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Case #15 Case #16


Case #9
Outmoded Deferred Compensation Plan

S Corp with national distribution. Two owners, minimal top management and 250 employees.

Company had deferred compensation arrangement establish pre-1986 which had not weathered the changing tax laws. Company also had an outdated buy/sell and estate plan for the owners. In addition, they were interested in increasing their golden handcuffs for their financial officer and operations officer.

BMI Solution:
BMI reviewed the existing deferred compensation funding for the company an recommended a restructure which included changing the documents to reflect the AMT tax now applicable to corporations. BMI recommended an additional deferred compensation arrangement for the top officers to be funded by the company based on profitability. BMI reviewed the buy/sell and estate plans for the owners and suggested several changes to improve the tax free benefits of existing programs they had in place.


Case #10
Conversion to S-Corp

Large privately held mortgage company with multiple locations. Majority shareholder had sold stock to several key managers.

Majority Shareholder wanted to convert company to S Corp. He wanted to simplify decision making by purchasing all of the stock from the minority shareholders.

BMI Solution:
BMI arranged for an appraisal of stock values and recommended a tax free purchase of stock. Plan would convert stock to cash over an extended period of time. Shareholders would be able to defer tax on sale until they actually took receipt of the sales proceeds. In the meantime, the value would continue to grow with interest tax deferred until liquidation. Subsequent to purchase, owner entered into long term buy/sell agreement to protect company in the event of his death.

As a result of the redemption, client recognized the loss of equity participation for the management group. BMI recommended funding a non-qualified equity replacement plan for the managers. Plan was based on minimal benefit but had equity kicker if the company met plan or executive exceeded specified objectives.


Case #11
Disability Plan for Key Personnel

Large building contractor with several key personnel.

Company was concerned about cyclical nature of construction and wanted to tie key management to company by using a long term incentive plan. In addition, company recognized there was a potential disability liability in the event one of their key people were hurt and unable to work.

BMI Solution:
BMI was retained to design and implement a long term incentive plan for the company. Plan was designed to address the key factors facing a construction company. Plan included a disability feature which covered the key managers for 65% of salary in the event of disability from accident or sickness.



Case #12
Buy/Sell Agreement with Estate Plan

Two brothers and two minority shareholders owned an interest in a medical manufacturing company. Over 250 employees with significant growth potential.

Majority shareholder and brother had no estate plan or buy/sell to protect family. Minority shareholders wanted exit plan in case majority shareholder should decide to sell or might die.

BMI Solution:
BMI, working with attorney and accountant structured a buy/sell agreement based on appraisal done by BMI appraisal service. Buy/sell was coordinated with estate plan to provide tax free dollars to finance purchase of stock or payment of estate taxes.

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