beginner problem

[Admin]

Originally Posted by Unregistered

If y ou were out meeting with a contractor, according to your logic, you were out wasting there time and yours.

Please read my previous post more carefully. You will see that I state several times very clearly that we meet with contractors either when necessary or when they would like to, not just to meet. Yesterday it was necessary and so I met with them.

I'm starting to sense some agression here in your responses, if so please don't bother participating in our community. The forums were to set up to create a community of industry professionals to help educate the public. We have no room for agression, as these forums are for discussion amongst professionals.

Also, if you would like to participate further, please create a user name. Is there a reason for the secretiveness?

Absolutely no agression .... just don't like it when someone twists my words around to try to make me look the fool.
If you don't want me to participate, no problem, after all, it is your board.

[Admin]

Sir/Madam, I am sorry you feel I am twisting your words around, I am not sure what part in particular you feel I did, but in any case that was not my intent. However, since you have not registered I don't think you have much to fear as no one knows who you are. As I stated earlier, my intent for these boards is simply the collaboration of great minds in our industry. I feel you have a great deal to offer our community, but lets both do ourselves a favor and tone down the negative vibes we are both apparently sending out.

So lets start over...I look forward to you registering and being an active member of our community. You can do so at the following link: http://forums.jwsuretybonds.com/register.php?

Forget the UFC (Ultimate Fighting Championship) I will let you Bond agents go at it.
First let me say I appreciate everyone's time on this Forum. As far as buying the business it has been grossly mismanaged over the years. My Father in law is an excellent man in the field with vast technical knowledge and has an excellent work history. That good at one thing does not make you good at another and that is his problem as he admits. The company has bought lots of equipment and put 5 children through college and they have a 100 acre farm worth around $750k. His health has been failing and he may have a couple of years left in the field. He has produced a lot of income but has let it go out as fast as he made it. There was a simple mistake made (not getting a form signed) by his eldest son that cost him $200k (ouch!). His son leaves him shortly after and sues his father for his portion of the business that his Dad gave him to begin with. Between that and gross mismanagement of funds has set him back. He wants this company to go on. That is the reason he would rather sell to me than to liquidate.

[Admin]

That was the forums first online tiff, sorry you got caught in the middle. Honestly, from what you told me my advice is as follows...

Your financials are not going to get you very far in the current bond market. For now, I suggest doing private work and bonded jobs under $100K to rebuild the financials. You can apply for the under $100K contract bond program, which is based on the owner(s) personal credit.

Keep in mind the sureties don't know you or your company, nor do they have the resources to fully investigate your company's potential risk. Your business financial statement is the best way for the surety to see how well you run your company, so it is imperative that it remains healthy.

I also recommend looking for a good cpa, you won't be able to obtain a very large bond line with in house financials. If you like, I can give you the number of a great CPA that actually understands suretyship. I refer all my clients in need of a new CPA to him, I don't get anything out of it other than a great financial statement for my clients to present to the sureties.

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"That was the forums first online tiff, sorry you got caught in the middle. Honestly, from what you told me my advice is as follows..."

Well, if it was a tiff, I too apologize, because it wasn't meant to be. Just a disagreement about a few things. Will have to chastise my fingers for typing with an attitude that wasn't meant to be.
Having said that, I unfortunately have to disagree with some of your comments -- this is not another 'tiff' but a different take on the matter.



"Your financials are not going to get you very far in the current bond market. For now, I suggest doing private work and bonded jobs under $100K to rebuild the financials. You can apply for the under $100K contract bond program, which is based on the owner(s) personal credit."

If you saw the financials, then this could be a very accurate statement. If not, I disagree with the statement. Someone needs to take a good hard look at the statement and see where they stand, what can be done now and in the future. As an example ... he's heavy on equipment it seems, is there someway to utilize the equipment to improve bonding situation. Is collateral available, is funds control an option? These may not be viable options, but I don't think you can determine the options without thoroughly reviewing everything about the case.

"Keep in mind the sureties don't know you or your company, nor do they have the resources to fully investigate your company's potential risk. Your business financial statement is the best way for the surety to see how well you run your company, so it is imperative that it remains healthy."

But keep in mind that sureties want to know everything they can about your company and the more positive that information is the better. So yes, it is imperative that if it is not healthy financially, that it get healthy financially.

"I also recommend looking for a good cpa, you won't be able to obtain a very large bond line with in house financials. If you like, I can give you the number of a great CPA that actually understands suretyship. I refer all my clients in need of a new CPA to him, I don't get anything out of it other than a great financial statement for my clients to present to the sureties."

I must not have picked up the fact that he had in house financials. If that is true, no question, you need to find a good construction oriented cpa as well as a good knowledgeabe surety agent. Actually, even if you do have a CPA, he should be knowledgeable in the construction industry and surety industry. The only thing I would disagree with you on your advise (and not a major disagreement) is that I tend to give out three names of CPA's in their area, all of whom are great with contractors and sureties, for them to interview. I feel that among the three in their area, they should be able to 'click' with one of them.

Again, didn't mean to start a tiff ... fingers have been properly reprimanded!

[Admin]

Originally Posted by Unregistered

Well, if it was a tiff, I too apologize, because it wasn't meant to be. Just a disagreement about a few things. Will have to chastise my fingers for typing with an attitude that wasn't meant to be.
Having said that, I unfortunately have to disagree with some of your comments -- this is not another 'tiff' but a different take on the matter.

I also appologize for any miscommunications for statements that may have come out wrong. I still urge you to create a username, I value your input as I always like to hear other professionals views, especially when they are different than my own. At the very least, use a different name than 'unregistered' when posting

Originally Posted by Unregistered

If you saw the financials, then this could be a very accurate statement. If not, I disagree with the statement. Someone needs to take a good hard look at the statement and see where they stand, what can be done now and in the future. As an example ... he's heavy on equipment it seems, is there someway to utilize the equipment to improve bonding situation. Is collateral available, is funds control an option? These may not be viable options, but I don't think you can determine the options without thoroughly reviewing everything about the case.

Read the original post again...We know they are showing a loss for last year and have little liquidity. Any surety will want to see them become more liquid and turn a profit. I am not saying that the under $100K program is where they will stay, but it is a good baby step to get them back into public work as soon as next week. It is a good temporary solution until we can get the financials where we need them.

Originally Posted by Unregistered

I must not have picked up the fact that he had in house financials. If that is true, no question, you need to find a good construction oriented cpa as well as a good knowledgeabe surety agent. Actually, even if you do have a CPA, he should be knowledgeable in the construction industry and surety industry. The only thing I would disagree with you on your advise (and not a major disagreement) is that I tend to give out three names of CPA's in their area, all of whom are great with contractors and sureties, for them to interview. I feel that among the three in their area, they should be able to 'click' with one of them.

I agree that referring multiple CPAs is ideal. However, I am extremely picky about who I refer my clients to and with all the financials I review I have never seen a more quality statement then the gentlemen I refer my clients to. If I could find another CPA with the same surety/construction knowledge I would certainly give my clients that option.

Originally Posted by Unregistered

Again, didn't mean to start a tiff ... fingers have been properly reprimanded!

I just slammed mine in a car door for you! Just kidding...

I'm curious, what agency do you work for?

The company showed a $22 dollar lost IN 2004' . They use a outside CPA and I am not sure what his qualifications or knowledge base lies. The company has always paid their bills but over the last year it has been slow pay. So what you guys are saying at that point the bond company looks at the priciple owner's financies which right now looks like the companies or worse. The company has a lot of equipment free and clear but cash flow is slow. It was suggested to me to dissolve that company or sell it on paper to another person with better credit and disassociate itself from that name to get away from the rocky credit history. Now you have a new company with all free and clear equipment with a principle owner with a good credit rating that can start out with small jobs (under $100k) and build its own financial stability. Would you bond guys take a chance on this owner if he had no previous construction experience? We he have to have a lot of cash in the bank? How many jobs would take before a bond company would loosen up and allow higher bids. How does that process work? Thanks In advance for your time.

[Admin]

My mistake, I thought I read the financials were in house. Bonding companies will look at the business AND personal financials. You do not have many options being that there was a loss last year and there isn't much liquidity to the business.

In order for anyone to go in depth on this they would have to see your business financials. If you are looking to bid on a job in the near future, I would suggest setting up the $100K bond line. From there you can fax in financials and discuss a "game plan" with one of our agents. If there is no immediate need for bonding, you can fax a copy of your financials to us at (215) 862-0122 with a request for review by an agent. Be sure to give a brief explanation of what your company does and your current situation and don't forget to include your contact information (you wouldn't believe how many do that!)

Let me ask a question -

Don't you think collateral or funds control could possibly be some help in getting bonding over $100,000?

Unfortunately, we are all talking without proper information, so all of this talk of the $100,000 program or alternatives is putting the cart before the horse.
But, just for the sake of having some 'fun' discussion, why wouldn't you think those are an option

Also, some other facts we've learned -- lost a small amount of money last year. OK, not what we want to see, but, not an overwhelming amount. Especially for an equipment heavy company with heavy depreciation.
Another interesting point a lot of equipment, free and clear. Possible options with some financing on the equipment.

Does the owner have any personal funds that can be put into the company by way of additional paid in capital or by a long term note subordinated to the surety? Just a few things to look at.

As for the question about starting from scratch with a new owner who has no construction experience. I am not sure this is a good option While the company is struggling right now, the track record may still be good, or at least better than no track record. Perhaps new management showing a financial turnaround is better than starting from scratch Again, though, all speculation without knowing what the financials look like and what the history of the company looks like.