Planning Ahead for Your Transition with Kelly Robinson

Episode Description:

In this episode, Elizabeth is joined by Kelly Robinson, who recently left her partner position at a “big law” firm and launched her own practice. With over 30 years of law experience, Kelly was able to make this transition to successfully launch and expand her own firm to practice family law. Tap or click the play button below to listen to: Planning Ahead for Your Transition with Kelly Robinson.

You’ll get to hear about the transition journey that Dianne and Elizabeth have gone through over the last five years of working together, including creating opportunities for others to learn, balancing business relationships, learning to be more intentional, and bringing clarity to the journey by narrowing in on what you’re really trying to build for the future. 

You’ll get to hear about the details of Kelly’s very recent transition and about some of the situations she has seen in her work with family law when businesses are involved. She’ll share what works and what doesn’t, and why planning ahead and thinking out the what-ifs is always the way to go. 

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This episode was produced by Story On Media & Marketing:

Planning Ahead for Your Transition with Kelly Robinson Transcript

[00:00:00] Elizabeth Ledoux: So hi, and welcome back to Business Transition Roadmap to our podcast, and I am so excited to welcome Kelly Robinson. She and I have known each other for many, many years, and recently she left her. Partner position at what she would call big law and launched her own law firm. She’s got over 30 years of practice, um, in law and.

[00:00:31] about 16 years ago, she expanded her practice into family law, so did civil litigation and employment law prior to that. Um, and during that, and then about 16 years ago, launched and expanded into family law, which she now has that as her primary focus. And for those of you who are curious what family law encompasses, um, it encompasses so much.

[00:00:56] It encompasses divorce, custody. Um, parenting disputes, pre and post-marital agreements, um, cohabitation agreements, which are interesting these days. And, um, a variety of other things. So pretty much anything that you can think of around family, she helps with those kinds of issues and also, also prevents, does some preventative type law in, uh, keeping people out of trouble.

[00:01:26] So when they’re happy, um, some of the agreements get done so that if anything happens, um, there are some boundaries and some things that people can navigate. So Kelly, welcome and I’m just so excited to have you here. You have such a great background. So how about if we start by you telling us a little bit about you and maybe a little bit about your why behind, um, what you’re doing today?

[00:01:52] Kelly Robinson: All right, well, thank you Elizabeth. I am. I’m honored to be here with you. This is fun. A little bit about b Um, as Elizabeth said, I’ve been practicing law for 30 years. I have a wide variety background. I have not done the same thing that. , um, I started out with, which is, you know, could be unusual for lawyers.

[00:02:11] They tend to pick a type of law and stick with it. But I’ve been curious and like learning and like learning new things. So my career path has been more varied. I started, uh, as you said, with civil litigation doing, you know, products, liability, airplane crashes, Jeep crashes, those kind of things related to defects possibly in vehicle.

[00:02:32] Or airplanes and other type of devices like that, or, um, and then I did a lot of construction litigation and branched in eventually to employment law representing, um, mostly employers, uh, against claims of discrimination and wage and hour issues, um, negotiating management agreements, and so the whole gamut.

[00:02:55] Employment law then I just discovered, although I said I would never ever wanna touch family law, um, cause my parents had a very difficult divorce when I was a teenager. , I swear I would never do that. And then 16 years ago I was working with a couple of, uh, colleagues who just seemed like they handled fascinating employment or, uh, family law cases.

[00:03:15] And I thought I shouldn’t be so close-minded. And so, um, I started doing family law, just ended up loving it. Loving, helping people who are navigating really difficult situations or sensitive situations, um, and using my legal skills for them. Um, and then, like I said, I never wanted to do family law. I also swore that I never wanted to have my own practice.

[00:03:38] And fast forward to about a month ago and I decided I would, you know, I didn’t make the decision a month ago, but about a month ago, I launched my own firm having decided to leave Big Loft, being there for 16 years. Um, and I am loving it so far, and I like to believe that, you know, life can be in the transitions.

[00:03:57] So I think maybe I’ve learned that concept, um, along the way and have welcomed this change and am excited about it, and it’s going very well. So thank you. .

[00:04:09] Elizabeth Ledoux: Yeah. No, I am very excited that you are, that you did launch your practice and, um mm-hmm. . Yeah. I think that that’s part of your next adventure. Uh, yep, yep, yep.

[00:04:20] So it’s amazing how, uh, you know, we all go through transitions. all the time, whether it’s through, you know, one position to another or leaving big law and going into your own practice. Um, all all good things. And you know, one of the reasons why I thought it would be great to have you on here is because family, we do a lot with family transition and I.

[00:04:46] Uh, private companies actually have family influences in them. Even if, even if there aren’t family members working in the company, um, they’re still, the business actually provides for those family members. And sometimes in divorces and other things, uh, the business can get caught up in some of the. Um, turmoil at times that happens with those.

[00:05:11] And so, um, for our listeners, I thought it would be great to have a little bit of a conversation about some of the things that you see in your work when you have businesses that are involved. .

[00:05:23] Kelly Robinson: Yes, I would agree that it comes up all too frequently in family law cases, especially in the context of divorces, but also actually, um, even in prenuptial agreements when you have young, uh, members of, you know, the family getting married into families of, you know, significant wealth and they’re wanting to make sure that, you know, transitions don’t get, you know, sort of.

[00:05:51] I guess complicated or, you know, derail family planning because some, something happens down the road. And so yeah, it really comes up in the family law context, both before somebody’s married and, and unfortunately during a divorce if there hasn’t been, um, proper planning for those kind of events and those kind of transit.

[00:06:12] Elizabeth Ledoux: Yeah. Maybe you could share with us a couple of, you know, just a couple of typical things that you see and maybe some things that have been done that actually work. So things that haven’t worked for, you know, just that you’ve seen typical things that happen, and then also maybe a couple of other pathways or other solutions that might have been a better way to do.

[00:06:37] Kelly Robinson: Um, you know, really one, one example that comes to mind all too frequently is when there’s a business involved in the marriage. Um, it was started, uh, during the marriage or significantly grew during the marriage. Uh, and you either have one party who significantly is res, you know, is the most responsible for that business, works in the business the most.

[00:07:02] Um, or you can have a situation where both you. Parties were invested in the business with different roles, and then, um, it’s time for unfortunately the marriage to unravel divorce and the decision has to be made. You know, what are we gonna do? With the business now, who gets to take, you know, if, if both have been involved, who gets to take it over?

[00:07:23] Um, or if just one has been involved, um, that person continuing the business and they have to deal with, you know, valuing that business. And that has, you know, a lot of, um, emotion tied to it. You know, you can have a situation where the business, you know, for the person keeping the business, they think it’s value too high.

[00:07:44] And the person who, um, is not getting. to take, you know, go forward with the business, thinks it’s value too low. And so that, that, you know, comes up all too often. And we also see situations where, you know, you have a business that involves outside partners, um, and the family hasn’t really addressed, you know, transitions, whether it be in the event of a divorce and one of the partners, um, is divorcing and how is.

[00:08:15] Partner who’s divorcing buying the other partner or buying their spouse out? Or can they, um, how do they get cash from the partnership in order to make that feasible or outside the context of the divorce? Being in business with your par, you know, partners and not. talking about what’s gonna happen when we’re ready to retire, or we’re ready to pass the baton on to the next generation.

[00:08:38] And now you might be the partner who’s staying in it and you have partners passing it on to their kids and you’re like, well, I don’t, I don’t really wanna be in business with their kids, but. the way our agreements are. I’m stuck with that. So, um, everything’s all well and good until it’s not right. , right?

[00:08:56] Until, until you realize, oh man, we didn’t really think this all the way through, or we didn’t, you know, properly plan for this event, you know, this event. And so it really can catch people, you know, off guard and. Uh, you know, then on the flip side, you have the, the spouse who’s not involved in the business saying, oh my gosh, had I known that this was a possibility, then I would’ve maybe pushed for things during the marriage to get taken care of differently, to provide, um, some additional protections.

[00:09:25] So, you know, I think there’s, when things are going along and you don’t wanna rock the boat or you don’t even really think about it, um, life’s life’s fine and then all of a sudden, , there’s a monkey wrench thrown into it, and you have to say, oh my gosh. Um, I wish we would’ve talked about these things and figured out how to transition better in these events.

[00:09:46] Elizabeth Ledoux: Yeah. Yeah. And that’s, um, you know, I’ve, I’ve found many, many times, um, that so many business owners don’t have a shareholder agreement and they haven’t discussed things and, um, Even individuals. You know, when you’re a, when you’re an individual and you’re the hundred percent owner, uh, having a shareholder agreement could also be beneficial.

[00:10:16] I don’t know. Um, you know, sometimes it seems like it’s not needed. However, well, we’ve got an example. Owner right now who’s, he’s a single owner, right? A hundred percent owner thinking about bringing in four other successors. So thinking about doing that and he, so that he can prepare for that is preparing a shareholder agreement.

[00:10:41] basically one that he would like for himself. And then as he invites them in, they would be invited to either sign that agreement, um, or not. And the agreement is really, you know, the way that he wants it. Uh, so I’ve found that owners, they tend not to want these agreements or not believe that they need them.

[00:11:04] Because it puts boundaries on them that they don’t really want at times, and they feel kinda locked in. Uh, yeah. I also, and you can tell me what you think about this, Kelly, in your honest opinion, but. , these agreements are for when things don’t go well, they’re, they’re kind of the last place to stop. It doesn’t mean that you can’t negotiate something different if everybody’s still in agreement with doing it.

[00:11:31] A, you know, slightly different than the shareholder agreement would state.

[00:11:35] Kelly Robinson: Right? Yeah, no, I think that’s, that’s exactly right. It generally should be, you know, if things go south and we can’t agree on anything, here’s what’s going to govern and what’s interesting is that what may make. , you know, when you’re doing it or when they did it 20 years ago.

[00:11:52] Um, and the reasons why they had certain agreements in their share, you know, in their partnership agreement about sale, about value, about restrictions on transfers, things that might have made sense at the beginning of a partnership. Um, suddenly once you’re 20 years into it, it doesn’t necessarily make sense.

[00:12:10] Um, and how you need to think about addressing that before there’s a real. To address it, because at that point, whoever is really needing to address that obviously has lost leverage because they’re the person needing the change, so to speak. Right, right. So I think even if you do have a partnership agreement or a shareholder agreement, those should be revisited, um, on, you know, a regular basis to make sure that those that are governed by it understand what it means and that they don’t think, you know, they don’t.

[00:12:46] circumstances may, may have changed where it doesn’t make sense that it contained those provisions, so,

[00:12:53] Elizabeth Ledoux: you know. Right. And some of those circumstances could be kids growing up, um, and potentially being interested or what other things would make that, like, what would trigger them to review it? Or is it, what would you recommend?

[00:13:08] Is it just a timing every year or every

[00:13:11] Kelly Robinson: three years? I think if. . If shareholders or partners who are, you know, involved in a business venture together will at least, you know, revisit it, uh, during their annual meeting each year. I mean, most of those years it’s going to be, we don’t really need to talk about it.

[00:13:29] There’s nothing to talk about here, but at least it’s something that doesn’t, you know, when it is time, maybe it’s every five years, suddenly you’re like, oh, we really, we haven’t, it’s on our agenda every year and we never talk about it. We really, we really should now. Right? I. Um, it’s probably something to just have as a placeholder, you know, are the agreements, do we have everything in there?

[00:13:48] How we want it? Do we, are we addressing how things get transferred? Are we addressing how the business gets valued in the event one of us, um, needs to be bought out? Um, those type of things should, you know, I think it’s just because you should be having an annual meeting. You should be sort of a placeholder on that, even if you don’t end up devoting a lot of time to it.

[00:14:08] Right.

[00:14:10] Elizabeth Ledoux: Yeah. And um, yeah, I think that things do change and one of the things also that changes is just the business itself. Mm-hmm. , um, finding that in the beginning when everybody is building and growing the company and it’s small, um, maybe not of a high, high value right. Then the share. pretty, I mean, you know, it’s fairly straightforward to put together as you, as the company grows and gets more valuable and also, um, just expands and maybe gets more complicated with more arms, uh, you know, on it.

[00:14:45] Um, then that agreement sometimes gets completely outdated and isn’t even

[00:14:51] Kelly Robinson: possible, right. Right, right. Yeah. Mm-hmm. . And then I think, you know, the other, the other issue I think, um, we see people, you know, they have an address is that, let’s just say, you know, with your partners, you have this agreement that you, you know, you’re gonna all stick in it.

[00:15:08] There’s gonna be severe restrictions on transfer or sale. Um, and there has to be an, you know, meeting of the mind. You know, you have to all unanimously agree if you’re gonna sell any of the assets. Uh, and that all sounds fine and good until you know you’re getting closer to retirement and then all of a sudden you don’t have any, none of your children are necessarily interested in taking over your business.

[00:15:31] And then you’re sitting there going, okay, so now what does this mean? You, you know, you can’t force somebody. to, to come in and take it over. And so then what’s gonna happen upon, you know, your death if, if you’re leaving this partnership piece into your estate, even if it’s in trust to your heirs, you know, who’s gonna manage that?

[00:15:57] Um, who’s gonna step in and be that partner role? Is it gonna be now the trustee? And what does that do to, you know, the, to you? What you thought you were leaving your heirs. Um, so I think there’s always that piece about those who build a business and, you know, hope that maybe, you know, their next generation’s gonna wanna continue it on.

[00:16:25] That’s not always the case. I think you see that as well, right?

[00:16:29] Elizabeth Ledoux: Oh yeah, yeah, definitely. We see that and. M we also see that, you know, there’s sometimes an expectation that the kid or kids will come in and sometimes it’s just not the right thing for them. So, um, they’re just not as interested, engaged, and it’s more of a burden than it is.

[00:16:51] Right. Something that they love and, you know, gives them wings Right. And launches them. Right. Yep.

[00:16:57] Kelly Robinson: Or then the other. Yeah. You know, the other thing you have is if, if more than one of the kids. want to, you know, want to be the one that comes in and takes over. . . That’s

[00:17:09] Elizabeth Ledoux: right’s. Which

[00:17:10] Kelly Robinson: flip side, right?

[00:17:10] Elizabeth Ledoux: Which one?

[00:17:11] Yeah. Yeah. How do we do that? Yeah. Yeah. Yeah, it’s great. Um, that makes me think of, um, it’s a client out of, well, there were three kids, um, dad who wanted out, three kids that wanted to be in, they were all active in the company and the blessing for them was that all three of the kids got along one, and they all really recognize.

[00:17:37] Each other’s talents. So there was a lot of, uh, appreciation of the differences and working together, and instead of lack of appreciation for the differences and, um, , you know, creating that tension between them so they were able to team together. When sometimes when you have multiple kids coming in, um, fairness, equality, and everybody wanting to be the c e o doesn’t work, right?

[00:18:07] Kelly Robinson: Yep. Mm-hmm. , and it’s especially complicated in the situation we started off, you know, I started off with, which is if you have outside partners, let’s just say there’s three of you and, um, one of them, one of, you know, two of them have been the money people. , one of ’em has been the, the worker bee, you know, the, I guess the brains versus the finances or what, however you wanna look at it.

[00:18:30] And then all of a sudden they’re all getting, you know, close to retirement age or beyond retirement age. And now you have the new generations coming in. And what if, you know, the, the partner who’s been the worker bee isn’t, you know, who’s gonna take O when the other two partners have been basically uninvolved in the business for the most part, rather.

[00:18:51] you know, pretty hands off. Um, and there’s no one to, to step in. And what if all the, all three generations that are coming up, none of them have the appropriate expertise to manage this huge company that it’s grown into. You know, how do you basically, if you don’t address it as the business owner who’s built this, how do you expect the next generation to navigate that when they don’t even understand or have the skills to do?

[00:19:21] Right, right. It could be a real mess.

[00:19:25] Elizabeth Ledoux: Yeah. That’s why, that’s why I like the concept of transition being a journey because, and um, you know, in other podcasts, I’ve said this before and it’s in the book also, but foundationally, I believe why the statistics are so low that businesses thrive forward in the next generation is because.

[00:19:45] First generation or the prior generation leave too soon, they have this idea that. , they don’t have to deal with it. And they actually, you know, through osmosis, somehow that next generation will figure it out. And uh, most of the time they try to figure it out if they can. Right. Because it’s an asset that you know is functioning.

[00:20:06] But most of the time the business declines to their level of knowledge. The next generation’s, the successor’s level of knowledge. Right? Um, yep. And sometimes it’s unrecoverable.

[00:20:20] Kelly Robinson: Yep. Makes sense. Mm-hmm. , you know, and I think sometimes, you know, in the divorce context and you have a business that both spouses have built up and it’s gonna be difficult for one or the other to take over.

[00:20:35] Um, you know, that can be, that can get very tricky. Uh, either they have to come to an agreement, you know, as to how are we going to continue to be business partners even if we’re not married. Or if one of them’s leaving, um, and giving up that control. How to make them comfortable with the fact that the other person’s going to be able to continue to run it, or recognizing that they’re gonna have to bring somebody in to fill those skills, which is going to deplete, you know, the money, cash flow available for any buyout, that kind of thing.

[00:21:09] So, you know, we, I have navigated some, um, Divorces where the spouse is not, you know, generally won’t be involved, but it will be involved for a while. You know, negotiating employment agreements to cover them, um, in lieu of maintenance, that kind of thing. So you have to get creative, especially if parties going through a divorce, you know, ha can’t figure out how to, um, you know, what to do with the business, I guess.

[00:21:38] Elizabeth Ledoux: Right, right. Yeah. And, um, the creativity, you know, you start with relationships that are intact right when you first start out. And, um, the idea behind it is to figure out how to meet as many objectives of everyone involved as you go through the transition. Uh, actually know which ones you’re giving up. So if you’re an owner and you want something, but the other person wants it too, or right then I think it’s, but I think it’s great to be able to give the other person the gift versus having that feeling of it being taken from you, you know, well, that person got this and blah, blah, blah.

[00:22:25] Um, versus, gee, if you want that, how about we trade and I get this and you get that and you give me that and, you know, it’s a. It’s better in the negotiation and Right. I think it’s difficult for partners or people to have great relationships in a transition where there’s tension. Uh, it takes some real mindfulness to get through that.

[00:22:47] Kelly Robinson: Yeah. And in the, no, in the normal business, you know, context, that’s one thing. And then you add the layer of a divorce and it’s nearly impossible because you have all those emotions, right? ,

[00:22:59] Elizabeth Ledoux: all those emotions. Yeah. Tie you in. It depends. Yeah. So Kelly, um, you know, one thing that came to mind. in the beginning of a, of a new venture.

[00:23:12] Say you have some partners and you’re going into this new venture. One of the things that I’ve seen in the share agreement is the ability to buy out a company at a very low value. And it’s typically because the business is of a low value. So it kind of doesn’t matter in the beginning. And the idea behind it is to make it easy for you to, you know, buy out the other partner.

[00:23:38] if you end up in that scenario that you talked about before where your kids aren’t interested and you really want to cash out the value of it, but the share agreement is written, so it’s just book value or some low mm-hmm. low value. Um, how often do you see that and what would you do about that?

[00:23:59] Kelly Robinson: Well, unfortunately we do see that, and there’s not a whole lot you can do about it if the other members or partners are not willing to change that.

[00:24:11] That’s the agreement you’re stuck with. That’s why it’s hard to. . It’s hard when you haven’t looked at this and considered it over the years as the business has grown, because you can’t go into a court and just say, oh, this is no longer fair, or This no longer makes sense. You’re, you’re pretty much stuck with it’s a contract and that’s what’s gonna govern.

[00:24:35] Yeah. And the court is not here to, you know, it’s not there to help people out of bad business decisions. Basical. .

[00:24:44] Elizabeth Ledoux: It’s so curious. Um, cuz you know, what would be your thoughts on the concept of when you begin your business in a share agreement to put something in there about, um, a market value, a fair market value.

[00:25:01] Start there instead of at the low value and then, If the business was unable to pay full value or it was gonna significantly impair the business to do that, cuz some, some businesses, um, the money is reinvested and reinvested and reinvested for so many years that it actually isn’t, doesn’t create enough cash flow.

[00:25:25] It’s not built to get people out of the company. Um, so. . My example of that, um, is a company that we worked with, there were five sisters, all 20% owners, um, had been for years from their father and. , they needed, all of ’em needed to transition at some point. So the strategy of how do you get them out? And started with just getting one sister out, just one, and building the business to get used to the payments so that one could get out.

[00:26:04] And then another, and then another. And I think now they’re, they have three. The third one is just leaving. Now it’s taken years to do it, but um, yeah, at a fair market value, so, , my question to you is, starting with the shareholder agreement, do you start with that low value or do you start with a fair value and then if you need to change the strategy because then you’re all in agreement and potentially keeping the business whole and healthy so it can pay.

[00:26:32] The owner that’s

[00:26:33] Kelly Robinson: leaving? Yeah, I mean, I do think it makes sense to set up the agreements at the beginning as to be the fair mar, you know, fair value or fair market value because that’s gonna, you know, that’s gonna be fair to everybody. And at the time, if, like you said, it gets valued at, at, at a price that makes it impossible for the business to, to fund a buyout, it’s gonna force them to come.

[00:26:57] It’s a way to force people to come to an agreement about it. , because absent that agreement, you’re basically gonna fold the company. Right? Right. So that’s a better scenario when you’re basically forcing everybody come, come to an agreement, or we all lose,

[00:27:13] Elizabeth Ledoux: versus

[00:27:15] Kelly Robinson: starting an agreement with book value and then never being able to get anybody to change it.

[00:27:22] because they get entrenched, right? And they might be the type of people who are like, oh no, we’re gonna just keep continuing to pass this generation to generation. And with no, you know, no one should ever wanna get out of it. And it’s like, well, yeah, it’s fine for you to say that cause you know who your partners with.

[00:27:38] What about the next generation? All of a sudden they’re partners with complete strangers and things may not be going as smooth then. Right. .

[00:27:46] Elizabeth Ledoux: Yeah. Yeah. Kind of unlikely that it will be that smooth, right? Yep. Yeah. Yep. So, so, gosh. Yeah. Well, um, Kelly, what kind of, in closing here, what would be one thing that you would recommend that business owners and our listeners think about or do when they’re in business and considering, um, potentially getting out?

[00:28:15] Kelly Robinson: I think my best advice to anybody in a business, whether they’re trying to get out now or not, would just be to make sure you’ve thought through the what ifs. What if I got divorced? What if my partner got divorced? What if I were to pass away? , what does my, what would my, what position would my estate be in and my heirs relative to this business?

[00:28:42] What would be the situation if my partner were to pass away and it went to their heirs? Um, what, where would that put me? And just think about all the what ifs that you may not wanna think about, and make sure you understand what your current agreements would do with that situation, and that you’re comfortable.

[00:29:01] with it and if you’re not that’s the time to come together and say, Hey guys, have we all thought about this? And if we haven’t got guys and gals, let’s think about it now before one of us needs to be thinking about it. Right. .

[00:29:18] Elizabeth Ledoux: Yeah. And, and that you’re thinking about it as a collective group. Um, again, exactly.

[00:29:23] Concept of putting people first. Exactly. Because if you’re collectively thinking about the entire group, um, you know, you kind of have to look at yourself and go, gee, this might be hard for me to buy my partner out. Right. Or to get, to get that done. Um, it also is gonna be hard for them if I have to do that, but we don’t want it.

[00:29:43] Destroy the business, right? Because the business is what’s responsible for getting the money right, to either that partner who’s leaving or the family and all of those years of hard work and building and growing, uh, you really want to, I think, harvest some of that, right? Maybe not at the max, max, max value if you’re going to an internal type sale, which would be a partner, employee, family member.

[00:30:07] Um, but definitely you want some good value for all the work that you put. . Yeah. Yeah. All right. Oh gosh, Kelly. Um, yeah, I sure appreciate you being here and sharing so openly with all of our listeners. And, um, if you are interested or want to ask Kelly any questions, her information, we’ll follow the podcast.

[00:30:31] So her email. And, um, her new company, Kelly Robinson Law, is the new name of her company. And, um, she’s got so many years of great experience. You’ve done some amazing things for some people that I know and that we’ve worked with. And, um, just really appreciate all of your openness today. All right, well, thank

[00:30:50] Kelly Robinson: you Elizabeth.

[00:30:51] Thanks for being here. Thank you. Have a good day.

The Business Transition Roadmap with Elizabeth Ledoux

How do communities thrive? When businesses experience healthy growth and transition. Join CEO of The Transition Strategists, Elizabeth Ledoux as she and her guests identify what makes a successful business transition roadmap. If you know you want to transition or exit your business “one day”, today is the right day to start planning. This show will give you the roadmap.

If you’ve enjoyed this podcast, you can check out other episodes here: Podcasts – The Transition Strategists
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