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Case #15 Case #16


Case #5
401(k) / 401(n) Plan Restructuring

Company with 250 employees in three locations including Puerto Rico.

Privately held company wanted an incentive based long term compensation plan for all employees and a special plan for top management.

BMI Solution:
BMI designed a 401(k) for the client but recommended the top twenty people withdraw from the plan. This group was placed in a non-qualified 401(n) plan with an incentive match. In addition, BMI restructured the ownership transition plan for the two owners. Restructuring included a redrafting of the buy/sell to resolve the estate tax problem faced by the founding shareholder. BMI was able to save significant income and estate taxes for the company and family.


Case #6
The Leveraged ESOP

National service company with 3,500 employees in multiple locations. Management consists of 250 executives with 60 performing administrative and top management functions.

Company needed to raise capital to fund a holding company to purchase other entities. In addition, client wanted to reward top management for long-term service.

BMI Solution:
BMI structured a leveraged ESOP to fund the holding company. Plan included all full-time employees. BMI provided complete administrative services including arranging for the annual appraisal. In addition, ESOP purchased liquidity to find the purchase of additional stock in the event either of the major shareholders died before the plan was completed.

A long term incentive plan was established for top management to provide a base of retirement income. A deferral plan was also implemented along with an executive disability plan for the same group. The company also created a 401(k) for the entire company to provide tax savings.


Case #7
The Incomplete Business Plan

Small software company with strong national distribution system.

Company was in the process of raising capital from a venture fund and had not put any compensation systems for top management into their business plan. Company needed to determine salary levels and long term incentive plans commensurate with company's projected growth and value.

BMI Solution:
BMI arranged for an appraisal and completed a comprehension study for the venture fund. In addition, BMI arranged for keyman coverage to cover fund liabilities in the event one of the founders died. BMI also designed an ESOP for future funding of growth.



Case #8
Estate Taxes

Petroleum/land company with existing drilling operation with 125 employees.

Owner was facing significant estate tax costs based on fair market value of land and mineral rights. Client wanted to pass future appreciation to children while values were depressed.

BMI Solution:
BMI arranged for a current appraisal of existing assets and created a gifting program to the children to be funded over the next several years. In addition, the client separated the company into two entities and sold stock to children at depressed values in the land. To guarantee the preservation of the assets, client agreed to fund the tax liability with discounted dollars through an estate tax free zero coupon bond yielding 10% with a maturity at death.

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