WINTER 2017

110
THE DISTRIBUTOR’S LINK
DENNIS R. COWHEY THE FUTURE IS NOW from page 42
Many companies in the Fastener Industry are solidly
established in the methods and business practices that
worked very well 50 years ago. Others are moving forward at
a rapid pace. The companies that fall behind in technology
rapidly become takeover targets for the more successful
companies. When that time comes, their technology (or
lack of it) profoundly affects the price that they can get
when they sell their company.
Which Path Are You On?
It pays to take time to conduct a detailed assessment
of where you stand when it comes to the technology that
you use. Do you have “clean” data? Are your records up
to date? Can you easily access and analyze your data? Do
your field people have remote access to information? Do
you have an online presence? How well is your inventory
managed? Is your computer related hardware up to date?
Technology Is Competitive Edge
Access to information and the ability to place orders
from the field is a huge competitive advantage in the
fastener industry. Time is of the essence and there are way
too many details for someone in the field to just “know”
the answers to customers questions. How well are your
salespeople equipped? I can assure you that many fastener
companies are taking advantage of these and other friction
reducing technologies to make their businesses run more
efficiently. Their customers really appreciate it and their
salespeople have an easier task, while at the same time
they are doing a better job.
Choose Your Path
Each company must choose their path. If you don’t,
your path may choose you and lead you in the wrong
direction. Status quo is not the way of the world these days.
If you question that, just look at the news, conventional
wisdom said Brexit would not happen and conventional
wisdom predicted that Donald Trump could not win the
Presidency. What “conventional wisdom” are you holding
on to that is taking you on the wrong path? Look again.
DENNIS R. COWHEY
BART BASI ENDING THE CONFUSION REGARDING CONVERSION TRANSACTIONS OF THE LLC & NON-LLC from page 50
Partnership to Corporation
When converting from a non-LLC/partnership or
LLC filing IRS Form 1065 to a corporation, this is not a
distribution. It is an exchange of assets to the corporation
in exchange of shares of stock in the newly formed
corporation. One advantage of this conversion is that
corporations are generally lower cost to maintain year-byyear
and the formation fees are generally cheaper as well.
For the small/household based business, this can be a
positive factor.
Corporation (includes both S or C type) to an
LLC/Partnership
This is a distribution and it is taxable. This can be an
attractive conversion, though. Limited Liability Companies
are great for liability exposure to the extent or better than
a corporation. Additionally, in 16 states and in one territory
statutes allowing, “Series LLCs” have been enacted. The
states include: Alabama, Delaware, DC, Illinois, Iowa,
Kansas, Minnesota, Missouri, Montana, Nevada, North
Dakota, Oklahoma, Tennessee, Texas, Utah, Wisconsin,
and Puerto Rico. Series LLCs allow an owner to place
assets in “series” and that contains liability through cross
section existence.
Conclusion
LLCs can be converted every 60 months. Given the
technology we now have, the concept of a company has
become more fluid. No more do companies have to carry a
rigid structure cradle to grave. In the electronic/computer/
internet age, a business can change its name, concept,
and structure as often as it suits the owners to change it.
The Center routinely advises on these matters, as well as
business succession and valuations of companies.
BART BASI