Outside Legal and Financial Advisors – Choose Them Wisely!
February 28, 2011
Every automobile dealership should have a CPA and an attorney that is familiar with their business and that they can rely upon. They should be part of the trusted “inner circle” of your business. These important advisors should be competent, timely and remain up-to-date with their practices and continuing education. Too often, we see companies using their “cronies,” family friends or old school buddies that were chosen because of past relationships and not their competency or abilities.
Your CPA should be on the front lines with you. We know of CPA’s who regularly visit their client’s dealership and often take the time to subscribe to industry publications. A CPA can spot negative trends in your business such as excess payroll, inventory, debt and past-due receivables. Today’s tax laws are ever changing; you may be unaware of new rules that could affect your business. We recommend that you have a tax-planning meeting with your CPA at least quarterly.
Your attorney should also know your business, know your ownership structure and know your company’s (and your family’s) long term goals. He should know the history of your business, your key employees, your litigation history and the fundamentals of your insurance coverages, etc. Just like dealer operators, there are good, bad and mediocre attorneys and CPA’s. Your attorney or CPA is not the person or firm to sell your business, but someone who knows your business and can be an invaluable asset during the due diligence process of a sale. Sometimes, however, we see outside advisors such as these that have grown complacent with their business relationships over time. We have seen outside advisors that have caused undue delays and given misdirected or uninformed advice because they are afraid they may lose a long-term client.
We recently worked with a client who had waited more than 3 months for stock information from their attorney so that a portion of ownership could be passed down to family members. We have other “horror” stories of outside CPA’s and attorneys causing undue delays or problems with business sales, stock transfers and even refinancing. Just as with any other vendor, you should have the expectation of timeliness, competency, relevancy and ability of your attorney and CPA. Choose them wisely and don’t be afraid to make a change if necessary!
Please contact me should you have any questions.
Leslie E. Chayo, Attorney at Law
By telephone 310.277.6337