BA Q&A: Do It For The Right Reasons

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I love listening to your podcast and I want to hear your thoughts on a decision I've been contemplating for the past year. I've got my bachelor's degree in twenty eighteen in organizational instrate teacher Communications, but have recently been considering pursuing my MBA. The company I work for has an amazing tuition reimbursement program and they'll cover ninety five percent of the cost if you get a's in your classes, with the stipulation being that you sign a retention contract

to stay on two years after your final class. This is an incredible opportunity and I could get my MBA for nearly nothing. I struggle on whether or not it's worth it. I've spoken with a couple of higher ups at the company who do not hold degrees higher than a bachelor's and why it's not and while it's not required for me to move up in management, I worry that if I ever wanted to branch out into other industries, I would have a hard time competing with others who

may already have their MBA. Since my experience would only apply to the financial industry and I lack knowledge of general business operations for other industries, I worry that I may limit my growth potential. Do you believe it would be beneficial to obtain my MBA while gaining management experience to stand out in the event that I wanted to pursue other opportunities with higher pay or is there little to no benefit in this day and age to pursue

a graduate degree? Kind regards, Oh, she does work for a financial institution. Kind regards Christina.

at a bank, so I'm guessing. I'm guessing that they're not men of people of color, and they they may have had connections to get where they are. I just feel like you definitely want to think beyond the bank where you're at, because I doubt you'll stay there for your whole career, and in that case, maybe an MBA would be a good strategic move. And you have to think, will I be comfortable staying here for the duration of the program to that's like that's the coat.

dot Will the masters help with that? You know, it's really not about the bank, honestly, It's just that you get them to pay for a thing potentially that will enhance your ability to make wider choices later maybe or maybe not. Because how long is the NBA program made? Like two years, a couple of years, three years?

Like if that's what you're thinking. I think MBAs really are about reaching parity with like competitive like the competitive nature of people in that industry, like business industry, financial industry, And if you are thinking you have a long career in financial services, then you know, I feel like, yeah, it could make sense to have your MBA, especially if it's going to help you stand out on like a resume, you know, if it's like the one thing that they'll

they'll filter for before they hire anybody, which I think is short sighted but probably still happens. I do want to say about this whole golden handcuff thing is you don't have to look at it as if you are trapped there, because one of my favorite, you know, lessons that I teach in my negotiation masterclass is that you are able to negotiate. Like, so, let's say you got a job offer from another bank and you were like,

I'm ready to sign this offer letter. However, I'm going to be on the hook for these tuition payments that I've had for the past years. They may give you a signing bonus to help you cover that payment and have you do the same thing in return, sign some kind of retention agreement, you know, which tip is very

typical about signing bonuses in general. There's maybe a year or two years or whatnot, but you don't you're not entirely trapped by that because you can potentially negotiate and get your future another employer to like cover it for

you so that you're okay walking away. So if that gives you a little bit of comfort knowing that you have that bargaining chip, Obviously nothing is guaranteed, but I have to assume that in an industry like in the banking industry, and I have negotiated big fat signing bonesses myself in banking, and I mean they got the money and if they want you, they'll be.

like understanding of my company right now. So I would just say, like, you know, you really have to be doing it for the right reasons. I would pick your program carefully and make sure that it, you know, has the courses and has the reviews, and maybe even talking to alumni to see, you know, if they thought it

was helpful. So that because they're not all created equally, and you want to pick a program that you know qualifies as an MBA of course, but may have you know, maybe able to teach you beyond just like generic business strategy that you could use later in your career and just like squeeze as much juice out of that orange as you can.

I've always wanted to learn marketing. So she got her MBA, almost like a dual NBA, but it was like the core component of it was marketing, and then the subcomponent was finance because she was like, she was really interested in that so just you know, beyond where she was working, Like she worked for a financial company, but she was like, if they're going to pay for it or help, That's why she did it that way, because she was just like, this is something I'm interested in to grow beyond where

I am. And you know she's not working with them anymore, but she still has this this education that she uses for her PR business now. So that's yeah.

you know. And I help people with their businesses. During the pandemic, I formed a limited partnership consulting business with one of my closest friends. When we worked, we worked on our first big contract together. I realized that we did not work well together. Our work stars caused a lot of conflict, and so I stopped bringing in contracts through this business. I have another business that I solely own. Ooh,

sound like me girl. Recently, I've decided I wanted to grow the consulting business, but I know that I cannot work with my friend. Therefore, through several very difficult conversations, good she agreed to let me buy her out of the business. Now that I have done the hard part, I'm not sure what the next best step is. Should I hire Laurier to draw leader paperwork, dissolve the business and reform it as a single member LLC, or some

other options? Thanks advance for your help. Chaw. Okay, let me step lightly because I may or may not have just done this. So remember what my coll I can't say it about what I can say, not with me.

If you are in partnership with someone who is a friend or otherwise and you're thinking you want to not be in partnership, the key is before you bring the lawyers, you have to have a series of conversations. I did not like, thankfully, I have a well this girl named Biffany that I don't know. She had a really great business coach, really coached her the same had these deep heartfelt conversations because you need to get on the same page before you get legal in so I'm glad that

you did that part, so bravo. And they're meant to be hard you know, but thankful this is your friend. And Biffany also cared about her and still cares about her fictational partner, that's first and foremost. And then when that happens, then too you have to get on the same page about the cost of the like how much is the business worth? And so you want to get it wasn't as expensive you were thought. You want to get a one of those things called evaluation, right because

you want because here's why. Let's just say you're like, oh, I just agree, just give me two hundred dollars right, But then later your potential partner can come back and say, hm hm, I felt like I got was ripped off. So having an official valuation on the books is really critical. There's a company called Scaler. Let me see if I make sure I spell it rant who does evaluation. And what I like about Scaler is that they've done like

dollar like billion dollar companies. S C A L. Right, is a Scaler Scaler valuation company and that's all they do. You value is I mean, Biffany, well, I didn't do this this person like you know, Biffany might have you Scaler, So it's SCA L A R. So I had heard that Tiffany had used this company called Scaler, and they're great. That's all they do. They've done like Dollar Shape Club, They've done like some of the biggest companies that you've known.

And it was a few thousand dollars. It wasn't like thirty thousand dollars. You know, that's what I thought valuations cost. And it took maybe like a two weeks. You know, that's what Biffany has said. And so you know, so having that on in paper and then literally what's so great?

I mean, hopefully you have a financial person that can pull up all the financial components because they're going to want to know about the business in total, because they're gonna want to know, like you know what, had They're really going to look at the last year's worth of business. They're not going to go back two or three years. So if you were making big money three years ago, they're like, yeah, but what's happening now. They need a

real snapshot of what's happening now. And if there's any contracts that like leading into the future, they're going to use that. Then they're going to look at your industry and say, there's a multiple So in the finance industry. It used to be like kind of like what your net income is, multiple multiple times ten, but the finance industry has been a little shaky, so they don't multiply

times ten like they used to. And so but you're the scaler will know and they'll say and they'll also compare you to other similar esque type of companies to say this company is worth this, and that's how based upon your numbers, based upon what you do, based upon the multiple, and based upon the comparable companies. This is how we come to you with your numbers. Now here's

the thing you will there's gonna be two numbers. You're gonna get a number is if you were a publicly traded company, which that number will probably be higher, and then you'll get a number as the fact that you are not a publicly traded company, so that number is gonna be lower because you know, they all call it like a marketability penalty because it's like you're not publicly traded.

So I can't just say each is your stock is going to be worth or whatever, because you know, maybe the company has your face on whatever it is, and you know they're like, well, we can't quite say you're worth ten million. We got to say you're worth six because it's just a privately traded company, and that's going to harm your ability to sell this company and actually get ten million dollars, if that makes sense. So they're

going to give you both of those numbers. So you're going to want for you and your business partner to be talking with whatever valuation company that you use, so you know, like no one's ever fully happy, but at least it's a third party. This is what they do. It can stand up in court. We're all on the same page. You know. Some people get multiple valuations, you know, but like I said, that was a solid company at

least for you to go start. Okay. So then once you get your evaluation, then you and I don't know, if you guys are fifty fifty, thirty, forty, whatever, then you that's basically the math, which is you know, worth fifty to fifty. So they told us the company is worth a million dollars, I have to pay you five hundred thousand, and you can figure out whatever that payment looks like. Is it going to be over a period of a couple of years, is it going to be

right away? Whatever that is. But this is something to keep in mind too. You also have to keep in mind that if there's money in the company that is not a sign for specific things, that money is up to be divided as well. So I'll give you an example. So for Biffany, I had heard that she had six months worth of savings, and at first she was like, girl, no, those savings is for the company. One day and it's like, no, no, No. Any savings in a company really is just delayed payment

to its owners. Because really, if I have money in a company, like for example, Manny and I will have money in our account for brand ambition, and just because we haven't spent it, right, it doesn't mean that we have not paid taxes on it, like we have to pay tax on whether we spend it or not. But we like to have a little bit of savings because we have some things to pay, so that money has already been taxed, so legally and morally and rightfully, that

money is yours and your partners. So you're going to have to like so if you have if you have money set aside for operations, because it's okay to say I have two or three months for operations for these specific things, that's fine, that's not money you split. But if it's just savings for savings sake, then know that that money outside of what you owe them is going to go to that person like their half or whatever, and then you will also have to pull out your half,

you know. And so like just keep that in mind, you know. But also too equipment. So Biffany, for example, I heard that she had like cameras and these like maybe twenty thousand dollars worth of equipment. The equipment had to also be accounted for, and then the value of the equipment had to be you know, like split if it's fifty to fifty or whatever. You know, So just keep that in mind. So the part part about it is that like all of a sudden, you know, you

kind of pull money out of the company. Like I said, I don't know if you have savings that you might be like damn. But the good part is for Biffany, for example, there was enough money pulled out that that pull out money was enough to pay. So Biffany didn't actually have to come out of her own pocket. She just used the money that she received from the savings. So it was like, oh, you know, that's why I had her or she had done.

like five hundred thousand dollars or whatever. So if you don't have the money out of pocket like Biffany supposedly did because she was able to pull it from the company, then you can set up a payment plan and basically let the new the company you're keeping help to generate

that revenue. So that's that's another thing. So once you figure out, okay, this is what the company's worth, this is our split, we're on the same page, then you bring in the lawyers because lawyers are expensive and you want as little back and forth as possible, so you want to be like, we're on the same page, and it would be great for you. Your attorney. They definitely need an attorney even and they're like oh no, no, no, no, no, they need to have an attorney too and do a

recorded zoom. So this is also recorded, you know, like hey, any last little tweaks or whatever, like what about this and what about that? You know, it's all on recording, and then we've all you know, it's all been agreed to. Contract is drawn up. It's important for both attorneys to

touch the contract. So if your attorney starts the draft allowed their attorney to make the tweaks, that makes sense because you were thinking about a year from now, ten years from now, whatever, is like, well, that wasn't a fair contract. How Because both attorneys touch the contract, that's really important. It should not just be one attorney doing all the tweaks, you know. So that's something really important too.

And then so the worst case scenario is really shutting down the business because as you know, like if you're wunning contracts and things like that, that you like to see businesses in business for two years. So ideally you don't want to shut down the business. And so you know that's only if you know whatever, you guys can't agree and it's like, well, we just got to shut this thing down. I have to just restart as something else.

But you don't have to shut down the business. If you buy this person out, you do what you're supposed to do, then you can keep the business. And then it just gets like, you know, I don't know, like your your attorney will do this for you, Like my business attorney will refile and say, you know, this is Tiffany's Biffany, that's what I had her business total, and you know, like so all that stuff will be will

be fixed on the legal back end. Your attorney will do that for you as well as your CF, your what whoever your financial person is. But that's kind of like the process. And then you know, you pay over a series of years, or pay right away or whatever it is. It's really important to let the person receiving the money decide. So let's just say it's at the

end of the year. They're not going to want to take a big lump sum at the end of the year because they don't have enough time to write it off, you know, so you don't you want to integrate your financial whoever your financial person is on the team, your accountant, you know, to see making sure that like when it comes to taxes, what does that look like? There's not really any tax implications for you, the buyer, but certainly

for the person receiving the money. They have to sit with their account and figure out what that all looks like. And then you just make sure you have her airtight contract that basically says that you've accepted this money is done, though you cannot come back for more money because in case we blow up, you cannot come back for equity and nothing. It's done, done done. Everybody agrees, this is

the evaluation. Everybody's on the same page. Like I said, have one attorney draw it up and the other attorney make the tweaks, so everyone has touched it. You have the video recording of we're all on the same page. We all agreed. This is I mean, this is best case scenario. Honestly, some people are just gonna be battling it out. To have a friend who's battling it out for the last three years, so this is kind of

best case scenario. And hopefully this is your friend because like Biffany I heard, she's still really good friends and real cool, still with her business partner that they I mean, it was hard and certainly contentious, I heard, but it's all good, you know. So I just say that that is what the process may or may not look like I had heard through the grape vine because over here I'm holding good. But you know, it's it is possible to do that because you.

is going to help significantly? Like what's what's our percentages? You know, if you own more of a percentage, you can kind of force someone's hand, But if you're fifty to fifty, you have to kind of come to the table. I've done this twice. I've broken up with business partners twice. Two companies. One I wanted to shut down and one oh, I mean I had heard that Biffanity had done that.

So anyway, I'll just say all that to say that, like it is possible to you know, it's not supposed to be easy, but it's certainly possible for it to not be you know, like super contentious and for it to smooth smooth, like go smoothly as smoothly as it can. But I will say this, and I know it's that inclosing less time. But pick a date that it has to be done by, or you'll just be dragging your

fee forever. Like, hey, this needs to be done by you know, I'm just making up a date October thirty first. If not, I'm just I'm just gonna shut this thing down. You have to pick a date because people will drag their feet for it ever and ever and ever. You certainly don't want to drag it into the next year because you know every year, you know, you pay twenty twenty two taxes, we have to pay in twenty twenty three. So you have to think to yourself, you're going to

be connected the next year either way. So pick a date, do not let it go into the next year, and you know, and get it done. And you know, if you have to walk away, you know sometimes you know that's better than you know, getting dragged for years and years and years. So hopefully that was helpful. Biffany girl, Thanks girl for giving us some tips. You know, like I said, i'd heard.

when things are good. That way, if he said, you could do whatever you want until you disagree and then you do where the contracts is so but like I'm just making it up, like let's just say me and Mandy always said we always have to have a beat face no matter what in our contract, we don't have to do that. We're like girl by But if me and Mandy are beefing, I'm like, no more, girl, then okay, the contract says be faced, so we both have to

have beat face. And so you see, I mean like you could do whatever you want until you disagree, and then then you follow what the contract says. So just keep that in mind that contracts are so critically important. Even now, I was just thinking to myself, I got to hit my designer Rihanna because she's doing my my new condo that I bought. She did the house that I live in now, and she's like, oh, we don't led in a contract. I'm like, oh, yes, we do,

Yes we do. Because not that I mean, obviously she's awesome all the things, but I'm like, it's just bad practice not.

Dennis and Plinsky is our in house tech guru. I am your co host Mandy Woodris Santos and we will see y'all next week. Ba Fama