Deborah Peacock of Peacock Myers P.C.

Copyrights and trade secrets can protect two types of intangible assets that can be the basis of business success.

Copyrights apply to original literary, dramatic, musical and artistic works. They can protect blueprints, computer software, jewelry, television ads and performances.

Trade secrets are any bits of information or ideas that, if leaked, could be used by another company to undercut the originator’s competitive advantage. A customer list or computer code could be a trade secret, and the precise formula for the Coca Cola soft drink has been a trade secret for decades. An example of partial failure of trade secret protection is when another company reverse-engineers computer software, uses the concepts discovered and writes source code from scratch embodying the concepts. Continue reading →

by Teala Kail, Public Information Officer, NM RLD

The New Mexico Regulation and Licensing Department’s Construction Industries Division (CID) is considering two rule changes to the New Mexico Administrative Code (NMAC) that would increase reinspection fees and clarify the ratio of journeymen to apprentices in the construction industry. The agency wants to hear from the public before making the rules official and has scheduled five public hearings around the state to take public comment.

New Rules

One reason the agency wants to increase reinspection fees is to cover the cost of these services. The fee increase applies only to construction projects that require reinspections because they failed the first inspection.

This rule change is expected to encourage contractors to have their construction projects in their appropriate phases before requesting inspections. If the rule change takes effect, reinspection fees will rise from $45 to $80 for a second inspection and to $120 for a third or subsequent inspection.

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Lloyd Calderon, Director, New Mexico Veterans’ Business Resource Center

The stories we hear about veterans tend to be heartbreaking ones that demand the attention of a nation at war in two countries — stories about veterans who are debilitated or made homeless by service-related physical or psychological injuries. But there’s a success story involving vets that few people hear. In New Mexico, that story involves the 22,600 businesses owned by veterans — fully one out of seven of the 158,200 small businesses based in our state, according to the Small Business Administration.

New Mexico is home to 180,000 veterans, 30,000 of whom have served in Iraq and Afghanistan. Many of those former soldiers hope to draw on the same commitment, dedication and courage that served them in battle to operate businesses that serve community needs and provide jobs to other Americans.

Hundreds of the warrior-entrepreneurs doing business in New Mexico find assistance in their quest at the Veteran’s Business Development Office, an office of the New Mexico Department of Veterans’ Services. State Secretary of Veterans’ Services John Garcia started this office about two years ago to help returning veterans establish new businesses or expand existing ventures — but he especially aimed to help eligible vets take advantage of new federal laws that set aside 3 percent of federal contracts for businesses owned by vets who were disabled during the course of their military service.

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Wayne Unze, Director of Business Brokerage at Maestas & Ward Commercial Real Estate

Pricing a business for sale requires evaluating its cash flow—another name for a business’s earnings before interest, taxes, depreciation, amortization and owner’s compensation are subtracted.  Cash flow is then multiplied by a number that falls within a range appropriate for the industry and market—a number that takes into account other variables that affect the business.

But unlike multimillion dollar enterprises, small businesses often find much of their cash flow goes toward the owner’s compensation (salary and benefits).  To accurately determine a small business’s true cash flow, its owner’s total compensation package must be removed from the equation to reveal essential operating expenses and thus avoid undervaluing the business.

The easiest and most widely accepted way to do this is to add all components of the owner’s compensation — things like health insurance premiums, salary, auto lease and profit sharing — to the earnings before interest, taxes, depreciation and amortization (known as EBITDA).  Other additions might include non-recurring expenses such as one-time moving expenses; however a seller must be able to prove all the cash flow components.  This means any expense he maintains is not business-related or is personal compensation must have a receipt or other validating document supporting the claim.

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