. for this type of property that the Europeans usually buy is in the region of CP1.500 – CP2.500 [max.] per sq.mts., the Russian market with a particular interest for Limassol, has even shown prices of CP4.000 – CP6.000/sq.mt. for beach units.

With a mathematical calculation Cyprus beach and even the near the beach locations will be acquired by the foreign market and this is something which one must consider. Foreign buyers demand affects the local population whose income is not competitive to the foreign market and who is gradually outpriced.

This will create several problems, whole areas/towns will be inhabited by foreign residents, at periodic visits [see Sotira area west of Ayia Napa] and even the complete take-over of small villages and I dare say towns [see Pafos in 10 years’ time]. Ofcouse I am not against the foreign market and I know that Cyprus cannot go back to the restrictive system on foreigners real estate sale, so it is more of a theoretical approach than otherwise.

We live in a global economy and now with the E.U. travelling and settlement abroad will become easier and easier. Cyprus is at a fortunate position regarding the weather, be it with little drinking water, but in closing, I will say that yes, invest in real estate, but take care and do not outstretch yourselves financially. Do not depend on rental income to repay the loan, bearing in mind that you need around 10% of the 12 month income of a residence to cover repairs/void periods and management, in addition to any tax implications, including your tax liability in the event of a resale.

For those who are permanent residents however, my advice is try to learn some Greek words or even better, to speak the local language. I know that trying to learn Greek is most difficult [two types of languages, the written proper Greek and the local Cypriot speaking Greek – quite difficult]. If you manage to master part of the language, it will make your life much easier, although I am aware that even when you attempt to practice your Greek language skills, people will quickly reply to you in English.

If you manage to speak the language I can assure you it will make your life much easier/happier here.

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Finance

Pro Se Primer 101 – 3 – Constitutional Irreducible Minimum Requirements of Standing in Foreclosure

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STANDING AS DEFINED BY THE UNITED STATES SUPREME COURT

“Why put all of the blame on the attorneys? Hell, most of them don’t know the law.”

If you were to walk into a 2nd grade elementary school class room and see that all of the boys are standing on their desks shaking their butts, laughing and shouting, and throwing things at the girls in the class, who respond by screaming and running, and then you notice that the 2nd grade teacher is setting at his desk doing nothing to stop the chaos, would you really blame, the children?

No, it is the teacher who is charge of the room. If the teacher does not enforce the rules of classroom behavior, then the children will act like wild monkeys. How would they know not to?

It is no different than the judge in the court case who is charged with controlling and enforcing correctness in information and procedure in a court case.

If the judge does not enforce the constitution, which is all that keeps this country great;

If the judge does not make the attorneys prove their claims and/ or does not keep them from claiming transfers of ownership of essential Promissory Notes with assignments of incidental security instruments (mortgage or deed of trust) which do nothing but describe the collateral, then, of course the attorneys are going to forge and fake and lie, worse than wild monkeys;

Then lack of subject matter jurisdiction is the fault of the judge of the court. He or she places the burden of proof of standing on the borrower (very nearly every time), yet it very clearly is the burden of the court.

The judge promised when he took the job that he, or she, would enforce and protect the laws that come from the constitution and that they defend the court ferociously from losing the public trust. Maybe that was too much to ask from a pompous ass.

Why did we all expect more of judges and attorneys anyway?

If I am any part of the public, then I can tell you for sure, the courts have lost some of the public trust.

It is difficult to pull Borrowers back from their searches for Promissory Notes, Assignments of Mortgage, MERS, PSA etc., etc., thinking like Dick Tracy and looking for a way to “prove” that the party trying to foreclose on them does not have the authority, or, STANDING, to do so.

But, if what I say is true and the judges are letting the attorneys run amuck like the 2nd graders in my description, who can blame the attorneys for running amuck. “Amuck” is quickly becoming synonymous with the “actions of the courts”.

If you had seen judges simply ignore proof when it is presented as much as I have, then what I am really trying to say is that this whole thing is only about Standing and in constitutional law only the court (the court is the judge and the judge is the court.) has the initial burden of determining if the foreclosing party is a Plaintiff with Standing.

It is only the Supreme Court that has original jurisdiction over all issues of Constitutional rights. No state judge or local judge should claim that they have superior jurisdiction to the Supreme Court and it’s decisions.

The way it has been practiced for the last 15 to 20 years has been exactly the opposite.

The judges have been sitting up there on their hands on the bench and waiting for the Borrowers to describe what the foreclosing party was up to and forcing the Borrower prove it. These cases nearly always begin with the judge placing the burden on the Borrower to prove what the Foreclosing Party has tried very hard to hide. That is a ridiculous premise. John Adams, Thomas Jefferson and the rest thought so too.

If an act of fraud is working here, then by definition the act was meant to be kept hidden.

How would the Borrower prove or disprove something he was not privy to. It is the foreclosing party who must claim that he has been wronged by the borrower and it is this same foreclosing party that must prove it (not claim it) with evidence which is “concrete and particularized”.

So, the way it works in reality law is that the judge cannot even preside over a case until he reads what the Plaintiff (in judicial states and defendant in non-judicial states) has written in their lawsuit to make the claim that the court should hand them the deed to your home and that they should get to sell it and keep the money. How this has been allowed to happen illegally ten million times is a shameful disgrace for the majority of our judiciary. It is truly unbelievable. Not untrue, just unbelievable. (There have been many beautiful and sane rulings also, but it is nowhere near “fair” yet.)

It would be very difficult for me to show you how Challenging Standing s is supposed to be working, because no one is doing what I am doing, so it is still, in essence, only in my head. There are hundreds of citations concerning case rulings on the subject, but they are mostly contract law cases from other industries. Home Loans funded with a Promissory Note are all contract law, but no one is doing it enforcing them is the correct way as required by United States Constitution, the basis of all American law.

That doesn’t change how it works with your home loan, because contract law is what governs home loans.

So, since it is the judges burden to know that he or she has subject matter jurisdiction, which he needs to even begin the case, he must see the proof of standing the Foreclosing Party wrote in his lawsuit.

Borrowers, before anything else, you must first understand the proof that is required to establish Standing. If prooff has not been presented and the judge rules without Standing and therefore without subject matter jurisdiction, then he has broken the law and this is the only situation where a judge does not have “absolute immunity”.

If he rules against you, right or wrong, without having “subject matter” jurisdiction he has done so as a “civilian” and if has barred you from any of your constitutional civil rights, he is liable to you for any money or property harm that you have suffered. You don’t really sue the judge as a judge, you sue the man or woman who acted as a judge without the requirements needed to create a legitimate court with subject matter jurisdiction.

There was no legitimate court for any foreclosure case that I have ever seen. I have seen as many as anybody.

So, first things first. Review, slowly and carefully what the US Supreme Court has determined is the constitutional minimum requirements for Standing. The words they use is the strategic offense you will use to keep your house safe from anyone that you do not owe the money to.

Let me know if you can see how those words fit your situation. If not, we will go over them again before moving on, as to how and when we would apply them.

Below is an actual paragraph from my own motion to vacate a void judgment of foreclosure.

Plaintiffs have filed to Invoke their Rights to Challenge the Standing of the Defendants at any Time Under Article III of the United States Constitution earlier into this court case, yet this court failed to even mention or give any recognition that the court had even read the Borrower/Plaintiffs’ invocation of this fundamental constitutional civil right, which was foremost the responsibility of this court.

Plaintiffs state as follows and the court ignores at its own peril:

1.) That Article III of the Constitution of the United States and the Supreme Court have established a constitutional irreducible minimum set of requirements for a party in a genuine dispute to establish Standing. Without Standing of the Foreclosing Party, all courts in the land must acknowledge that the court has no jurisdiction to hear any merits of a case and must dismiss the subject action, in this case the void and fraudulent foreclosure of Plaintiffs’ property.

1a.) That only the United States Supreme Court has original jurisdiction over constitutional question issues.

(The decisions of the United States Supreme Court, whether right or wrong, are supreme: they are binding on all courts of this land, Hoover v. Holston Valley Community Hospital, 545 F. Supp. 8, 13 (E. D. Tenn. 1981) (quoting Jordan V. Gilligan, 500 2 F.3d 701, 707(6th Cir. 1974).

(The lower courts are bound by Supreme Court precedent, Adams v. Department of Juvenile Justice of New York City, 143 F.3d, 61, 65(2nd Cir. 1998)

(Walker v. Quality Loan Service Corp. of Washington et al., No. 65975-8-1)

(Washington State Supreme Court, Bain v. Metro. Mortg. Group, Inc., et al.175 Wn.2d 83, 285 P.3d 34 (2012))

2.) That the requirements in a case of Non-Judicial Foreclosure actions are:

1. The foreclosing party must claim and prove with concrete and particularized evidence that it has sustained and Injury in Fact.

2. This Injury must be fairly traceable to the foreclosed party with concrete and substantive evidence.

3. The court must be able to redress the injury with a ruling in favor of the injured party.

3.) That if it is the alleged foreclosed party that is the claimant party then it must also 1. claim and prove an injury in fact. 2. Its’ injury must be fairly traceable to the foreclosing party. 3. Its’ injury must be able to be redressed by the court.

4.) That the United States Supreme Court defines the requirements of Standing as:

3.1.B. The Constitutional and Prudential Requirements of Standing

Inherent in the constitutional limitation of judicial power on cases and controversies is the requirement of “concrete adverseness” between the parties to a lawsuit. The rise of public interest law litigation involving claims of non-economic loss has forced the Supreme Court to craft an analytical framework for determining whether the requisite adversity is present. The Court requires that plaintiffs establish that the challenged conduct caused or threatens to cause them an injury in fact to judicially cognizable interests. By establishing that they personally suffered injury, plaintiffs demonstrate that they are sufficiently associated with the controversy to be permitted to litigate it. The question of injury raises two questions –

(1) what kinds of injuries count for purposes of standing and

(2) how certain the injury must be if it has not yet occurred.

3.1.B.1. Injury in Fact

The Supreme Court has held that, to satisfy the injury in fact requirement, a party seeking to invoke the jurisdiction of a federal court must show three things:

(1) “an invasion of a legally protected interest,”

(2) that is “concrete and particularized,” and f

(3) “actual or imminent, not conjectural or hypothetical. The following section discusses several types of injuries considered by the Supreme Court in determining whether there is a legally protected interest.

3.1.B.1.a. Economic Interests

The Supreme Court has had no difficultly determining that economic interests are legally protected interests. More difficult is determining when economic injury that has yet to occur is sufficiently imminent and likely to confer standing. The Court has been relatively forgiving in this regard. Economic injury need not have already occurred but can result from policies that, for example, are likely to deprive the plaintiff of a competitive advantage or a bargaining chip. In Clinton v. New York, for instance, the Court held that New York had standing to challenge the veto of legislation permitting the state to keep disputed Medicaid funds. The veto left the state’s ability to retain the funds uncertain, subject to the outcome of a request for a waiver. Despite this uncertainty, the Court regarded the “revival of a substantial contingent liability” sufficient to confer standing.

3.1.B.5. Injury Fairly Traceable to the Challenged Conduct

In addition to alleging injury in fact, the plaintiff must demonstrate that the injury is fairly traceable to the defendant’s unlawful conduct. In cases in which the government acts against the plaintiff, causation is simple.

3.1.B.6. Relief Sought to Redress Injury

A corollary to the Supreme Court’s requirement for standing, that the injury alleged be fairly traceable to the challenged conduct is the separate requirement that the relief sought must redress the injury. In the great majority of cases the inquiry into causation and redressability are indistinguishable.

Thus, in Warth, the Court held that there was no reason to suppose that the elimination of exclusionary zoning would enable the plaintiffs to obtain housing in Penfield. In Eastern Kentucky Welfare Rights Organization, the Court held that there was no reason to think that revoking the IRS Revenue Ruling at issue would assure that the next ill or injured poor person would be admitted to a hospital.

Furthermore, in Allen, the Court held it was entirely speculative that revoking tax-exempt status for allegedly discriminatory private schools would serve to foster public school integration. What is peculiar about the Court’s concern for redressability is the elevation of the question of remedial efficacy to constitutional status.

While the scope of equitable relief to redress unlawful governmental action has long been a matter of controversy, not until City of Los Angeles v. Lyons did the Court clearly articulate the requirement of remedial efficacy as a constitutional component of standing. The plaintiff in Lyons sought damages and injunctive relief after being choked by city police officers. He alleged that the city permitted the police department to use unnecessary choke holds indiscriminately. The Court conceded that Lyons had standing to sue for damages. However, the Court held that he lacked standing to seek injunctive relief, as an injunction would not redress his injury because it was unlikely that he would be arrested and choked again.

You really aren’t trying to outsmart attorneys or that joke of an entity the foreclosing party. What you really want to do is to place the judge in as much of a pickle as you are in (jeopardy).

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