Petrogram - Spring 2011 - (Page 21)
Out & About THE INDUSTRY
Marketers’ Mission: Preserve Business Value and Thwart Government Pilfering
A wise and frugal government shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government. —Thomas Jeﬀerson
Mark Radosevich, PetroProperties & Finance, LLC
t the time of this writing, the Lame-Duck Liberals are attempting to lay some final rotten eggs on America before they are put out to roost. Daffy Duck Liberals seems to be a more appropriate moniker given their current exploits. Besides another one-year unfunded extension of unemployment benefits, they’re unhappy that they couldn’t extract more than a 35 percent share of family estates through the Death Tax provision. Never mind that the equity was already taxed, that much of it comprises liquid assets like land, buildings or equipment, or that the heirs may need to sell or dismantle the business to pay the taxes. Doesn’t matter; redistribution of wealth from the “rich” to the poor is paramount, and the Dems can’t grasp the inherent unfairness or negative consequences to family businesses and their employees. Since much of the downstream petroleum industry is driven by multi-
generational family enterprises, and despite the results of the recent election, marketers still ﬁnd themselves in the crosshairs of potential government intrusion. Thus, proactive transition planning for the next generation should be a high priority. There are several legitimate methods to mitigate estate taxes that have passed IRS muster, including something called a Charitable Remainder Uni-Trust or CRUT. This will help shelter a large portion of an estate and still provide control of the business. Drop me a line and I’ll point you in the right direction if this type of arrangement sounds interesting. Given the prospect of continued economic uncertainty and ongoing fuel margin volatility, we anticipate that the wholesale petroleum industry will experience a heightened level of business consolidation. Smaller marketers with diversiﬁed retail and commercial distribution businesses will ﬁnd the playing ﬁeld increasingly challenging. As such,
…proactive transition planning for the next generation should be a high priority.
important steps should be made to preserve business value and insure that a planned (or unplanned) industry exit is both strategic and seamless. In the area of dealer supply, the relationship between a marketer and its dealers must be formalized, including supply agreements, suﬃcient fuel delivery security and a tight credit arrangement. Correspondingly, the commercial business must be addressed, including the establishment of supply contracts, tighter credit and a correspondingly reduced level of receivables. Many smaller marketers in rural areas continue to deliver product on a handshake and oﬀer generous credit terms without suﬃcient security. It may work for the current owners, but this type of business arrangement is not suited to deliver maximum value in the event of a sale where buyers are looking for ratable gallons. For volume that originates from the bulk plant, ensure that suﬃcient margin is being garnered to oﬀ set the various inventory and handling costs. Although this process will be time-consuming, cumbersome and face strong
Table of Contents for the Digital Edition of Petrogram - Spring 2011
Petrogram - Spring 2011
Meet Your New Executive Director
FPMA Chapter Meetings Are a Success!
FPMA Member Spotlight
You’ve Been Sued and Your Insurance Company Denied the Claim: Now What?
Out & About the Industry
How Health Care Reform Will Aff ect Your Business
Create Competitive Disruption Th rough the “8 Ps”
Index of Advertisers/Advertiser.com
FPMA Featured Advertiser Marketplace
Petrogram - Spring 2011