The "Order girl" (Investment Newsletter)

“The nature of business is the creation and nurture of wealth producing relationships” ?Peter F. Drucker.

Relationships in your business. Where are they and how valuable are they?

Let me tell you a story that I participated in.

Once upon a time, there was the sweetest little manufacturing company you ever saw in Orland, California, doing about $20 million a year’s worth of business.

They were a division of a larger $150 million manufacturing company in Garland, Texas, who was yet a division of a large holding company out of New York City.

When the Garland company started what turned out to be in an inexorable decline, this little company just rocked along making profits.

This attracted the attention of a “vulture capitalist” in Dallas. ?He offered them $25 million for their sweet little division.

They turned it down because: “it’s the only thing we have making money”.

A few months later , when the parent company shut down abruptly they went back to the Dallas capitalist and said they were ready to take his deal.

He said he didn’t want it.

They said they would take less than his original offer. He didn’t want it at any price.

“It’s been closed for 90 days. All of the critical relationships are broken.

?You’ve ?lost the wealth of tribal knowledge that were your employees. You’ve lost your supplier relationships and you’ve lost your customer relationships.

?I don’t want it at any price.”

This implies that his entire original $25 million offer was for the relationships, not: fixtures, equipment, inventory or intellectual property.

Relationships were the full value?

Well maybe not the full value as our company bought, all of the inventory, intellectual property and all of the equipment, at the bankruptcy auction for $600,000, so the relationships were only worth $24,400,000.

About that time our company hosted a distributor meeting in Cancun Mexico.

Many of our distributors had only had regular contact with our field sales people. ?This was our first big gathering.

Who do you think was the most requested home office employee that they wanted to meet?

The president? The engineering manager? ?The CFO who granted them the credit they needed to grow their business?

Nope! They all wanted to meet Karla, our “order girl”.

Karla was the one they trusted to get an order out that day when they called her at 2PM and they “absolutely positively HAD to have it the next day” to service their customer.

Gallop recently released a study showing that employee turnover is costing US businesses $1 trillion a year.

Who “owns” the key relationships that sustain the enterprise value that you have worked so long and hard to create?

What are you doing to keep them from walking out the door?

Who are your “key employees”?

ERISA regulated plans decide for you. ?Primarily based on income. ?

Section 162 plans give you control of how you can use retirement plans to “recruit, retain and reward” your key employees and do it in a way that creates “golden handcuffs”.

The University of Michigan used a multi-million dollar plan to lock in their football coach.

Let us show you how to protect the most valuable asset you have.

My partner, Mark Morgan, has been doing high net worth/corporate advising for over 25 years. ?

In my opinion, he stands head and shoulders above the crowd in: success, education and experience. ? Please see his biography on our website. ?Morgancapitalsolutions.com

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Thanks for your valuable time, ?

Neal ?

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Neal G. Shields

Director

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MORGAN CAPITAL SOLUTIONS, LLC

550 Reserve Street, Suite 190 | Southlake, TX ?76092

Office: ? +1 682 339-1871

[email protected]

Securities offered through Triad Advisors, LLC, Member FINRA / SIPC. ? Advisory Services offered through Osaic Advisory Services, LLC , a registered investment advisor. ? Morgan Capital Solutions, LLC and Osaic Advisory Services, LLC ?are not affiliated.

Foot notes

1Harbaugh up t $7M with Michigan paying insurance premiums. ?USA Today Aug 18, 2016

2 These benefits are applicable to “Section 162” or bonus implementations there are other structures that may be a better fit for company owners.

3 “This fixable problem costs U.S Businesses $1 Trillion” ?Gallup Shane McFeely and Ben Wigert March 13, 2019