Managing Wealth

Boards of Directors in Family Firms

Family Business Award

TWIN Awards

Small Business Person

The Future & Its Enemies

Telegroups

E-commerce Workshops

Job Opportunity Fair

Corporate Communication

Save on Commuting

Interlibrary Loan System

Corporate Angels

Corrections or additions?

Raising Capital: What Not to Promise

These articles were published in U.S. 1 Newspaper on May 12, 1999. All rights reserved.

Sell an interest in your company to an unsophisticated

person, and you might get yourself into trouble, says Robert D.

Frawley. He and Randy Harmon will give the free public seminar

on "How to Start a Business" on Wednesday, May 19, at 7 p.m.

at the New Jersey Law Center, off Ryders Lane in New Brunswick. Call

the New Jersey State Bar Foundation at 800-FREE-LAW for reservations.

Frawley, a graduate of Lehigh and Georgetown University Law Center,

is of counsel to Smith Stratton Wise Heher & Brennan, sponsors of

the New Jersey Entrepreneurial Network, and also has a Morristown-based

practice (973-451-1100). He has written his own guide to the legal

aspects of starting a company, and his experience ranges from public

companies to family businesses.

Frawley reported on changes in the "blue sky" securities laws

at the New Jersey Entrepreneurial Network meeting last week, and he

will also discuss this at the bar association workshop. More than

just stocks can qualify as a "security" for legal purposes,

he warns, and these avenues to capital count as securities if you

are dealing with more than a very limited group of people.

If you collect money in return for IOUs or promissory notes.

If you sell or give stock options.

If you sell or give interest in an LLC company.

You get into trouble, warns Frawley, if you sell a security

to an unsophisticated person and — here is the important part

— they lose money. If they make money, obviously, they are happy.

Those who got in early on Ponzi schemes were also happy.

Don’t take people’s 401k money, says Frawley. Don’t promise short-term

results. Deal honestly with your investors — don’t use their money

for your car payment. Do give out news to your investors, even if

it’s bad. Bad news is better than no news.

What can count as a fraudulent promise of success on investment in

your company? Any promise of the future which is beyond reasonable

expectation, says Frawley. "Normal exaggeration," he warns,

"can constitute fraud. A good plaintiff’s lawyer can make that

case."

Randy Harmon, meanwhile, is one of the three small business experts

to give tips to the Association of Internet Professionals on Wednesday,

May 12, at 6 p.m. The meeting is free and will be held at the Sarnoff

Corporation on Fisher Place. Call 609-924-8864 for information.Harmon

directs the Technology Help Desk and Incubator, a one-stop gateway

to accessing business and technology information (800-432-1832), and

at this seminar he will distribute his just-published business development

resource directory, with descriptions and contact information for

three dozen organizations ranging from Angel Capital Electronic Network

(which can connect investors with entrepreneurs over the Internet)

to the Washington Technical Liaison (which helps negotiate federal

contracts).

The directory is also available at www.nj.com/smallbusiness

Also speaking: Nat Bender, also of the Technology Help Desk,

and Dan Strombom, manager of the incubator known as the Trenton

Business and Technology Center.

Top Of Page
Managing Wealth

If there is one signal characteristic of the superwealthy,

says Brian H. Breuel, it is their willingness to seek help with

their planning. Breuel writes for both the rich and the rest of us

in his book for Bloomberg Press, "Staying Wealthy: Strategies

for Protecting Your Assets" (1998, $21.95). The adventures of

the rich can be an object lesson for those less well-endowed.

Breuel will be on a panel entitled "Managing Wealth" at MarketFair’s

Barnes & Noble on Thursday, May 20, at 7 p.m. Also speaking are Steven

Gittelson, senior editor at Bloomberg Press, and Dan Rottenberg,

author of "The Inheritor’s Handbook." The event is free; call

609-716-1570 for more information.

"The vast majority of wealth in this country escapes the federal

estate and gift tax," writes Breuel. "It happens by design

and through a dedication to the belief that it is permissible to pay

as few dollars in taxation as the law allows. In story after story,

one finds an enlightened team of professionals dedicated to helping

their clients minimize taxes."

Breuel has had all of these team jobs — attorney, financial planner,

stockbroker, insurance agent — at various times in his life. Breuel

graduated from the Lawrenceville School and Princeton University (Class

of 1966) and earned his law degree at University of Florida. He has

master’s degrees in financial services and management and the CLU

and CHFC professional insurance designations, as well as a securities

license. He had his own fee-based financial planning firm, his own

pension company, and now his own brokerage office, an Edward D. Jones

investment office at Princeton Shopping Center. He also spent six

years sailing around the world and writing novels. Recently he wrote

"The Complete Idiot’s Guide to Buying Insurance and Annuities"

(Alpha Books, published by Macmillan)

"It sounds easier to afford this planning on $20 million than

on $1 million," says Breuel. "However, in many cases, there

is some risk and significant expense involved."

Risk, indeed. He tells of how the Newhouse heirs took an aggressive

position that paid off well. S.I. Newhouse — who owned the

New Yorker magazine, the Times of Trenton, and the Star Ledger, among

other publications — died in 1979 with an estate of more than

$1 billion. "The family business was the largest asset, and the

IRS arguing that the control vested in the heirs made the stock even

more valuable, levied a tax bill of $609 million. The heirs argued

that the stock was worth much less because the voting shareholders

who were family members would have been reluctant to vote against

the decedent, but now were more inclined to be independent. This made

all of the minority interests worthless. They litigated the issue

in tax court, and in 1990, the court agreed with the taxpayers and

said the tax due was only $48 million."

Here’s another episode from the lives of the rich and famous: When

Joseph H. Lauder, founder of the firm named for his wife, Estee,

died with a $100 million estate, the IRS and the family valued the

stock differently. the IRS claimed the tax due was $89.5 million,

but the family said the amount should be $29 million. The court split

the difference.

Tips for the wealthy that might work for the rest of us:

Assemble a great team of estate and financial planners early

in your wealth-accumulation career , an excellent attorney plus

financial planner and an accountant, for valuing businesses and providing

insurance to prefund the estate tax.

Use life insurance to prepay estate taxes with discounted

dollars. Buy this insurance before your health fails and you are

uninsurable or must pay premium rates. If necessary, pay those rates.

"Don’t take rated policies personally; it’s about their willingness

to prefund your tax bill and your willingness to pay their premium."

Don’t be afraid to take a little risk in your estate planning.

"Just know what the risk is compared to the potential game. Put

yourself in your heirs’ shoes for a moment, and then make your decisions

based on your comfort level with the possible outcomes."

Consider offshore trusts if you have both asset protection

and non-asset-protection motivations. "This is not an area

for the weak of heart, but it represents a tremendously fertile ground

for estate planning in the decades to come, largely because of the

globalization of our economy and investments." For this, you need

$1 million to invest with foreign investment managers.

If you’ve got the million but prefer to be patriotic, consider an

Alaskan trust. For that, you don’t need to move to Anchorage.

Top Of Page
Boards of Directors in Family Firms

While members of family firms usually care more about

the business, are more committed and are willing to invest more time

and energy into it, family firms have their own unique challenges,

says Clayton P. Alderfer, professor and director of the Organizational

Psychology Program at Rutgers Graduate School of Applied and Professional

Psychology. For instance, if the founder director should have retired

10 years ago, who is going to tell him that? This is where a board

of directors can help, says Alderfer.

While most non-family firms usually have boards, many family firms

do not, says Alderfer. He will address this problem on Thursday, May

20, at 8 a.m. at the Eagleton Institute, New Brunswick. The session

is sponsored by the Rutgers Family Business Forum, one of two family

business-oriented programs offered by universities in New Jersey.

(Fairleigh Dickinson has a curriculum for family businesses at its

Rothman Institute of Entrepreneurial Studies.) Cost for the May 20

session is $45. Call 732-445-7504.

The board of directors is a group of people above the CEO who set

the policy for the whole organization, says Alderfer. Their responsibilities

include evaluating the performance of the CEO and finding a replacement

when a CEO retires.

The session will address the responsibilities of boards, characteristics

of effective boards, what factors aid and impede the development of

effective boards, and the special opportunities and challenges that

face boards of family firms. Session participants will also be assisted

to take constructive steps in forming effective boards for their firms.

"Problems between family members should not become business problems,"

says Alderfer. Maintaining the family dynamics in a family firm is

very crucial. For this reason, family representation on the board

should be minimal, like 25 percent, and definitely not a majority,

says Alderfer. "What is good for the family may not be good for

the business and what is bad for the family is also bad for the business."

A group of people from different professions with no vested interests

will be able to provide an objective perspective.

Top Of Page
Family Business Award

Your favorite Mom and Pop business can win an award.

Nominations are now being accepted for the Seventh Annual New Jersey

Family Business of the Year program administered by the George Rothman

Institute of Entrepreneurial Studies at Fairleigh Dickinson University.

Any New Jersey-based family business which now includes, or has included,

more than one generation, and whose policies and business practices

have had a positive impact on business and the community, is eligible

for nomination.

Companies can be nominated in one of two categories: family businesses

with annual sales/revenues up to $10 million and those with sales/revenues

over $10 million. Deadline for nominations is May 28. Call the Rothman

Institute at 973-443-8842.

Other sponsors are New Jersey Monthly magazine, PNC Bank, Horizon

Blue Cross Blue Shield of New Jersey, McCarter & English LLP, Pricewaterhouse

Coopers LLP, PSE&G, and DKB Partners.

Semifinalists, finalists, and winners in each category will be honored

at a luncheon at the DoubleTree Hotel in Somerset on October 5. Winners

will be eligible for the National Family Business of the Year Competition.

Top Of Page
TWIN Awards

Eight women have been named recipients of the Princeton

YWCA’s TWIN Award: Deborah Aldredge of Merrill Lynch; Leona

Brenner-Gati,of Janssen Research Foundation; Maria Harrison

of Covance; Mara Isaacs of McCarter Theater; Christine Lokhammer

of PNC Bank; Connie Mercer of HomeFront; Dorothea Coccoli

Palsho of Dow Jones; and Anne VanLent of Sarnoff Corporation.

The award ceremony and dinner will be Thursday, May 20, at the Princeton

Marriott at 5:30 p.m. Cost for dinner and the event is $85. Call 609-497-2104.

The Tribute to Women and Industry (TWIN) program was established nationally

by the YWCA in 1975 and adopted by the YWCA Princeton in 1984. The

selection process takes into account academic achievement, professional

responsibility, community service, demonstrated leadership, mentoring

of others, ability to communicate ideas, special projects or accomplishments,

and contribution to the bottom line.

As manager of financial consultant training at Merrill Lynch,

Aldredge, a resident of Flemington, is responsible for support of

19,000 professionals in over 600 offices nationwide.

Brenner-Gati, M.D., vice president and global head of project

management at Janssen Research Foundation, is responsible for worldwide

development planning of research. She lives in Princeton Junction.

Harrison, director of operations in drug management systems

at Covance Inc. manages a staff in Brussels, London and Princeton

that handles the logistics for clinical drug trials. Harrison lives

in Holland, Pennsylvania.

Isaacs, a resident of Princeton, and resident producer at McCarter,

is responsible for selecting plays and directors, casting, and hiring

artistic teams for the theater’s five-play season.

Lokhammer, also a Princeton resident, is vice president and

manager of PNC Bank’s Nassau Street office. She is responsible for

loans and deposits, business development, and customer service. She

also chairs a committee in the Princeton PNC community that provides

75 charities and organizations with financial support.

As the executive director and founder of HomeFront, Mercer heads

the eight-year-old agency that coordinates 800 volunteers to provide

food, clothing, counseling, and recreational activities to the homeless.

She lives in Lawrenceville.

Palsho, president of Dow Jones Interactive Publishing, leads

a 600-person worldwide organization striving to become the world’s

leading publisher of electronic business news and information (U.S.

1, February 3). She is a resident of Princeton.

VanLent, vice president of ventures at Sarnoff Corporation,

uses her science background and communication skills to explain complex

technologies to investors (U.S. 1, February 3). She lives in Augusta

in Sussex County.

Top Of Page
Small Business Person

The regional Small Business Administration has selected

Janet Lasley, president and owner of Lasley Construction of

Rocky Hill, as the SBA Small Business Person of the Year. She will

be honored at the New Jersey Conference for Small Business on Thursday,

May 13, at the Brunswick Hotel in East Brunswick at 11 a.m. The keynote

speaker is Warren G. Little, chairman of the U.S. Chamber of

Commerce. Call 973-645-6064.

Lasley Construction began as a one-person operation in 1985 and has

grown to employ 23 people and handle 30 to 50 construction projects

per year. Lasley just recently started another business — The

Kitchen Company — which designs and builds kitchens and distributes

cabinetry. Last year, Lasley was honored with the Princeton YWCA TWIN

Award and was named Small Business Person of the Year by the Princeton

Chamber of Commerce.

Top Of Page
The Future & Its Enemies

Learning better ways to do things, whether in business

or the rest of life, depends on a trial and error process with outcomes

that are often unpredictable, writes Virginia Postrel, journalist

and author of "The Future and Its Enemies: The Growing Conflict

Over Creativity, Enterprise, and Progress" (December 1998, Free

Press, $25).

The foundation of entrepreneurship, innovation and experimentation,

Postrel writes, is under constant attack by those who prefer stability

and control to the challenges and promises of a dynamic, open-ended

future. She will speak at the next meeting of the Venture Association

of New Jersey on Tuesday, May 18, at 11:30 a.m. at the Westin in Morristown.

Cost: $55. Call 973-631-5680.

Postrel has been credited with launching a national debate on change.

A graduate of Princeton, Class of 1982, she is the editor of the California-based

Reason magazine and a columnist for Forbes and its high-tech companion

magazine Forbes ASAP.

Top Of Page
Telegroups

For working women too pressed for time to make it to

a networking meeting, Central Jersey Women’s Network (CJWN) has the

solution. Telegroups. Groups meet by phone on a teleconference bridge

line and chat for an hour, sharing experiences and resources and supporting

each other.

CJWN currently runs two telegroups. The "Working Moms Telegroup,"

led by Natalie Gahrmann, working mother and personal life coach,

meets on the second Wednesday of each month from 9 to 9:55 p.m. The

"Women’s Work Telegroup," led by Carol Gerrish, professional

certified coach, meets on the first Wednesday of each month from 1

to 1:55 p.m.

Advance registration is required. Call 732-424-8413 for the Working

Moms Telegroup and 732-438-1468 for the Women’s Work Telegroup. The

group is free but participants incur normal phone charges.

Top Of Page
E-commerce Workshops

Scranton ECRC will present two E-commerce workshops

— "Business Opportunities Through E-commerce" and "Business

On The Internet" — on Monday, May 17 at the Mercer County

Community College and on June 15 at the Raritan Valley Community College.

These free sessions will provide information on how to start doing

business with the federal government via E-commerce and ideas for

transitioning your everyday business activities to the Internet. Call

800-575-3272 or E-mail elizabeth.zygmunt@uofs.edu to reserve your

seat.

Hands-on training is also available at the Trenton Business and Technology

Center on July 14, July 28, August 11, and August 25. Basic Internet

skills, Home Page Development, and Advanced Home Page Development

will be covered in two sessions at 9 a.m. and 1 p.m. on the first

three dates respectively, and a Business Opportunities Lab and Lecture

will be offered at 9 a.m. on August 25.

Top Of Page
Job Opportunity Fair

Human resources professionals from more than 100 New

Jersey businesses will be present at the Middlesex County Job Opportunity

Fair and Career Exploration Day at Middlesex County College on Thursday,

May 13, at the Physical Education Center from 9 a.m. to noon. The

event is free. Call 732-906-4653.

Those seeking entry, mid-level, and management positions will be able

to network with potential employers, gather information about a variety

of companies, and set appointments for interviews. The fair has partnered

with the Middlesex County Regional Chamber of Commerce’s Expo ’99

to increase the number and variety of companies registering for the

fair this year.

Top Of Page
Corporate Communication

Seton Hall University offers evening and weekend classes

leading to a masters in Corporate and Public Communication. The degree

covers effective writing and interpersonal communication, presentation,

and web page design. The program can be combined with other market-responsive

degree options.

Courses include Writing for the Media, Cross Gender Communication,

Cross Cultural Issues, Events Management, and Writing and Editing

from the Technical Perspective. A summer session begins June 1 and

the fall session begins September 1. Call 973-761-9490 or visit http://www.shu.edu/depts/gradcomm.

Top Of Page
Save on Commuting

If your employer signs up for the new transit benefits,

you can pay for your transportation costs with pre-tax money. NJ Transit

will tell about his plan in a seminar entitled "Improving Employer’s

Bottom Line while Improving Employees’ Morale" on Tuesday, May

18, at 8:30 a.m., at NJTPA, 1 Newark Center, 17th Floor, Raymond Boulevard,

in Newark. Among the speakers are Mark Daniele of McCarter &

English in Newark and Patricia Farrell of William M. Mercer

Consulting at the Carnegie Center. Call 973-491-7108.

Thanks to new federal TEA-21 legislation, the NJ Transit Business

Pass allows nearly every kind of company — including public agencies,

non-profit organizations, and government entities — to set up

a payroll plan for deducting up to $65 per month from a worker’s pre-tax

salary. This money goes to pre-purchase public transportation costs,

and no cost is incurred by the employer.

Top Of Page
Interlibrary Loan System

Soon, with one online search, you will be able to access

the state’s public, academic, and school libraries. Soon, says John

H. Livingstone, state librarian, New Jersey will have the first

statewide electronic interlibrary loan system. By the end of this

year 180 of the state’s 312 public libraries will be online, and the

entire system is expected to be operational in two years.

The New Jersey State Library has entered into a contract with Ameritech

Library Services to allow simultaneous searches of the major libraries’

book collections and provide library patrons with quick access to

books not available locally. "This will insure a fast, efficient

way to make New Jersey’s vast library resources available to all our

residents," says Livingstone.

Earlier this year the library, affiliated with Thomas Edison State

College, made INFORME, the Spanish language magazine database, available

in its public libraries.

Top Of Page
Corporate Angels

The Geraldine R. Dodge Foundation has awarded

a $60,000 grant to Newgrange, a school and educational outreach center

for people with learning disabilities, to fund teacher training programs

for charter schools. The training will help teachers to reconsider

their students’ capabilities and re-envision the classroom environment

as one which facilitates teaching to diverse needs, styles, and cognitive

strengths. Call Newgrange at 609-924-6204.

The Lawrenceville School has issued a $50,000 grant towards

Main Street Project’s "Century Campaign," to raise $600,000

for parking enhancements and streetscape improvements for the Village

of Lawrenceville. Designed by Clarke Caton Hintz and the Main

Street Design Committee, parking enhancements encompass a complete

redesign and landscaping of the parking lots behind the stores along

Main Street (Route 206). Call the Main Street Project at 609-219-9300.

The Mercer County Arena will accept 10 to 15 interns per

semester from Rider University’s department of communication for video,

public relations, and multimedia work. "This exciting and innovative

partnership is a win-win situation for everyone," says Robert

Prunetti, Mercer County executive. "It allows us to tap the creative

minds of our students trained in public relations and the latest video

and multimedia technology to create work products such as videos and

scoreboard messages that will be used at events. At the same time,

these students will receive real life experience that will benefit

them tremendously in the workplace after graduation." The state-of-the-art,

multipurpose arena will open this fall.

DeVry Institute will be hosting the Educator Institute,

a forum for meaningful dialogue between educators and the business

community, open to secondary level educators — teachers, administrators,

and guidance counselors. 30 educators will be selected by the Chamber

of Commerce to represent a cross-section of Mercer County. The institute

will be held from June 28 to July 2.

The United States Environmental Protection Agency and the

National Science Foundation has awarded a $750,000 grant for wetlands

research to the Stony Brook-Millstone Watershed Association. "This

grant will help take the Watershed Association into the next century,"

says Congressman Rush Holt, former chairman of the association.

"The creation of the Stony Brook Millstone Association marked

the beginning of a new era — an era in which local residents would

change the way they perceived their natural resources and their connections

to them."


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