Much has been published and much is still to be published on the impact of the new federal tax law recently made effective generally as of January 1, 2018. Based on our experiences with the operation, management and sale of manufacturers’ rep agencies, here are some thoughts on the new tax laws.
S vs. C Corporation
For a number of years, the S corporation has been the entity of choice for manufacturers’ representatives because S corporations themselves generally are not taxed. Instead, the income or loss of an S corporation rep agency is taxed at the shareholder level. In addition, … Read the rest
With the improving economy and manufacturing activity on the rise, many reps and principals are entering agreements for new lines.
Although much effort is invested in developing relationships and securing new business opportunities, in the initial excitement and optimism, far too often important details of the representation are overlooked, which can cause major trouble down the road.
This article addresses three recurring contract situations and identifies some best practices for reps and principals facing those issues.
Best Practice # 1 — Set the Right Term (Length) for the Agreement
A key consideration is the term — or length — of … Read the rest
Planning for Changes in Control and Welcoming Opportunities With the New Owner
Your best principal was just sold. Hearing those words is generally not welcome news to the established rep. In some cases, new relationships are forged and a mutually rewarding situation continues for the rep and new owner. In other cases, the new owner takes the business in a “different” direction, putting future sales and the rep’s commissions at risk.
In recent years, principal ownership changes have increased consistent with the trend of increased merger and acquisition activity. The purpose of this article is to provide guidelines and a … Read the rest
The purpose of this article is to identify guidelines for enhancing the value of your agency, as well as important items to consider in succession planning for your agency. The guidelines are based on the author’s experiences of being involved in more than 100 agency transitions. First, the stage will be set with a look at valuations, along with important structural elements and historical perspective. Then, we will examine some strategic planning points that might increase the consideration payable to you, if and when you decide to pass along your agency.
Valuation in the rep agency world is elusive. … Read the rest
Recommendations made by a manufacturer’s rep are an issue that arises all too often in the world of reps. It is important to set out a framework before describing how to best manage the issues associated with recommendations by reps.
Successful manufacturers’ reps are frequently degreed professionals with many years of hands-on experience in their respective industries. They can be a wealth of knowledge when it comes to practical applications and performance criteria for products. Their knowledge and information can be invaluable to principals and customers, and is often key to closing a sale.
Rep Theory and Practice… Read the rest