EDUCATION
MARKETING
Meet Carlos Pina
The man behind Capillus
SOCIAL
MEDIA
Don’t Pay for Reviews!
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You can’t afford it
Sharing the pain
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The National Hair Journal
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Volume 21 No 73
The Professional Publication of Hair and Skin Rejuvenation
Light therapy turns on more than hair follicles
Siena, Italy. 01/17 - It is well known that low level laser light therapy can stimulate hair growth, but recent research by Italian researchers found that men exposed to just two weeks of daily doses of bright light also increased testosterone levels by over 50% and their sexual satisfaction levels more than tripled. “We were not surprised to observe our results,” said study author Dr. Andrea Fagiolini, chairman of both the department of mental health and the school of specialization in psychiatry at the University of Siena. June ranks as the top month when it comes to maximum rates of conception, he said. “We thought light could well have something to do with that.”
A Follea Wedding
Beverly Hills, CA - Luxury wig company, Follea International helped Kellie Morgan look her very best just in time for her wedding. Kellie was selected as prizewinner in Follea’s special, ‘Wig Give-Away’ promotion and was flown from her hometown in Buffalo, NY to the Follea Beverly Hills salon for a weekend of pampering where experts fitted and styled her new Follea hair.
Capillus Gains OTC (Over-the-Counter) Clearance Miami. 09/16 - Capillus, LLC a medical device company manufacturing hair growth lasers, one of the first companies in the world to receive ISO 13485:2003 certification for its quality management system through the Medical Device Single Audit Program (MDSAP) pilot has now secured OTC (Over-the-Counter) clearance, allowing hair salons and other retailers to
OlaPlex vs. SmarBonds In 2014, California-based, OlaPlex launched a new hair repair product that protected hair during bleaching and color treatments and repaired broken disulfide bonds. Jimmy “The General” Toscano recommended OlaPlex in a special commentary in the National Hair Journal. Olaplex has now filed suit against L’Oreal, claiming their new product, L’Oreal Professional Smart Bond infringes on its patented technology. The company also states that L’Oreal recruited several of its key people to gain technical insights that would aid in their product development. offer Capillus lasers to their customers for the first time in the USA. Capillus offers a multiple of laser device options in the home-use and clinical categories with 6 models of wearable laser caps as well as 1 professional use model.
Winter 2016/17
New Hair Loss Topical MT. Kisco, N.Y. 01/17 - Immudyne has been granted a second patent for its new hair loss serum which will be marketed by Pilaris Laboratories, under the “Shapiro M.D.” label. Pilaris was founded by Steven Shapiro M.D. and Michael Borenstein M.D. Ph.D. after 5 years of clinical research on topical dihydrotestosterone (DHT) inhibitors. Dr. Shapiro has over 20 years of clinical experience treating hair loss and hair transplant procedures. Dr. Borenstein holds a Ph.D. in Pharmacology.
“Disruptive Technology” from LaserCap® Cleveland, OH. 01/17 – LaserCap®, the company that invented wearable low level laser light technology (LLLT) to treat hair loss at home, has announced the release of a new device with the slogan “Light. Years Ahead.” Worldwide distributor, John Vincent, claims the new device, named MC²™ (for ‘Maximum Coverage, Maximum Comfort) will make other laser wearables obsolete.
Confidence Lost
Consumer are losing confidence in suppliers and need information they can trust. The explosion of online advertising for beauty and personal care products, combined with the increasing number of personal care products in pharmacy, supermarket and even bigbox stores, has left shoppers confused and distrustful over the beauty claims. Their skepticism was given a new boost recently when Walmart, Target and CVS were found to be promoting private label brands of Aloe Vera personal care products that contained no Aloe.
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The National Hair Journal Winter 2016/17
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The National Hair Journal Winter 2016/17
Editorial
View from 30,00 feet
This page is where we stand back from the PR releases, phone calls, scribbled notes and business meetings and try to make sense of all the information that flows across our desk and what it means to the industry. And the thing that continues to strike us is the fundamental importance of hair to men and women in virtually every country around the world. Readers in North America and Europe probably think of hair as a personal embellishment; a way to express personality, health and vitality. But in India, it is a source of livelihood for the millions of women who shave their heads at Hindu temples in the country’s southern states as a form of sacrifice. In China, Vietnam, Indonesia, Thailand, and more recently Cambodia and Myanmar, hair provides employment for hundreds of ventilators and other production specialists who work in factories or as part of cooperatives to work at home. In many Middle Eastern countries, hair is so revered that women must cover their heads in public. And the latest continent to embrace beautiful hair is Africa where a growing middle class enthusiastically searches for imported wigs with long straight hair that can be styled and fashioned any way they choose. This trend is wonderfully explained in a series of special BBC World Service reports including: “How India’s Human Hair Factory Helps Africa” (http://www. bbc.com/news/world-asia-india-36023361), “Cambodian Hair Extensions Gaining Popularity” [www.bbc.com/news/ world-asia-18512218] and “Why Is the Human Hair Market Thriving?” [www.bbc.co.uk/programmes/p03qy4p1] - I encourage everybody to visit the BBC website for themselves.
Paradox - Another quality publication, The Economist, ran
a fascinating article “Human Hair, The Bare Truth” In which it tried to explain the paradox of men and women removing hair from some parts of the body and replacing it in others. With thanks to The Economist, we are quoting some of their most interesting observations in this paragraph. “Human beings’ hairy preoccupations are curious because, compared with their closest animal relations, humans have very little hair to begin with. Hair is unique to mammals, and is one of the most obvious and defining characteristics of the group… Of the 5,000-plus species of mammal, the only other (mostly) hairless creatures are elephants, rhinoceroses, hippopotamuses, walruses, whales and naked mole rats. It is easy to see why these few animals are not so hairy. Elephants and rhinoceroses are some of the largest of mammals, live in hot places and have trouble staying cool. The others live, at least part of the time, in water—where hair is not very useful—or underground, where temperature does not fluctuate as much as on the surface. Pigs are different.
Their relative hairlessness has been bred into them recently, in rather the same way as the unfortunate Mexican hairless dog. A scientist might argue that humans are not, technically, “hairless”. Many have the same density of hair follicles as an ape of the same body size would have. But human hair is generally fine and short, and so humans look naked compared with their closest animal relations. Completely hairless human skin is found in only a few areas such as the soles of the feet, the areolae round the nipples, the umbilicus, and the palms and undersurface of the fingers and toes.
Coming or Going? - But here’s where things get compli-
cated. Gillete, a leading razor manufacturer, invested three quarters of a billion dollars to develop its Mach3 razor, just one of several devices the company offers. Getting rid of hair is a huge business. So is getting it back. In the US alone, men spend over $2 billion to remove facial hair… and almost as much to put hair back on the top of their heads! And while it’s okay for men to have hairy armpits, chests and pubic areas, women spent a hundred million dollars to remove hair from those same places. “Typically, today’s women start shaving at a slightly younger age than men do but they shave an area nine times as large. Although the average male beard has the same number of hairs as a woman’s legs and underarms combined (7,000 to 15,000 hairs), the beard is denser and grows much faster. The average American man spends about 33 days of his life removing facial hair.”
Bonnie & Clyde - Virgin human hair is an increasingly commodity. Savvy thieves know its value. In 2014, burglars in Houston grabbed $120,000 (£73,432) of unprocessed hair from My Trendy Place hair salon. The owner said the burglar knew exactly what he wanted and didn’t even bother to raid the cash register, heading instead for the storeroom full of extension bundles and wigs. This was the beginning of a series of targeted raids across the country that netted criminals thousands of dollars more than they would typically get raiding a liquor store.
I Want to be Different - So, what’s the conclusion from
this amusing and contradictory information? We believe it simply this. Hair, any hair, is not essential for safety, comfort or health, but it is a unique and powerful tool to express yourself. Because it can be styled, colored, comes in different lengths and you can use it to say you are sophisticated, flamboyant, youthful… anything you want! Humans are social animals and all of us want to stand out and be unique. Hair is still the best tool we have.
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The National Hair Journal Winter 2016/17
Meet Carlos Pina The Man Behind
Capillus, LLC is a limited liability corporation founded in 2012. It is based in Miami, Florida and manufactures personal care products with a special focus on hair loss. The company received the first FDA clearance for any laser therapy cap in the market. It now holds a total of 7 FDA 510(k) clearances for its 7 laser therapy products, ranging from 82 to an industry record of 352 laser diodes. The company backs their claims with scientific evidence; an independently reviewed 2014 clinical trial showed an average 51% increase in hair in active study participants using the Capillus272 Pro. Capillus offers a multiple of laser device options in the home-use and clinical categories with 6 models of wearable laser caps and 1 professional use model. Most recently Capillus gained OTC (Over-the-Counter) clearance, allowing hair salons and other retailers to offer Capillus lasers to their customers for the first time in the USA. Home-use laser caps range from the Capillus82 at $799, to the premium Capillus272 Pro at $3,000. The difference between these devices is the number of laser diodes. The Capillus272 Pro offers 272 diodes, for maximum simultaneous laser coverage, the Capillus202 offers 202 diodes for excellent coverage, and the Capillus82 features 82 for a great value. The Capillus272 OfficePro is designed for supervised treatment at medical centers, salons, and spas. Capillus laser therapy caps are considered medical devices and have all received clearance by the Food & Drug Administration for the promotion of hair regrowth in females and males with hereditary hair loss. In September 2016, Capillus received ISO 13485:2003 certification for its quality management system through the Medical Device Single Audit Program (MDSAP) pilot, making it the first manufacturer in the laser industry to achieve the distinction. MDSAP is an international initiative led by a group of Regulatory Authorities, including the U.S. Food and Drug Administration (FDA) and Health Canada, aimed at developing, managing and overseeing a single audit program that makes worldwide medical device regulation easier and more effective. Capillus’ certification process was completed by Intertek, one of the Auditing Organizations
authorized by the participating Regulatory Authorities to audit under the MDSAP pilot. Capillus is the only manufacturing and design company of its size to participate in Intertek’s MDSAP pilot program. Intertek’s certificate confirms the company’s conformance to the requirements of ISO 13485:2003, Canada: Medical Devices Regulations – Part 1- SOR 98/282 and United States: 21 CFR 820, 21 CFR 803, 21 CFR 806, 21 CFR 807 (Subparts A to D). The scope of the audit encompassed the design and development, manufacture, service, and support of devices utilizing laser diodes for hair (re)growth promotion. The National Hair Journal met with Capillus Chief Executive Officer, Carlos Piña to learn more about the wearable laser market, the significance of ISO certification… and why the Capillus logo pops up every time your editor opens his computer or iPhone. Hair Journal: Carlos, you’ve just returned from the Annual Scientific Conference of The International Society of Hair Restoration Surgery (ISHRS). Only a few years ago, doctors were skeptical about low level laser light therapy. That has now changed following positive clinical trials and a history of consistent patient outcomes. It goes without saying that this required serious investment in medical research and hard ground work by manufacturers and their marketing teams. What was the latest feedback at ISHRS? Carlos Pina: I saw widespread acceptance and promotion of light therapy. Doctors have studied the clinical trials and have seen the results for themselves with their own patients, so you could say that lasers are now selling themselves. In fact, many doctors are now taking a new step and are beginning to use light therapy in conjunction with PRP. NHJ: Is the medical profession now 100% on board or are there some physicians still sitting on the fence? Carlos: I haven’t seen any specific numbers, but based on my experience, I would say most hair transplant doctors understand and endorse light therapy even if they have not yet found the right model to integrate laser therapy into their business. NHJ: Capillus is a relative newcomer but has grown very fast. What accounts for this trajectory? Carlos: Capillus started about 4 years ago. From the beginning, we wanted to make Capillus a brand that people would know by name. We have now accomplished that. We advertised aggressively in major US airline publications and Air Canada as well as Iberia and EasyJet to reach the European market. This investment has paid off. In all my travels, I have not met one hair restoration doctor who does not know the Capillus name. When a patient inquires about Capillus, everybody is familiar with the brand and what it stands for. NHJ: Is your success because of the marketing, because of the technology, or is it simply an idea whose time has come? Carlos: It is a combination of all of them. Obviously, there must be serious science behind the product, but without question this is a technology whose time has come - in fact, you could say it came some time ago. Laser results speak for themselves. Doctors who needed evidence that light thera-
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py worked have witnessed the results. Our point of difference is that we offer patients the convenience of a wearable and discrete laser device that was not available before. NHJ: The laser space is becoming progressively more and more crowded. If there is one thing that you are most proud of would it be the ISO 13485 Certification that you received last year? Carlos: We are certainly very proud of this. It was not easy to come by. The first and critical step was to find a person with the expertise and experience to guide us through the complicated process we would have to follow to apply for recognition. It had to be a person who not only understood the regulations, they had to understand the science and technology behind our work. We were very lucky to find Patricia Schnoor who has many years of experience in this field. She recently returned to the US after an assignment with Philips in the Netherlands. Patricia makes sure that our science and other procedures are done in full compliance
“We wanted to make Capillus a brand that people would know by name rather than just asking for a laser cap that happened to be called Capillus.” with FDA requirements. This was critical for the clinical trials that had to be done when we started our applications for market clearance (510(k)). We now have a total of seven positive market clearance decisions, including the clearance for use by both genders. In fact, we are the only laser cap company on the market today that has both male and female clearance by the FDA for all our devices. NHJ: We’re sure you had to make adjustments and refinements to the production process in order to meet the conditions Patricia was insisting upon. Patricia, could you jump in here and give us some examples of stringent requirements that Capillus had to meet? Patricia Schnoor: The owners of the company have done absolutely everything to ensure that they followed my instructions and met all conditions I submitted to them before we applied for certification. They were 100% responsive and I can’t say the same about every other company I have worked for… and I have worked for or consulted for a lot of companies. NHJ: Could you give us some examples? Patricia: Change control - every change, even the smallest tweak to our device had to be documented. In risk management, we must document everything because even the
The National Hair Journal Winter 2016/17
smallest change might have implications down the road. Every time we made a change not only did we have to record the technical details, but also the reason why we were making this adjustment. What was the expected benefit? This was perhaps the hardest thing to manage because of the level of detail. Most companies, especially when the dealing with consumer devices, don’t realize that everything must be documented. NHJ: Does this include documenting the patient experience and satisfaction? Patricia: Yes, absolutely. We have to collect all of that. Everything the consumer shares with us is documented; every call, every blog, every bit of feedback data. It’s all collected and analyzed, as well as our own qualitative data and tracking information. If there is any kind of problem or question at the end of the production line when our product reaches final quality control, we make a note of that too, together with the steps we took to correct it. All of this is consolidated in a report that we examine together. Our yardstick as a manufacturer is 100% consumer satisfaction. It’s hard to achieve that when you are pioneering a new technology, but that’s what we measure ourselves against. Carlos: This is very important to us. For better oversight and quality control, we decided two and a half years ago to move production to Miami. Today, all our products are made here and each one is individually tested and the results documented. Patricia: Every device is checked and documented - as required by regulatory authorities. Carlos: We even go up and beyond; we even test each diode one by one as they are being inserted. As a medical device company, our top concern is the safety of the end-user. To assist us, we hired Intertek, one of the largest medical audit firms in the world. Intertek consulting services are carried out by independent medical device experts of a separate legal entity who have no influence over any aspect of Intertek activities. Intertek examined every aspect, every detail of our product and gave us a clean bill of health. We are the first hair care company to be issued a certificate by Intertek. NHJ: Capillus is a vigorous competitor. What sets you apart? Carlos: I have to come back to our quality control. We are fixated on product integrity. There are a number of key people without whom this company could not function. I’m talking about our head engineer, our head of quality control, our head of shipping. They oversee all the pieces of our operation. Everything associated with the product is tested, even something as marginal as the packaging, the box and the label. Everything is checked and double checked. NHJ: With any new technology there are always skeptics
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The National Hair Journal Winter 2016/17
and opponents. Do you feel it’s important in your emerging category to set standards whether of product quality or ethics so that the industry builds on a solid foundation? Carlos: Of course. Not only that, we encourage our competitors to maintain the highest standards. We would encourage all industry manufacturers to enroll in an auditing system like we have in order to monitor their product quality. NHJ: So you see ourselves not only as a vigorous competitor but also as a standard-bearer for the industry? Carlos: I would like to think of ourselves as standard bearers. We want to provide top quality and listen to the needs our customers whether it is providing maximum laser coverage, better ease of use for better compliance or US based manufacturing and support. NHJ: It’s great to pull together, but clearly you view your product and corporate philosophy as innovative and different.
“As a medical device company, our top concern is the safety of the end-user. To assist us, we hired Intertek, one of the largest medical audit firms in the world.” Carlos: We are especially proud of the science behind our product and the support we provide our client base, whether it be doctors themselves or their patients. Every day we search for ways to make our device better. We’re quick to respond to any feedback. If we find something we think can be improved, we’ll invest the time and dollars to test it out. We are constantly reinvesting in R&D. Patricia: As I mentioned earlier, every new idea has to be tested. When it comes to a laser device, we need to have an emissions report for example, to examine things like electromagnetic disturbance and radiation. We never present any new product until all these tests are completed. We recently had an exciting new product but it didn’t have what I considered to be sufficient test data for us to show it in a public forum, so it didn’t leave our premises. Carlos: What Patricia is saying is that we’re very strict. We’re expanding and we have to meet the requirements of the most demanding international markets like Canada, Australia and the European community. NHJ: We’d like to turn to your distribution strategy. You started off by seeking the approval and endorsement of hair loss professionals to establish a platform of credibility and proof of performance. But now you are reaching out aggressively to the consumer and in fact on my iPhone, my iPad, my computer and most places I go online, Capillus is right there behind me! Capillus is everywhere! What is your current distribution strategy?
Carlos: At the beginning, I wanted to make sure that physicians knew about us, trusted us and kept track of their clients on a daily basis to ensure compliance and see those positive results. Since this was a new technology, we also wanted our device to be presented to men and women with hair loss by somebody with medical and technical knowledge. As the benefits of light therapy became better understood, we extended our marketing to the public, but restricted distribution to professionals, meaning medical offices or Capillus direct. Now with our OTC clearance, we will also be available on Amazon making it even easier for consumers to learn about our products.
“I’m originally from Cuba and extending our distribution into Latin America is an obvious priority.” NHJ: let’s talk about Carlos Piña the man. Why you, why lasers? How did this all come about? Carlos: My background is in marketing, advertising, branding. I have a good friend, Dr. Bernard Nusbaum who is a transplant surgeon here in Miami. Over the years we kept track of everything that was happening in the industry involving hair growth and hair transplants. Dr. Nusbaum had a keen interest in lasers and asked me if I would like to get involved. NHJ: Readers of The National Hair Journal are hair loss professionals. What would you like to tell them? Is there still a role for the in-clinic laser, or do you think it’s now a 100% in-home device? Carlos: Hair replacement salons and professionals outside the medical community are aware that our most powerful device, the Capillus 272 is only available in physicians’ offices. That will remain the case, but with our new OTC clearance (over-the-counter), we can now start contacting the top spas and hair replacement studios, in other words readers of the Hair Journal to offer distribution of the Capillus202 and Capillus82. NHJ: Looking over the time horizon, what can we expect from Capillus in the future? Carlos: We have a talented team of researchers and we are constantly looking at new personal-care opportunities like skin rejuvenation and the treatment of psoriasis. With regard to hair care, we plan to expand Capillus international distribution. I’m originally from Cuba and extending our distribution into Latin America it is an obvious priority. NHJ: Carlos, we know you’re jetlagged and you are returning from a stressful four days of business meetings. We appreciate you finding the time to share your news with Hair Journal readers.
About - Capillus was founded in October 2012 to manufacture
medical laser devices. It received its first FDA 510(k) clearance in January of 2015. Facilities: In June of 2015, The company moved to its present day 20,000 square foot location in Doral to expand its manufacturing capabilities and has been experiencing steady growth. Capillus has secured a total of 7 FDA 510(k) clearances for its laser therapy models. NHJ
The National Hair Journal Winter 2016/17
Model is wearing top-of-head system: Trend II. ©2016 HairUWear Inc.
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The National Hair Journal Winter 2016/17
THE ONLY LASER CAPS FDA-CLEARED FOR NON-PRESCRIPTION SALE
NOW LEGAL FOR DISTRIBUTION THROUGH SALONS & RETAILERS LEGAL FOR SALE BY STYLISTS & SALONS FOR THE FIRST TIME
7 FDA CLEARANCES. 7 FDA-CLEARED LASER THERAPY DEVICES. 82 TO 352 DIODES, HOME & CLINICAL USE, BRINGING YOU & YOUR CLIENTS MANY PRICING OPTIONS. The FDA-Cleared, physicianrecommended cap that’s clinically proven to regrow hair – affordably and easily - is now available for sale through stylists and other retailers in the USA & markets throughout the world. Capillus is the only laser cap that is legal for sale in the USA by anyone other than a physician. Capillus laser therapy caps and clinical laser unit prevent progression of hair loss and regrow thinning hair. Handmade individually in the USA, Capillus laser caps are FDA-cleared for both prescription & over the counter sale and have no known side-effects, so you can prescribe them with confidence. Nothing tops it for convenience. Capillus meets current Good Manufacturing Practices set by the FDA and is able to provide Certificates to Foreign Governments upon request. Capillus conforms to the highest of medical device quality standards with ISO 13485:2003 certification by Intertek.*
CALL +1 (786) 800-3366 TO LEARN ABOUT ALL OUR NEW PRODUCT OFFERINGS. ALL MAJOR CREDIT CARDS ACCEPTED
HELP YOUR CLIENTS WHILE INCREASING YOUR BOTTOM LINE +1 (786) 800-3366 • WWW.CAPILLUS.COM CAPILLUS, LLC - 1715 NW 82 AVE, MIAMI, FL 33126, USA +1 786 888-6249 - THE CAPILLUS NAME & LOGO ARE REGISTERED TRADEMARKS OF CAPILLUS, LLC. PATENT PENDING. ALL RIGHTS RESERVED. * CAPILLUS LASER THERAPY DEVICES ARE INTENDED FOR THE PROMOTION OF HAIR GROWTH IN FEMALES WITH ANDROGENIC ALOPECIA WHO HAVE LUDWIG-SAVIN CLASSIFICATIONS I – II, AND IN MALES WITH ANDROGENETIC ALOPECIA WHO HAVE NORWOOD HAMILTON CLASSIFICATIONS IIA-V; AND BOTH GENDERS HAVING FITZPATRICK CLASSIFICATION OF SKIN PHOTOTYPES I TO IV. EFFICACY DEMONSTRATED IN CAPILLUS CLINICAL TRIAL. SEE CLINICALTRIALS.GOV FOR MORE INFORMATION. ALL CAPILLUS LASER DEVICES ARE MADE IN THE USA. *ISO13485:2003: CANADA : MEDICAL DEVICES REGULATIONS – PART 1- SOR 98/282 AND UNITED STATES : 21 CFR 820, 21 CFR 803, 21 CFR 806, 21 CFR 807 (SUBPARTS A TO D). THE SCOPE OF THE AUDIT ENCOMPASSES THE DESIGN AND DEVELOPMENT, MANUFACTURE, SERVICE, AND SUPPORT OF DEVICES UTILIZING LASER DIODES FOR HAIR (RE)GROWTH PROMOTION.
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The National Hair Journal Winter 2016/17
Paid Reviews Cost Companies By Jeffrey Segal, MD, JD
Two companies have settled with the New York Attorney General’s Office after being accused of paying consumers for positive reviews by agreeing to increase their transparency and pay a total of $175,000. MedRite Care, LLC, a medical emergency care service, paid thousands of dollars to Internet advertising companies and freelance writers over a two-year period for posting positive reviews of the company on sites like Yelp. The reviewers neither visited MedRite facilities nor experienced its services, the AG said, and never disclosed they were paid for the reviews. In September 2012, the company paid $375 for 15 positive reviews on sites such as Yahoo Local Page, and followed with job postings on Craigslist offering $10-$15 for positive reviews on Yelp. When Yelp discovered that MedRite was using the site to solicit reviews (one e-mail to a Yelp member read, “I see you are yelping a lot. I own a company in NYC and would like to get more reviews … would you come checkout our company and write a review? (will pay).”), Yelp posted a “Consumer Alert” on MedRite’s Yelp profile. Similarly, car service company Carmel provided a $10 discount to clients who posted a positive review online. Between May 5, 2016 and July 27, 2016, the company sent 161,000 e-mail messages to customers requesting feedback about their experience. Customers were presented with three choices to describe their service: “Perfect,” “Good,” or “Bad.” Those who clicked the first two options were directed to a consumer review website and provided with a $10 discount off their next ride with Carmel upon confirmation of the review. Those who chose the “Bad” option were not connected with a review website or rewarded with a discount, the AG said. The companies violated both the Federal Trade Commission’s Endorsement Guides and New York state law, which prohibits misrepresentation and deceptive acts or practices in the conduct of any business, according to Attorney General Eric T. Schneiderman. The companies will pay $100,000 and $75,000, respectively (although MedRite’s fine was partially suspended to $50,000 based on inability to pay), and will no longer engage in such practices. MedRite is prohibited from misrepresenting that an endorser is an independent user of its services or compensating a reviewer who has not made the required disclosures. Carmel also promised to educate the for-hire car transportation industry on false advertising law and online consumer reviews by taking out a full-page ad in trade newspapers and conducting educational seminars. Why it matters: These actions are a continuation of the AG’s efforts to ensure accurate and reliable consumer reviews, an effort that began with “Operation Clean Turf” in 2013, the AG’s Office said in a statement. “Consumers should not be misled when it comes to making important determinations about their health and well-being,” Attorney General Eric T. Schneiderman said in a statement. “Our investigation into MedRite sends a strong message to companies that the rules preventing deceptive advertising and practices must be upheld online. Those same rules apply to other service industries.”
“Magic Mirror?” Digital mirrors are all the rage in the cosmetic market. What started out as a dressing room utility in upscale stores like Neiman Marcus and Nordstrom has now come down market and is being used to show women different shades of makeup or hair color. Shiseido, the leading Japanese cosmetic company, has just announced its commitment to becoming the most digitally advanced cosmetic company in the world and plans to use this technology to attract millennials who like to make quick comparisons and fast purchase decisions. Just recently, New Kinpo Group has launched HiMirror, a $189 smart mirror for use at home that measures 11 x
16.4 inches and uses facial recognition to track and log skin texture, clarity, brightness and health. Could this affordable device also be used to monitor hair loss or growth and become a valuable adjunct to home laser therapy. Restoration Robotics, makers of the ARTAS® Robotic Hair Transplant device, already offers software allowing cosmetic surgeons to review potential hairlines and densities with transplant prospects, but the nonsurgical, hair addition market is lagging behind. Perhaps devices like HiMirror or the “Future Mirror” from Panasonic will help turn this around. It’s an investment that should pay for itself. Experience has shown that when men and women can see themselves transformed, they are twice as likely to purchase.
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The National Hair Journal Winter 2016/17
Everyone Is Beautiful
By Nazy Curtis
ological necessity like an organ, or even a convenience like fingernails. It is an accessory, and like all accessories, it can be enjoyed, customized and changed.
That’s where I come in - My hair additions, wigs and ex-
tensions are not prosthetics or cover ups. They are personal enhancements that flatter and beautify. So much so, that half of the women wearing my wigs haven’t even begun to thin. But I am not here to promote my own work; I want to make the point that everyone is, can be, and will always be beautiful! The job of the cosmetologist is to guide and partner with her client on this exciting journey. So here are my tips to help everyone get the style, technology and beauty that is right for them – Firstly, get a professional diagnosis - female hair loss is not the same as it is for men. So, as a first step, consult with a trichologist, dermatologist or professional specializing in hair loss. Once you know and understand the nature of your hair loss, you can begin to research the solutions. Today, you have many choices, many of which can be used in combination. There is a new organization being formed that can help you here. It’s called “The Hair Authority” and that’s precisely what it is. The Authority is preparing a special directory that lists the qualifications and professional skills of hair loss clinics and studios across the country. Use it to drill down to find a professional in your neighborhood who has the skills you need.
Some personal tips and tricks - Since I am a cosmetologist by training, I’m going to focus on nonmedical hair addition choices.
How it all started - My early training focused on beauty
and styling. I grew up in Europe and received what is probably the best training and instruction available anywhere. My beauty education took me from Hamburg, Germany to London, England, Paris, France and finally, the United States.
I expected to be hi-end stylist and colorist - but life got in the way. Just as I moved to the US to start my own salon, I began to lose my hair! Not just thinning… all my hair. I was young, fit… and like every woman, I still had my dreams. Most of all, I still wanted to feel beautiful, feminine and desirable. That’s when I decided to use my years of training to create hair loss solutions for myself - and for every woman in my situation. Just because you are losing your hair, you don’t have to lose your beauty. In fact, just recently a young lady from Nebraska won the Miss America competition wearing a wig because she had lost her hair. I admired her self-confidence, poise and yes, her beauty. Hair is an important part of our wardrobe and we use it to show who we are, create a look for a special occasion, or simply to reflect a mood or personality. But hair is not a bi-
Assuming you have determined the reason why your hair is thinning and concluded that a wig or hair addition is a good solution, how do you choose a good wig and where do you get it? Because a wig can dramatically change the way you look, this market has attracted a lot of competitors, mostly from China. But there are huge differences in quality and un-
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fortunately, many of these differences only become apparent after you have taken your wig home and worn it for a couple of weeks. It is critical to make the right choice upfront and, as in most markets, you get what you pay for.
The National Hair Journal Winter 2016/17
she should not use a circular motion to avoid tangles. There is also a right and a wrong way to use conditioners. Hair conditioners should not be applied to the roots of a wig because they can loosen the knots, resulting in shedding. Many conditioners can also clog the scalp, so I recommend that my clients exfoliate their scalp regularly. Healthy hair grows from a healthy scalp. If your client works out, she doesn’t need to wash her wig each time she goes to the gym. Normally, it is sufficient to clean the inside thoroughly with a nonalcoholic wipe. However, if she has had a vigorous workout and has been perspiring heavily, she should gently hand wash her wig, shampooing it one time only.
Synthetic or human?
What makes a good wig?
There are lots of individual features I could talk about, but it comes down to two things: 1. The quality of the hair. 2. The comfort of the cap.
Custom design or off-the-shelf?
A custom design that reflects your style and personality is a great choice, particularly if your hair loss is permanent. It captures who you are and how you want the world to see you. But there are also high-quality ready-to-wear wigs available at competitive prices. The important thing is to make sure you get the hair quality you are paying for – and that’s not always an easy task… Finally, always, always check that the cap Is comfortable.
New style or keep my current look?
Choosing a new style can be fun and refreshing, but if your client is going through chemotherapy, I suggest that he/ she keep their current style because they are already going through major life changes and don’t need something else to adjust to. However, don’t forget, that whatever makes a woman feel sexy and attractive, no matter what the circumstances, that’s the right look for her.
What color is right for me?
The best color Is determined by your client’s skin tone (undertone). For example, if she has a lot of yellow, you should not use red or warm shades. If anything, use violet to neutralize the yellow. Similarly, if your client’s skin has pink undertones, you should not go to white, blonde or “wheat” colored hair. The psychology of color is a discipline I studied in Paris and I will share those insights and explain how to select the best colors for your client in a future article in The National Hair Journal.
Caring for my wig.
If your client has a high quality human hair wig, she should care for it in the same way as her own growing hair. The routine is simple. She should brush it gently before she washes it, starting at the bottom and moving up towards the roots. When washing the wig (or her own growing hair)
Several years ago, an attractive woman in her ‘60s came up to me and asked if I thought she looked good in her new wig. It was a factory made, synthetic wig but my honest answer was, “Yes” because it matched her style and demeanor perfectly. She was conservatively dressed; very St. John style, and every strand of her wig had been pre-planned, placed and manufactured. Everything about this lady was in sync. It was a perfect match. Her formal wig would’ve been completely out of place on an active woman of today who mixes her Gucci bag with a Forever 21 tank top and Dolce & Gabana jeans, but this lady she was happy and confident. It reminded me of the golden rule - if she feels good in it, that’s what makes her beautiful!
Getting the color and highlights right.
Everybody talks about “100% human hair” wigs and extensions, but not everything is as it seems. In fact, the language can be downright confusing. For me everything labeled, “100% Human Hair”, “Remy Hair.” “Brazilian Hair,” the list goes on, all fall into the same category of “Processed Hair.” I contrast this with “Virgin Hair” which is completely unprocessed and falls into a different category altogether in terms of styling, coloring and highlight possibilities. If you are a good colorist, you can use your knowledge and enjoy your creativity when you work with quality hair, but that good hair is precious so avoid cheap products that contain a lot of ammonia, avoid excessive heat and always pay attention to the processing time!
More hair is not always better.
The axiom, “Less Is More” is often true when it comes to wig making. Since Chinese and Indian hair is easy and cheap to get, manufacturers often overuse them. This can result in multiple problems. Firstly, the color typically needs to be corrected, which results in serious chemical damage to the hair shaft. Secondly, the diameter, or denier, of the hair is thicker than that of the average North American client. And finally, when you combine this with the tendency
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The National Hair Journal Winter 2016/17
of manufacturers to add too much density, you get a wig of vulnerable quality that is unlikely to match your clients own thinning hair. European hair on the other hand, is finer in texture and for the average North American client it looks more natural. However, Europe has many regions and the characteristics of the hair depends on its origin. Hair from the north of the continent is likely to the finer than hair from the Mediterranean region - though the hair from the south may be perfect for a Middle Eastern or Latin client.
Staying out of the sun.
Human hair, whether it’s your client’s own growing hair or hair that’s been crafted into a quality wig, will lighten when exposed to UV radiation. The difference is your growing hair will regain its natural pigmentation, but the wig will remain faded and continue to lose color with repeated exposure. The simple solution is wear a hat or stay in the shade. This not only protects your valuable hair it also protects your skin against aging. The same logic applies to synthetic wigs - with one additional consideration – synthetic wigs tend to be heavier and do not “breathe” in the same way as the best human hair wigs, so they can feel hot and uncomfortable in warm weather. Again, the shade is your best friend.
Protection from chlorine.
Chlorine is not good for hair; any hair. Synthetic wigs cannot handle chlorine at all and human hair tends to dry out and change color faster after exposure to chlorine. However, there are conditioners that protect the hair before entering a chlorinated pool and many of them also contain a UV sunscreen. They are worth the investment.
Beauty Radar 2017 Eyebrow Restoration Permanent, natural solution for eyebrow hair loss, growing in popularity Ongoing trends indicate that fuller, natural brows will continue to be a critical factor in women’s perception of aesthetic qualities. The International Society of Hair Restoration Surgery (ISHRS) 2015 Practice Census Statistics report documents a 57.2% growth in the number of eyebrow hair restoration procedures from 2012 to 2014. Eyebrows are said to be the most important facial feature — even more so than the eyes. Eyebrows express emotions and are a critical factor in how people recognize and remember faces. Thinning or patchy eyebrows can often make people feel self-conscious and deeply affect their self-confidence. From adding fullness to thinning brows to restoring gaps or missing brows, eyebrow restoration offers a natural and permanent solution, according to experts at Bosley, a leader in medical hair restoration and hair loss solutions. “We want women to know there is a simple, permanent and natural solution for eyebrow hair loss. Our experts bring experience, skill and artistry to every restoration,” says Bosley Assistant Medical Director, Dr. Edwin A. Suddleson. “We have seen an increase in consultation requests for eyebrow restorations and expect to see the number of restorations increase in 2017.” Eyebrow restoration is a simple procedure that takes browlike follicles from the head and transplants them into the thin, patchy or missing areas of the eyebrow. The procedure takes a couple of hours and results are generally seen in the following months. Having a restoration done by an experienced professional is crucial to a successful restoration, as eyebrow hair is different than any other type of hair on the body, and facial type and ethnicity both affect the thickness and arch of the brow.
Go easy with the dryer. The best way to dry human hair wigs, whether they are made from processed or unprocessed virgin hair, is to first apply a leave-in conditioner, brush the hair the way you want to style it, let it air-dry, then when it is halfway dry, blow dry it with a round brush until you achieve the desired look. Special considerations for chemo patients. Chemotherapy patients are already going through heart wrenching challenges trying to match their hair to the look they had before they started therapy. This is a time when empathy, humility and talent come together. Your role is to help connect them to the person they used to be when they were enjoying the most satisfying moments of their life. It is a time when those years of training, your special skills can bring the greatest satisfaction and reward. NHJ
“Bosley physicians create custom-tailored brow solutions that complement their patient’s individual facial type and features, including facial structure, landmarks on the face and bone structure,” says Dr. Suddleson. “From the latest beauty trends to the most advanced hair restoration techniques, our physicians have the expertise to help bring out the most beautiful version of you.” Eyebrow restoration is offered at all Bosley surgical offices across the United States.
About Bosley Medical Group - Founded in 1974, Bos-
ley Medical Group is the largest hair restoration practice in the United States. For more than 40 years, Bosley physicians have focused on the art and science of hair restoration utilizing innovative, artistic, and scientific techniques. With more than 275,000 hair restoration procedures performed on men and women (with patients from all 50 states and 60 foreign countries) NHJ
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The National Hair Journal Winter 2016/17
Your Bed or Mine
By Amy Gibson This is a sneak peek at another chapter that will be included in the updated version of Sex, Wigs & Whispers now in development that I wanted to share with you in The National Hair Journal. Once a woman suffering from hair loss understands that the possibility of feeling, looking and living like the person she has always been - or desires to be - is still possible, then her journey changes from challenging to liberating; from depressed to exhilarating. What we do as hair loss consultants is not easy. It takes heart, inner strength, tremendous patience, guts, great insight, talent and continuing education. But our support offers our clients the chance to feel beautiful and normal again. They still want to live the life they had. They still want to be active, date, have intimacy, experience love and be loved, just like other women around them - with hair. But many women have no idea know how to do this with a wig on and most importantly, how to keep their discretion in the interim. So, they stop their lives. Women are desperate to know how to enjoy these parts of life, but have had no one to ask. Hence after many years of teaching women from all over the country my Pearl Program on Intimacy and Dating, and seven years in the making - Sex, Wigs & Whispers (SWW) was born. Over the next few months I’m going to share many tips from SWW for all of you to share with your clients in the hopes of helping you approach what has been a taboo and uncomfortable subject. I’m sure you’ll find, as I have, that this information will ease your clients’ confusion, enhance their self-esteem and, with your assistance, help them get their lives back.
Intimacy Preparation This ladies, is about honoring yourself and owning your power. What happens if you forget something? I’ll never forget the time I had finally gotten to the emotional place of being intimate with someone and we planned the perfect evening… We had been dating about nine weeks and my boyfriend (of course like many girls, I was already daydreaming about our impending marriage) was cooking a romantic dinner. I purchased an expensive human hair wig and had it styled to perfection. The cherry red on my nails matched my lingerie and sexy heels; also purchased earlier that day. To be frank, I truly felt like I was rockin’. At least I thought so – which is all that mattered. When I arrived at my boyfriend’s house it was obvious he had put enormous effort into preparing for our evening. It could have been in Hawaii. Lighting and flowers lined
his long driveway; and the luscious scent followed me all the way to his doorstep. He gave his housekeeper the evening off so we had absolute privacy. The interior design of his home showed his talent for aesthetics. There were cobalt blue velvet curtains, matching sofas and red flowers bounced that off the reflection of the polished marble floors to perfection.
“Satin pillowcases are great for reducing static and I was sooo grateful he had chosen a satin bed set!” The coup de grace was that Mark was an incredible chef. He created a delicate and sensual meal with spectacular wine. Candles bathed the room in romantic ambiance. We began watching a movie in his custom home theater and in time we started kissing. When he reached over to touch my hair – I told him that I had gotten a perm earlier and my head was very sore; I asked him please not to touch
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The National Hair Journal Winter 2016/17
my hair or head. As he knew what was waiting for him, it was easy to get him to comply. Although his house was beautiful it had a strange layout. The living room and home theater were on the opposite side of the house from the bedroom. As we were moving into a more serious level of foreplay; I took my cue and immediately excused myself to the bathroom. I was nervous, so just the thought of finally getting to this point with him had me ultra-excited. Everything I needed was packed, and I was fully prepared from mouthwash to protection. However, as I opened my purse I realized that my “thrasher wig” was actually sitting in a bag back at my apartment. I did not want to ruin my expensive human hairpiece by sleeping or romping in it or get it matted from perspiration. Between my raging hormones and this hiccup, my heart was thumping so loud I had to throw cold water over my face just so I could think.
possible change in my hair; it’s a bit of a pain in the toushie but far better than the alternative - having to expose my secret before I was ready to. Most of the time your partner will be so caught up in you, that he wouldn’t (and shouldn’t), pay enough attention to your hair to notice. But just in case… To pull this off successfully you need what I refer to as an “extra thrasher wig” which is identical to the one you are wearing, along with the ResQ Bag® to keep your wig discreet.
Here we go
Get close - begin your fondling - then cutely and nonchalantly, excuse yourself to the ladies’ room saying you just need a minute. Make sure the door is closed, remove your current wig, and turn it inside out; immediately place it in the large zip lock baggy, the ResQ Bag™. Leave a small amount of air in the bag that will keep the wig fluffy. If you take air out of the bag the Keeping in mind how “What always worked best for me was to have wig will be flattened out. much he loved my hair, I two identical wigs; one that was specifically for When we’re nervous we went back into the bedcan forget the most imsleeping over when having intimacy and the room and just kept my portant things, and you hair out of the way by other to keep fresh for every day use.” want to keep your discrepushing it over to the side tion; so place the wig in as much as possible. the bottom of your bag. Remember the key is keeping your secret regardless of how I knew the difficulty would arise when it was time to sleep. I nervous and excited you may be. twisted my hair into a comfortable bun, which reduced the perspiration and kept it from tangling. Attach one side of the wig tape to the front, and each side, Satin pillowcases are great for reducing static and I was sooo grateful he had chosen a satin bed set! This allowed me to keep my ‘little lady’ fresh. Sleeping in a strange bed, with a new person can be uncomfortable enough. Add to that a wig that gets hot and itchy and that equals a sleepless night. I made it a point to rise quietly in the morning before him, so I could brush through my piece and have it looking just like he remembered it a few hours earlier. Luckily, all went well; but following this, was one of many reminders on how important it was for me to be organized and prepared whenever I went out. With Wig Intimacy, preparation is the means to success.
of temples and nape; do this prior to placing it in the ResQ Bag™. To do this correctly ‘in a rush’ be sure to remove only one side of the tape before placing it on each tape tab; this is so the part facing up is covered with the wig tape, thus preventing it from catching on to the other hair. You’ll remove the remaining cover when you’re ready to put the wig on. This technique will help when you are in a hurry to get back in that room!
Note
To help keep your secret, be sure to hide the discarded wig tape papers either in your bag or if you must - throw it in your partner’s waste basket, then make sure to wrap it tightly in tissue a few times in a ball and place it on the bottom of the trash. :-)
The original “Sex, Wigs & Whispers” in its entiretyis available on Amazon.com
TIP: The Back-Up
What always worked best for me was to have two identical wigs; one that was specifically for sleeping over when having intimacy and the other to keep fresh for every day uses. I would make love and then sleep in my extra wig (otherwise known as my ‘thrasher’ wig) all night long. Then, I’d get up at least twenty minutes before he did, go to the bathroom, and change out of my thrasher wig and back to my gorgeous piece he had seen me in last, to avoid any notice or
AFFIRMATION: I OWN MY CONDITION. MY CONDITION DOESN’T OWN ME. NHJ
Safe Bonding Even in Winter
By Jimmy “The General” Toscano Jimmy Toscano needs no introduction to Hair Journal readers. His skills are legendary, his integrity unique and his generosity unmatched. “The General” as he is called by his friends, is the undisputed king of bonding. When we need technical advice, he’s the man we turn to. So, when The Journal learned about widespread complaints of scalp irritation, we did the logical thing and picked up the phone… Hair Journal: We keep hearing about an increasing number of hair replacement clients who are getting scalp irritations. What’s happening? Is it because they’re either not following the right procedures or not using the right products. Jimmy Toscano: It’s largely due to people trying to save money in a tough economy. Stylists and owners are saying that the right products are too expensive. But they have to understand that, they’re not protecting their studio in the long run. Doing things right is the best investment. Do you want a lawsuit? Would you rather spend the money at the courthouse? We don’t have anybody at our salon with any kind of scalp problem. That’s because we’re using the right stuff on their heads. With hair replacement, the most critical product is usually the attachment or bonding agent. It is applied directly to the skin and stays there for several weeks. Contrary to what you would expect, women are easier to bond than men. Anybody who’s having trouble bonding ladies is doing something wrong. NHJ: Isn’t bonding a difficult concept to sell to women. Surely most women won’t allow you to shave their heads? JT: Well, when you first get a lady in the chair, she’s not going to let you shave her head right away. But once you have her confidence and you describe the whole procedure and explain how in the future, the only time she’s ever going be without her hair is when she’s in the salon with you, then most times, she doesn’t have a problem. With bonding, clients can leave our salon and go swimming, waterskiing, whatever they want. From the minute, they walk out of the salon, they can do whatever they want without thinking about their hair until the time they come back. We do a lot of active young women where we shave their scalps, apply their hair addition and they look terrific! The only time they see themselves without hair is the hour they come in and spend with us to have it removed and re-bonded. We’re using real thin skins. You can’t even detect them.
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The National Hair Journal Winter 2016/17
NHJ: We would have expected daily wear wigs to be the first go-to solution, but you’re saying full head bonding is becoming more and more acceptable. JT: Yeah, it’s very popular in our salon. I might have 1 or 2 clients out of 200 - 300 who don’t want to do it, and that’s okay. Could be a cost factor; could be any factor. You know me, I don’t push anybody; I don’t sell. I let them make their decisions. I don’t make that decision for them. They need to be comfortable with what they’re wearing. NHJ: We were talking earlier about the irritation. What is causing that irritation? JT: People are still using silicone bonding adhesives because they’re cheap and they last a long time. But bonding isn’t only about endurance. I have some men who need bonding every ten days. I have some who need service every two weeks and others who only come in every six weeks. Like I said before, most women will go a lot longer than a man. Everybody’s different. But bonding isn’t about how long the adhesive lasts, it’s about comfort and safety first and then longevity. It’s tempting for stylists to go for silicone based products because of the cost factor or because they like using something that will stay on for six weeks, but that cost saving isn’t worth it if your client develops an irritated or infected scalp. A key issue when working with silicone adhesives is the cure factor. When they’re curing a silicone adhesive, there’s no way to tell when, or if, that silicone is completely cured. If it’s not completely cured and they lay that system down, they’ll burn the client’s scalp. Most of the clients I see who’ve been silicone-bonded have scalp irritation. I don’t use silicone in my salon at all. I refuse to use it. Even if I get a client that comes in and that’s all he wants, he has to go somewhere else. I just don’t deal with them. NHJ: You used the term “curing.” For somebody who doesn’t know what that means, could you explain what curing is? JT: Many bonding adhesives have chemicals in them that are not kind to the skin. I’m not a chemist, so I’m not going to go into the formulations, but one of them is acetone. When you apply a silicone bond, it’s got to evaporate. If it’s not completely dry - and there’s no way of telling when it’s dry completely - if the evaporation isn’t complete when you lay that down, it’s gonna burn them. Now, the client is going to wear that hair on his or her head for several weeks and those harmful chemicals are never going to ever evaporate while she’s wearing it, so it’s going to be burning her scalp all that time. NHJ: So you’re saying that a silicone-based adhesive may last longer, but you cannot tell when it’s cured. And if it’s damp, it’s going to irritate the skin. JT: Right. And another thing; when they’re using silicone,
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The National Hair Journal Winter 2016/17
High performance bonding your clients can afford! What makes a market leader? High-performance at a competitive price. Gentle, yet strong formulation that’s easy to apply Skin-toned base for invisibility Matt finish, wet or dry. Antibacterial agents for health & hygiene High-performance companion removal & cleansing products PHL’s Legendary product safety
USA OFFICE: 4775 Allen Road Zephyrhills FL 33541 : 1.813.788.7468 : +49 (0)30 2089 6831 : +44 (0)20 3286 0094 : +353.(0)1.442.8808 www.prohairlabs.com info@prohairlabs.com
when it’s first bonded on, the stylist leaves a track under there. So, they’ll cut any hair the client has left real short and the bond then adheres to both the scalp and to the hair. After a couple weeks or so, the oils from the scalp will loosen the skin bonding, so the hair system is now just attached to the few strands of hair that may still be there. So not only are you now burning the person’s scalp, the hair replacement is loose and detectable. If somebody felt their scalp, they would know they had had something on their head. NHJ: What’s the better choice? JT: I used to be a lace person. I sold all lace systems. Now I’m into these thin skins. They’re real lightweight. The heat goes right through them. Clients don’t even know they have them on their heads. They’re 100 percent undetectable to the human eye. NHJ: You’re just talking about the base material. What adhesive do you use to bond them? JT: I use Professional Hair Labs products. They’re the only products I’ve found that are 100 percent safe. The owner’s wife was a technician and she got real sick from using products with all those chemicals in them… this is a good example… so, he went on a quest to find safer bonding agents to protect her and people like her. After a lot of research and visiting labs around the world, he decided to make them himself. Later on, he went one step further and formulated a line of safe cleaning products too. A lot of so called cleansers and scalp refreshers have orange solvent in them, which is acid-based. So, what’s that acid going to do? It’s gonna eat your scalp up. Is it smart to use a cheap cleanser? Oh, yeah, except when you end up at the courthouse, ‘cause somebody’s gonna have a burnt scalp. NHJ: Do you have to pay more for safety? JT: How do you put a price on safety? Pro Hair Labs has safe products. Some of their solvents are real expensive, I’ll admit that. But when you break it down, it’s comes out to about $0.30 an application. Well, if you can’t afford $0.30 for a solvent in this day and age in the hair replacement industry, maybe it’s time for you to get out of the business. That’s how I feel about it. I’m here for my clients. I don’t see dollar signs, you know that. What I see when people come in my salon is somebody I need to help. That’s what I’m all about. The money will come by itself. NHJ: Is Professional Hair Labs the only company making a safe bond and a safe remover, or are there other nonsilicone adhesives? JT: There are other companies that have non-silicone adhesives, but be careful because they may come from overseas countries with different quality controls and standards and a lot of them have got bad stuff in them. I just know what works for me. I’ve never, ever had a problem using this product, so why would I go looking for anything else? A lot of technicians and salon owners today are only worried about how long can they can keep hair on a client’s head? That’s not a real intelligent way of looking at things. Let me explain it to you this way. The first time you come into my salon, you might ask, “How long is this hair gonna stay on?” I’m not gonna commit myself. I’d say, “I don’t know how long it’s gonna stay on. It may stay on a week. It may stay on three days. It may stay on six weeks, four weeks. We won’t know that until we do this.” Another thing
17
I’ve found is that often, when you first bond these on, it may only stay down a week or a week and a half. But after a period of six or eight months, it’ll stay down a lot longer. I don’t know if our scalps get used to the products, but over time, it’ll stay down longer. NHJ: We are now seeing bonding agents being sold directly to the public. What’s going on here? Are people trying to bond themselves at home? JT: As you know, people have been selling rejected hairpieces back to the public forever. I believe a lot of the hair that’s sold directly to the public is hair we have returned and won’t use on our own clients. As far as clients bonding and styling at home, it’s like anything else. If you want something half-assed on your head, go ahead and do it. I know one thing: what I do, they can’t do at home. That’s all I care about. NHJ: A lot of people are concerned about the recent trend of trying to expand hair replacement into beauty salons. The skills you’ve been describing took you a lifetime to acquire. How do you feel about telling cosmetologists in beauty salons that hair replacement is their new profit opportunity? JT: I would tell you that hair replacement is not for an average hairdresser or beauty salon owner. It’s a specialized skill. It’s something they’re not gonna learn in one month or two months or six months. They’re gonna run into a lot of problems. They’re probably the ones that would get the lawsuits before anybody else because of their lack of knowledge and training. I feel bad for the cosmetologists in the salons because they’re going to run into a lot more problems than they imagined. Another thing; you’re talking about a huge investment. We already know how much it costs to get an average client in your door. So, I don’t see it happening myself. NHJ: One final question. Winter is coming upon us and it’s very cold in parts of the country. Do you change your bonding technique for cold weather? JT: No, not at all. But one thing I will tell you. We order all our bonding adhesives way before it gets cold, because when they ship them, you don’t want them to freeze in transit or on the dock. So, you need to stock up on everything you need before winter sets in. As an aside, you’ll find when bonding in the winter the hair will usually stay down one to two weeks longer. NHJ: When you say you don’t want the adhesive to freeze, does it not unfreeze and stay the same quality? JT: I find it’s often not as good as it was. That’s why I tell everybody, get your adhesive before the weather changes. I’ll put it this way; you can’t take a bonding adhesive and put it in the freezer then take it out to use. It’s going to degrade the product. You don’t wanna do that. NHJ: Any last comments? JT: Listen, a lot of people in our industry don’t understand their clients. I’m telling you, these people are special people. It’s no different than if they lost an arm or a leg. Most stylists aren’t understanding that. That’s why a lot of them are not successful. They’re not understanding that part of this business. My business is growing. I don’t advertise. Everybody else’s is shrinking. I’m still working 12 hours a day and I can’t get out of the salon. And you know why I NHJ can’t get out? ‘Cause I can’t let them people down.
The National Hair Journal Winter 2016/17
The Ultimate High performance bonding your clients can afford! What makes a market leader? High-performance at a competitive price. Gentle, yet strong formulation that’s easy to apply Skin-toned base for invisibility Matt finish, wet or dry. Antibacterial agents for health & hygiene High-performance companion removal & cleansing products PHL’s Legendary product safety
USA OFFICE: 4775 Allen Road Zephyrhills FL 33541 : 1.813.788.7468 : +49 (0)30 2089 6831 : +44 (0)20 3286 0094 : +353.(0)1.442.8808 www.prohairlabs.com info@prohairlabs.com
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The National Hair Journal Winter 2016/17
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The National Hair Journal Winter 2016/17
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OR EMAIL INFO@HAIRARTPRODUCTS.COM. SAY THE HAIR JOURNAL SENT YOU!
PRODUCTS A, CA 90248 • (310) 217-8900 OM • WWW.HAIRARTPRODUCTS.COM
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The National Hair Journal Winter 2016/17
Procapil – Drug or Cosmetic? You Decide This publication supports any product, therapy or procedure that halts, slows or reverses hair loss. We define our role as informing professionals about “hair management solutions.” We bring top authorities to our pages to explain how to maintain hair in optimum condition; and what to do when it begins to thin. So, we were intrigued by the headline on REKZE Laboratories website, “Procapil® VS Minoxidil. Watch out, Minoxidil! Procapil’s the new gem in the hair loss battle.” The website goes on to claim. “Clinical tests have proven that Procapil can boost new hair growth by up to 121% along with reducing hair loss by 58%. This effect is thanks to its DHT-blocking mechanism that treats alopecia, more commonly known as baldness, at the source.” (www.rekze. com/01/27/17). REKZE Laboratories is a privately held-boutique company that claims to have developed, “an innovative line of hair care products designed to restore the optimal environment for hair regrowth and stop hair loss. So, what does Procapil say on its own website (www.procapil.org)? Here are a couple of brief extracts from their “What is Procapil?” page: “Procapil is a new breakthrough formula that strengthens hair and prevents hair loss naturally. Procapil combines vitaminated matrikine with apigenin and oleanolic acid to form 2 powerful functions that target the main areas of hair loss. The first function facilitates the communication of cells and holds these cells together in order to prevent the effects of DHT. DHT stands for Dihydrotestosterone - it is a chemical derivative of testosterone which plays a major role in hair loss in men and women. It is formed when the metabolism of androgen interacts with an enzyme named 5-alphareductase. It’s generally found in the prostate glands, testes, adrenal glands and hair follicles. When DHT reaches the dermal papilla cells-which divide and differentiate to form new hair follicles- it undermines the absorption of essential nutrients for healthy hair follicles. Fortunately, with scientific improvements, Procapil greatly reduces the effect of DHT on hair follicles. The second function increases blood flow in the scalp which allows the hair to be well nourished, resulting in thickening of thin starving hair. Clinical studies have been under taken and have received astonishing results. The mitotic rate of cells increased in the root sheath after 2 weeks, which clearly indicated enhanced cell proliferation. Procapil activates a number of genes responsible for tissue repair mechanisms which proves that it provides protecting and repairing effects, keeping hair strong and healthy.” Which all sounds great, but how does the FDA feel about those clinical trials and where is their clearance to take this
product to market? Or are we talking about a cosmeceutical here whose benefits are strictly cosmetic? The Journal will let you be the judge on this one. To get you started, here are some guidelines taken from the FDA’s own website:
How does the law define a cosmetic? -
The Federal Food, Drug, and Cosmetic Act (FD&C Act) defines cosmetics by their intended use, as “articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body...for cleansing, beautifying, promoting attractiveness, or altering the appearance” [FD&C Act, sec. 201(i)]. Among the products included in this definition are skin moisturizers, perfumes, lipsticks, fingernail polishes, eye and facial makeup preparations, cleansing shampoos, permanent waves, hair colors, and deodorants, as well as any substance intended for use as a component of a cosmetic product.
How does the law define a drug? -
The FD&C Act defines drugs, in part, by their intended use, as “articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease” and “articles (other than food) intended to affect the structure or any function of the body of man or other animals” [FD&C Act, sec. 201(g)(1)].
How can a product be both a cosmetic and a drug? -
Some products meet the definitions of both cosmetics and drugs. This may happen when a product has two intended uses. For example, a shampoo is a cosmetic because its intended use is to cleanse the hair. An antidandruff treatment is a drug because its intended use is to treat dandruff. Consequently, an antidandruff shampoo is both a cosmetic and a drug. Among other cosmetic/drug combinations are toothpastes that contain fluoride, deodorants that are also antiperspirants, and moisturizers and makeup marketed with sun-protection claims. Such products must comply with the requirements for both cosmetics and drugs.
What about “cosmeceuticals”? -
The FD&C Act does not recognize any such category as “cosmeceuticals.” A product can be a drug, a cosmetic, or a combination of both, but the term “cosmeceutical” has no meaning under the law.
How is a product’s intended use established? -
Intended use may be established in a number of ways. The following are some examples: · Claims stated on the product labeling, in advertising,
Continued on Next Page...
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on the Internet, or in other promotional materials. Certain claims may cause a product to be considered a drug, even if the product is marketed as if it were a cosmetic. Such claims establish the product as a drug because the intended use is to treat or prevent disease or otherwise affect the structure or functions of the human body. Some examples are claims that products will restore hair growth, reduce cellulite, treat varicose veins, increase or decrease the production of melanin (pigment) in the skin, or regenerate cells. · Consumer perception, which may be established through the product’s reputation. This means asking why the consumer is buying it and what the consumer expects it to do. · Ingredients that cause a product to be considered a drug because they have a well-known (to the public and industry) therapeutic use. An example is fluoride in toothpaste. Please write or emailThe National Hair Journal with your conclusions. We will publish your comments in the next issue. NHJ
Play Safe! Warning to check your websites regularly. A recent online search brought up this warning for AHLC director, Marsha Scott’s clinic.
The National Hair Journal Winter 2016/17
Keep It
Natural The global organic personal care market is expected to reach $25.11 billion by 2025 according to a new report by Grand View Research, Inc. Demand for natural hair care, skin care, and cosmetic products is expected to accelerate over the projected period. Approval from human health & safety regulatory bodies such as the U.S. Department of Agriculture (USDA) and FDA for the use of organic products in various personal care products will further fuel industry growth. Technological innovations aimed at the development of cost-effective product lines by companies such as The Body Shop, Aveda Corporation, Amway and Estee Lauder are likely to remain critical success factors for industry growth. Changing consumer perceptions towards organic products, reduced reliance on petroleum-based products coupled with the rising demand for chemical-free skin and hair care products will all contribute to the growth of these products.
Hair Emoji Facebook users, tweeters, text messengers… and hair loss sufferers… can now choose to add a “Mr. Baldy” Emoji to their messages for added emphasis. Why they would want to do this is not clear to this magazine, but we’re not on the cutting edge of emoticons… and not sure we want to be…
The Journal notified Marsha of this warning from ESET, Cyber Security Pro which not only flags a security risk, but could also result in lost business . If you come across similar messages, even if you think they are false, please notify your colleagues. We exchange messages and emails so frequently that it takes no time for malware to spread through our professional community.
Emoji are ideograms and smileys used in electronic messages and Web pages. Emoji are used much like emoticons and exist in various genres, including facial expressions, common objects, places and types of weather, and animals. Originally meaning pictograph, the word emoji comes from Japanese “picture” + moji, “character”. Originating on Japanese mobile phones in the late 1990s, emoji have become increasingly popular worldwide since their international inclusion in Apple’s iPhone, which was followed by similar adoption by Android and other mobile operating systems. The first international Emojicon conference was held in San Francisco, California on November 4, 2016. (Source: WIKIPEDIA).
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The National Hair Journal Winter 2016/17
Flash Reports Goodbye Clogged Drains!
Few things are more annoying than a clogged drain, but the good news is there are two NEW solutions! TubShroom is a new must-have for the shower and tub. Designed to fit directly inside all standard size drain openings, TubShroom is guaranteed to catch every single hair! Wet or dry hair will instantly come off even if you don’t remove the hair right after you take a shower. Hair will wrap around TubShroom’s mid-cylinder while the water flows freely through the multiple holes strategically located throughout the unit. It is BPA-free, will save you from using harmful chemicals, no exposed hair, very easy to clean and maintain and works for both human a and animal hair!
SinkShroom - Elite Drain Protector & Hair Catcher! SinkShroom is based on the same revolutionary concept as TubSh-
room. It goes inside the drain, stopping hair, jewelry and other undesired objects from going down the drain preventing nasty and hard to deal with clogs. It does a great job catching hair, jewelry and anything in-between, while the water continues to flow freely. And the best part is that for the price of just a couple of bottles of Drain-o or Liquid Plumr, you are getting a solution that will prevent clogs and last for many years. It’s designed to fit any standard bathroom sink that is 1.25” in diameter. Installation literally takes seconds. If your sink is equipped with a stopper, it can easily be removed. Just loosen the screw located below the sink and pull out the stopper. www.tubshroom.com NHJ
WinkMagic Eyelash Extender
WinkMagic offers stylists a new way to create beautiful eyelash extensions for their clients in a fraction of the time required by manual treatments. This revolutionary device extends, combs and curls two hundred mink hair in ten minutes. Applying WinkMagic lashes is a two-step process. First, the WinkMagic-Extender bonds natural mink hair stored in disposable cartridges to a client’s lashes. Next, the WinkMagic-Comber divides and curls the extensions for a natural look. The adhesives used are certified safe and a plastic eye guard ensures there is no possibility of skin or eye irritation. Extensions last as long as the remaining life of the eyelashes, but can be easily and quickly removed through application of a safe 100% natural fruit oil. WinkMagic was developed by Myun Lee, a serial entrepreneur and national figure from South Korea. Dr. Lee became, at age 25, the youngest chair of an engineering department at Seoul National University. WinkMagic is on Indiegogo to finance its initial production run. The ultimate success of the product will depend on how creatively and successfully it is used in the salon. NHJ
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Five Dermatology Trends Expected to Be Huge in 2017 Dr. Melda Isaac, board-certified dermatologist and founder of MI Skin Dermatology Center in Washington, DC, discusses dermatological treatments predicted to be big in 2017. In the past decade, platelet-rich plasma (PRP) treatments have become common in orthopedics, but you may soon enjoy more benefits of this innovative treatment on your skin. According to the National Center for Biotechnology Information (NCBI), PRP treatment is effective in a variety of dermatological applications. But this is not the only dermatology trend expected to be big in 2017. “I’m excited at what’s coming in 2017, including an impressive method of facial rejuvenation,” said Dr. Isaac. “PRP injections stimulate your skin’s production of collagen, which results in glowing, youthful skin. As popular as I think these injections are, there are other trends I’m also looking forward to.” One trend poised to go viral is facial treatments with unique ingredients, such as charcoal, wine, or even snail secretions. These are modern twists on traditional substances that have long been used around the world for improving skin. If these ingredients don’t appeal to you, then you might be relieved to know that several of the country’s most wellknown cosmetic treatments will continue to rise in popularity, such as Botox®, which is expected to become even more popular among men of all ages. “As medicine continues evolving, patients looking to fight the effects of aging will try innovative products, as long as they are safe and effective,” said Dr. Isaac. “And although these cutting-edge treatments may be very effective, there are still plenty of patients who remain loyal to the traditionally popular ones, such as the neuromodulators like Botox® and dermal fillers like Juvederm® and Restylane®. The ingredients in those and other injectables are always improving to ensure more effective and faster results; plus, new injectable fillers are being developed with their own unique benefits.” Another facial rejuvenation treatment expected to get more attention is NovaThreads®, a nonsurgical facelift that uses dissolvable sutures to lift and tighten the skin. For those more interested in body sculpting, there is good news, as well, as CoolSculpting® looks poised to continue its meteoric rise in the new year. To find out more about body contouring, please visit: http://www.MI-Skin.com/Body-Contouring-Skin-Tightening. “I always look forward to the new year because of the incoming products that I can use to help my patients achieve their goals – and 2017 is no different. In fact, with some of the new products and innovations on the horizon, it might be more exciting than usual,” Dr. Isaac said. “However, regardless of which treatment patients are considering, they must be sure to do their due diligence and choose a board-certified, experienced doctor; that’s more important NHJ than which product or treatment they choose.”
The National Hair Journal Winter 2016/17
THE NATIONAL HAIR JOURNAL The National Hair Journal was founded in 1977 as a business resource for salon and clinic owners. Its mission is to provide hair-management professionals from all disciplines with accurate information that will help them provide superior service to their clients and patients. It is a full-color tabloid, published quarterly and distributed worldwide. EDITOR IN CHIEF Christopher Webb cwebb@nationalhairjournal.com
CREATIVE DIRECTOR Dylan Case dcase@nationalhairjournal.com
LEGAL NOTICE The views expressed inThe National Hair Journal are those of the individual author or contributor and not those of The National Hair Journal, its editors or staff.The Journal’s contents reflect the opinions of the authors and are not analyzed, peer-reviewed or otherwise investigated before publication. All authors and contributors are asked to disclose any interests they have of a commercial nature. The National Hair Journal makes no attempt to validate the sufficiency of such disclosures and makes no warranty, guarantee or other representation, expressed or implied with respect to the accuracy or sufficiency of any information provided. The publication of an advertisement does not constitute on the part of the National Hair Journal a guarantee or endorsement of the quality or value of the representations or claims made by the advertiser. The National Hair Journal accepts no responsibility for unsolicited materials. All articles and letters become the property of the National Hair Journal and may be edited for clarity, presentations and space. By allowing your articles, interviews and personal commentary to be used in The National Hair Journal, you are giving the publication permission to use these materials in its pages, websites and other information materials. Advertisers are required to sign a formal advertising agreement indicating that they are not violating any trademarks or other intellectual properties. Full details are outlined in The National Hair Journal Media Kit. COYPRIGHT The material published in The National Hair Journal is copyrighted and may not be utilized in any form without the written consent of the editor. THE NATIONAl HAIR JOURNAL 39252 Winchester Road #107-383 Murrieta, CA 92563 Tel: 626-709-6397 Info@NationalHairJournal.com
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The National Hair Journal Winter 2016/17
About Quality Control
from Your Friends at Hair Art
it the quality and security you need if you are to maintain your own reputation. So I strongly urge you to work with an established US-based distributor and let them do the research and troubleshooting for you. Doris and I have been in the hair business all our professional lives. In fact, the hair business is our life. We live and breathe hair. When we are not in our US offices, we are in China checking factories and looking for the best products for you. In fact, this article is being drafted en-route to Hong Kong!
As consumers become more educated, and as our own technology becomes increasingly sophisticated, specialized training and education is not only important but vitally necessary. And it’s not only the art of hair replacement, or as the Hair Journal would put it, “hair management” that needs to be re-examined, it’s the entire sales and marketing process. Here at Hair Art our special skill is in selecting and processing high-quality human. We are proud to have the largest stock of virgin European hair in the United States and we go to great lengths to make sure that the ventilators and technicians we entrust with the production of your orders treat it with respect. After over 30 years in the hair business, we know what it takes to produce a superior wig or hair system. Over those years, we’ve seen the good and the bad and we are confident that the quality of the products we offer is in the league of its own. In this article, we want to give you some simple guidelines about how to judge and care for the hair you receive from your supplier. We will take you through the checks and controls we recommend you to follow in order to make sure the hair you take out of the box matches your original order, is of the quality you expected – and how to make those last-minute adjustments so it is ready the day your client comes in for service. Let’s start at the very beginning. What do you know about your manufacturer? Have you ordered from this location before? What do your peers say? Have you seen samples? Did they provide you with their own color ring? Have you researched their make-good policy? What support can they give you if things go wrong? There are over 300 wig makers and hair productions businesses in just one coastal city in China, so you have lots of choices. But this workforce is constantly changing and with
But let’s go back to your own daily needs. Let’s pretend it’s Monday morning, your studio is closed and this is the day you set aside to go through your mail and new shipments of hair. You open the box and there is the wig or hair system you need for a key client in three day’s time. It looks just fine neatly curled up and held in place by a hair net. Your original order form is in the box next to it. So what should you do next? What should you be looking for? Here’s a simple checklist to get you started. It’s not intended to be a thorough “How To, “we’ll be giving more detailed instructions and hand-on advice in our professional seminars, but these are some of the things to be thinking about: Checking against the Order Form – Base size, hair color, length, blending. Density and flow. Ventilation and knotting. The front hairline. And finally, and most importantly, the quality of the hair itself. Problem Solving – What to do when things go wrong. Does your supplier have a hot line? Is your supplier just a distributor, or does he understand studio management and your client service needs? Back Up “insurance” for emergencies – Emergencies will happen. It’s part of the profession we’ve all chosen. But how you prepare for them makes the difference between a loyal client or a lost one. A good day or a lawsuit. So here are some lifesaving tips: Keep reserve inventory of standard sizes / use another order temporarily, set up a relationship with friends to share inventory / salvage your client’s old hairpiece / wear the new hair temporary. Or better yet, work with a supplier who can overnight a make-good. Some can, some can’t. And some won’t. So build a relationship with someone who will stand by you in an emergency. Summary – Get quality hair from a US based supplier. Get to know them and let them get to know you. We’d like it to be us, but there are other honest distributors if you do your due diligence. Go to training classes. Everyone’s different. Go to classes from the people who supply you. Make yourself important and they’ll be there for you, take it from someone who’s spent a lifetime in the business. NHJ
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The National Hair Journal Winter 2016/17
Wigs in The Work Place Here’s a note you can share in a consultation, use for an email message or post on your website. In a “selfie” world, wigs are a game changer. There was a time when a wig could be spotted a mile away either because of its bright hue or because of its, well, to be honest, “wig-ish” look. Most people would be too embarrassed to wear one out in public, especially on a daily basis. But that’s exactly what’s going on nowadays. Some wigs look so natural that it’s totally undetectable, bringing confidence and coolness to those wearing one. Let’s be honest, not everyone has the perfect hair to create great styles. Wigs and hair extensions are a unique and perfect way to change up your everyday look. Getting ready for work everyday can be a daunting task - especially for women. Hair, makeup, and picking out the perfect pair of pumps can totally cut the beauty rest short. Not to mention helping your family along in the morning. Many times, your hair will be the sacrifice…but not if you have a fabulous wig!
“Wigs and hair extensions are a unique and perfect way to change up your everyday look.” Choosing an easy to install wig can be a life saver and there are many other perks as well. You can be versatile and choose short or long wigs. If you’ve ever wanted to experiment with color, this is your chance to do so without damaging your natural hair with harsh chemicals. Just as there are rules and protocols in the workplace, the same applies for wearing wigs to work. Stay away from rainbow colors and keep it classy and sophisticated. There are many office approved styles that you can achieve while remaining fashion-forward. You may be thinking, “My co-workers and even worse, my boss will know that something is a little shady if Monday I have a cute pixie cut and Wednesday I have long, luscious locs. Well, dare to channel your inner alter-ego and embrace your ever-changing style. Look at it this way, you wouldn’t wear the same clothes to the office everyday so wearing different hair styles, or hair, isn’t so bad. The reason for wearing a wig doesn’t always equate to enhancing one’s style. Sadly, many women suffer from hair loss for many different reasons, including devastating medical conditions. Wearing a beautiful wig can breathe new life and confidence into women losing their hair.
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Whether it’s for vanity, experimentations, or to hide hair loss, there is space in the workplace for wigs. Just keep it NHJ classy and not too sassy!
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LaserCap® Re-Imagines Laser Hair Therapy (LHT), Produces the most complete & comfortable device, the MC2™. Where it all began Looking back more than 10 years, when the LaserCap® company invented practical wearable LHT- that which was both powerful and discrete- most people didn’t know of or understand how light-induced hair loss treatment worked. Like digital camera phones in that same era, Laser Hair Therapy (LHT) was still in its infancy! Although clear evidence of Low Level Laser Light (LLLT) stimulated hair growth was discovered in the 1960s, it took decades for this technology to find its way into the U.S…even longer for it to gain acceptance in the medical community. The first commercial LHT device was introduced in the U.S. in 1996 by the Harmonix™ Corporation. The company’s ‘hood’ machine was essentially a cabinet-like structure with relatively few (by today’s standards) laser diodes under which the customer sat for treatment. The machine took up a rather large footprint in an office and was often designated to a private room. The reception by U.S. hair restoration physicians to LHT was ‘lukewarm’. That the machines were marketed and sold to salons and hairpiece studios, did not help its cause with doctors. In the years that followed, as more LHT products came into the marketplace, the manufacturers of such devices were tasked with educating the public (and the medical community) about how the technology worked. There were few clinical studies regarding LHT, and no FDA-clearances to validate these devices as viable for hair growth. Most of the claims about LHT results was, frankly, anecdotal.
The Game-Changers It wasn’t until 2006 that the Hairmax LaserComb® received FDA-clearance for treating hair loss that LHT efficacy hit the mainstream marketplace. As with all validated new treatments for hair loss reported, a media storm ensued. In-office clinical laser machines had become more popular (because they worked!) at that time, but they continued to lack FDA-clearance to allow for medical claims about their efficacy. That same year, Dr. Michael Rabin invented LaserCap®, the first wearable LHT device with “clinical strength” that was an alternative to inconvenient trips to a clinic for treatment. With LaserCap®, Dr. Rabin and his team of scientists, hair restoration physicians and photomedicine experts created a practical LHT device containing a strategic array of semi-conductor laser diodes that met government mandated regulations for safe power output. These laser diodes utilized a specific wavelength of red light, like the FDA-cleared HairMax® product. Fortunately for the 50%-of- all-men and approximately one-in-four women today with hair loss, many LHT products have come into the marketplace to fulfill the desire for non-invasive, no-risk alternatives to common hair loss.
LaserCap®: Leadership Through Innovation The legacy device that fueled LaserCap® success (and its imitators) has been the safe, convenient and discreet way of imbedding laser diodes in a thin structure that could be secured and hidden inside of any hat. The thousands of patients use LaserCap® worldwide today, which attests to its success. FDA-clearance affirms the evidence.
Re-Imagining Wearable LHT Labeled “Disruptive Technology” by a renowned U.S. Derma-Pharmacologist, the new LaserCap® MC2™ “makes other wearable LHT products obsolete”! To re-invent the LaserCap®, Dr. Rabin started with a ‘clean sheet of paper’...
The idea was not only to make a device better than its competitors, but better than our own! Wearable device options created following the LaserCap® introduction included bulky devices that share similar shortcomings - they were inconvenient and well, ‘silly-looking’! Essentially, these wearables were mostly unstable helmets or bands that restrict movement and are embarrassing to wear. Today, LHT device makers often use confusing terms to distinguish themselves in the marketplace. Thus, we read about ‘Medical Grade Lasers’, ‘proprietary wavelength’ and irrelevant ‘patented’ features, which are, at the end of the day, meaningless ‘Fake News’! The original LaserCap® and a competitor device (co-incidentally, almost an exact copy of the LaserCap®!) have been proven to be a better design when compared to other less discreet wearables. However both the original LaserCap® and our imitators don’t fit everyone well. Also, both lacked coverage of broad hair loss patterns.
Why MC2™ is Better MC2 stands for MAXIMUM COMFORT and MAXIMUM COVERAGE COMFORT comes from laser diode-imbedded pliable bands of a soft tactile ‘Performance Apparel’ material that snugs to the shape of any head and secured with an interchangeable frontal connector band. As the MC2™ is lightweight and form fitting, one typically loses all sense of wearing anything. The current LaserCap® (and a notable imitator) requires a cap or hat to stabilize it for activities other than sitting still. The MC2™ is easily hidden under any head covering, it is unique & nothing is needed to secure it, for most normal activities. COVERAGE is another superior feature of this device. A comment frequently expressed about the LaserCap® has been the interior surface area did not cover the entire hair bearing (or lack thereof!) area. The new MC2™ design has that complaint covered! Today, the closest competitor to LaserCap® offers coverage of approximately 830 cm2 of scalp area. In addition, the leading ‘helmet’ brand provides a mere 500 cm2 of laser light scalp coverage. By contrast, the MC2™ 224-diode device provides coverage of approximately 1250 cm2 of the scalp, while the new 300-diode model adds deep coverage of the perimeter scalp and occipital area- totaling approximately 1450 cm2. These new LaserCap® models provide nearly 50% and 75% more coverage, respectively.
The MC2™ is Your Hair Loss Solution…For Life. To Learn More:
Contact: John Vincent, Exclusive Worldwide Distributor john@lasercap.com The LaserCap® is manufactured by Transdermal Cap, Inc., in Cleveland, Ohio.
The original LaserCap® was invented in 2006 in a collaboration of physicians, scientists and clinicians. • Dr. Michael Rabin- A medical doctor. • Dr. David Smith- M.I.T.-trained optical physicist. • Dr. Michael Hamblin- Associate professor of Dermatology at Harvard and chief investigator for photo medicine at The Wellman Center. • Dr. Robert Haber- Associate professor of Dermatology at Case Western Reserve University and both a practicing dermatologist and an award-winning hair restoration surgeon in the Cleveland area. He serves as LaserCap® chief medical advisor.
Advertorial
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The National Hair Journal Winter 2016/17
Print Works Bette Says So In today’s digital world, it is conventional wisdom that social media and online marketing are the only way to go. But that is not what one hair replacement studio has found. Bette Graff has been advertising in her local Inland Empire magazine for over 20 years and getting consistently good results. Her experience is not unusual. Studies conducted by multiple research organizations demonstrate that the personal connection that readers form with publications they know and trust are like a special friendship and the “word-of-mouth” from these special friends carry special weight.This is particularly important when it comes to an intimate service like hair replacement. The National Hair Journal spent a morning with Bette and the executive from Inland Empire Magazine to find out what made her advertising so successful.
NHJ: So, this was a beauty… and perhaps fashion… business at first, not hair replacement. BG: Right, it was a strictly beauty. I didn’t get into hair replacement until after my divorce. I’d started dating a fellow who wore a hair replacement and he didn’t know where to get his hair done so he came to me one day and said, “I don’t know if you’ve noticed, but I wear hair.” And I replied, “I did notice. I don’t know anything about that business, but I’ll find out and see what I can do.” So, I did some research in San Francisco and in L.A. and found a man in Hollywood called BJ. NHJ: We know BJ well. BG: Well, I took my boyfriend down there and was talking to BJ, and he tells me, “Oh, you really ought to get in this business.” And I shot back, “Why would I do that?” And he tells me, “Because I have a fabulous clientele and we need somebody in Riverside” which is where I was living at the time. The he says, “You should buy franchise from me.” Now, I am surprised and unprepared so I tell him, “Well, I don’t know about that” but I started talking to my clients, and a lot of their husbands wore hair, and so at night I began to do their husbands’ hair too. I didn’t know what I was doing at first, but I learned quickly and became pretty good. And all this time, BJ kept after me until signed up. That’s where I got my training, from BJ. NHJ: What hair systems were people wearing at the time? BG: It was a mesh base with polyurethane around the edges. We didn’t use braided ‘foundations’ like Hair Club. When I did clients from Hair Club, it was like a rug underneath. BJ did bonding, but everybody at Hair Club had the track. NHJ: Why did Hair Club clients come to you. BG: Convenience. I came up with an ad that said, “Why drive to L.A.?” That was my heading with before-and-after picture of one of my clients. The minute I did that, my phone started ringing. That’s how I started building my business. NHJ: Now, hair replacement has grown and is the dominant part of your business? BG: Oh, totally. Now we’re into trichology and we do the MicroPoints. There’s always something new out there. There’s always somebody that knows a little bit more than you do. I want to stay on the cutting edge. NHJ: When you were talking about replacements, you kept saying “He,” so we’re assuming your clients initially were men. But we’re guessing that that isn’t the case today. BG: I think our clientele is about 50/50 now. I started advertising to women in my local newspaper, but then I added a highend publication called January 2017
Hair Journal: Bette, before we get into your media and advertising, could you tell readers a little about yourself. You’ve been doing this for a long time now. Did you start straight out of beauty school? Bette Graff: Yes, that’s exactly what I did. I started straight out of beauty school, worked three years in Redlands, and opened my first business in 1965. I didn’t know what I was doing. I had a friend, I had a partner, and I was putting my husband through USC and I needed to pay the bills. So, we opened this salon, and all our friends became clients and little by little, we built the business up until we had ten stylists. My girlfriend opened a dress store next door and we had an opening between us so clients could do their hair then go into the dress store and do their shopping. My friend would ask me to go on buying trips with her, so I was not only doing hair, I also became a clothes connoisseur! This opened my eyes to the retail world.
Answers for Hair Loss.
4148 10TH STREET, RIVERSIDE WWW.GRAFFTECH.COM | 951.335.4825
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The National Hair Journal Winter 2016/17
the Inland Empire Magazine that covers the two largest coun“now.” I don’t like to junk it up. I keep it simple. ties in the nation with over five million people. NHJ: You talked about the importance of consistency in NHJ: Did you have time to attend industry events and your advertising. What do you mean by consistency? workshops? BG: Well, I’ve been with the Inland Empire Magazine for BG: It was actually as a result of attending these events close to 20 years now. When I first went in the magazine, I that I began the advertising and marketing that made me thought, maybe I’ll only get one call. When the rep came what I am today. I remember in 1990, I went to an On-Rite in, I told him, “I nervous, I can’t really afford this.” And he seminar in Fort Lauderdale and found out this is really a says, “You’re right to be cautious, but you’ve gotta be conmarketing driven business. You had to promote yourself to sistent.” So, I listened and took his advice. We started small survive. I didn’t have much monbut kept going. We’ve been there 20 years now. We went ey at the time, so I had to scrape from a third of a page up to a full page and that’s really SUFFERING up enough cash to put some paid off for us. FROM HAIR LOSS? KEEP NHJ: Looking at the ads, there are kind of program together. When THE HAIR no before-and-after pictures. BeI started my, “Why drive to L.A.?” YOU HAVE campaign, that’s when my busifore and afters have been the staness took off. At the beginning, ple in the hair replacement indusI had one tiny file cabinet for all try. Everybody does it. You don’t, my clients. Now we have 1,600 and yet the telephone still rings. square feet and five stylists and BG: We’re all about beautiful ads every year, we’re growing. in a high-end magazine that sits in DON’T WAIT! STOP YOUR HAIR LOSS NOW! lots of doctors’ offices and plasNHJ: You’ve also embraced trichology, technologies like Mi951.335.4825 tic surgeons’ offices. It just works croPoint Link and laser therapy. for us. We don’t need to put the KEEP How do you find out what’s new “before” in our advertising. THE HAIR and decide what to bring into the It’s the “after” that people YOU HAVE business? want. If they want to know BG: I found out about light therapy anything else, they’ll give when I joined the Transitions groups. us a call. The phone numWe launched laser hair therapy in ber’s where you can read 2004 and it has just grown and grown. it. It’s not real tiny. I do still We’ve now entered into trichology, show before-and-afters in Suffering from HAIR LOSS? which kind of goes hand in hand with DON’T WAIT! STOP YOUR HAIR LOSS NOW! the newspaper, but that’s a laser, and we’re doing well with that different medium. It’s just a also. Our services now cover a broad quick information tool, not spectrum. We don’t turn anybody an image builder. away. We’re able to diagnose a cliNHJ: We’re sitting with ent’s needs from the very beginning and determine whethRobert Smith, an executive er they need a hair replacement, some shampoos or treatwith Inland Empire Magaments with the laser. zine. NHJ: Your business name is Graff Technology. Did you Robert, it’s very popular these days to say that all you need choose “technology” to highlight that you offer multiple is a digital campaign, and that everything happens on the solutions? Web. But that hasn’t been Bette’s experience. How do you BG: Correct. I changed my name to add ‘technology’ to explain the contribution of your magazine to her media be more competitive. About four years ago I went to a marcampaign? keting thing. This guy from Australia was moderating and I RS: I like to tell people that the right magazine becomes asked him “What do you think about the name, Graff Techa foundation for your marketing. Yes, you can do difnology?” And he didn’t know. So, I said, “If you saw ‘Graf ferent things digitally, but if you don’t have a solid founHair’ and ‘Hair Club for Men written side by side,’ what dation with material that people are comfortable with, would you choose?” And without hesitating he says, “I then you’re just shooting in the dark. Our magazine would change your name to Graff Hair Technology and put has a certain authority in the Inland Empire because it’s you a cut above Hair Club.” So, that’s what I did. been around for 40 years. People trust it. People trust NHJ: That brings us back to your advertising. We have adprint more than they do digital or electronic media. mired your print campaign over the years. It’s attractive, it NHJ: How do you maintain that quality image? is consistent and it’s always fresh. RS: The magazine has some policies that help guide people. BG: It’s been very effective. You can take your money to the For example, we don’t encourage people to put “before” bank when somebody calls in because they been attracted pictures in the magazine, because we want a nice-looking by what they saw and are ready to make a purchase decipublication. Many ‘before’ pictures you see in other publision. We used to run a third of a page, but the last four years cations can be a little offensive. It strikes the wrong note for we have expanded to a full page. We get a better response people. The whole premise here is to get people to want to with the full page. The ad is cleaner. It’s crisper. It’s more, read your ad and then go to your website; that’s where you CALL TODAY FOR YOUR FREE PERSONALIZED HAIR AND SCALP ANALYSIS Imagine looking Fabulous for the
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The National Hair Journal Winter 2016/17
can go into all the details and show them all the pictures you want. NHJ: We have a point of view, perhaps because we’re publishers ourselves, that a publication makes friends - particularly a publication that’s been around for a long time, features local restaurants, local politicians, local automotive shops, people you know and do business with every day. So, when your product is positioned among them, you are just one more friend. We think that’s very important in an intimate business, like hair replacement where so much is based on trust. RS: With the tactile feel of the magazine, you’re closer to the reader than you are with a mouse and a screen. Building that relationship is paramount in any kind of a marketing. People want to feel like what they’ve purchased or what they’re going to purchase is a viable product. They want to have a relationship with it. That’s why an ad for a car dealer is not only important to bring people into the dealership, but also to make the people feel good after they’ve made the purchase. I think the same thing works with any product. NHJ: Betty, you mentioned that one of your clients came in with an ad that was four years old. That’s something that couldn’t happen from a website. So, your experience is that even previous advertising has a lasting benefit. BG: Yes, he was here yesterday. When he took out the ad, he had it all folded up in his wallet. It was all yellow and everything. He says, “I’ve had it out a couple of times, but just wasn’t ready to make that call.” Anyhow, something spurred him the day before yesterday and he made the call and we made the sale. He was thrilled. NHJ: Merck did research before they launched Propecia, and found that people who inquired about hair loss remained viable candidates for a solution for five years or longer. BG: Wow. So, their findings confirm what we’ve just seen. NHJ: What advice would you give to a studio owner who’s reading this article and wondering where to put their media dollars? BG: Well, I don’t have a huge budget, so I have to watch my dollars, too. The magazine gives more credibility. It’s a different kind of a sale. They’re almost sold before they even come in the door when they see this really nice magazine. But I would be careful with my dollars and I would listen to the media people to make sure your ad is a good fit. Another thing; You’ve got to be consistent. My rep made me aware of that. I was young and dumb, and I didn’t know what I was doing and he helped me understand that. RS: I’ve coached a lot of the people and I would rather have an advertiser come into the magazine and run the smallest-size ad that we have but do it every time the publication
is printed, than to come in and do a full page only one time. That consistency builds that relationship we’re talking about. How you introduce yourself to the reader is important, and you must also be there every month for them, to say, “Hey, good to see you again, glad you haven’t forgotten us.” That’s what that building is. Then once you see the benefits of that, you can always make your ad bigger. NHJ: You made a comment earlier about showing only attractive “after” pictures and said people were drawn to the desired benefit and didn’t need to be reminded about their problem. That especially true for hair replacement sufferers who don’t want to be constantly reminded about that they are no longer the person they used to be. Graff Technology advertising is a strictly ‘aspirational’ campaign and it’s working. RS: That’s a good point. Websites give shop owners a way to tell their whole story and show all their pictures. Print advertising is most effective when it gives you personal advice as a friend. Friends don’t go out of their way to shock or insult you. NHJ: Final question. We’re looking at Graff Technology’s latest ad featuring a very attractive woman. Bette, how do you come up with these gorgeous models? BG: Most of them come from within our industry. I get them from the On-Rite Company, and I get them from HairUWear. This one came from HairUWear. They provide these pictures if you’re in their program. I’m a Virtual Reality dealer and I also sell Raquel Welch wigs. This was part of the Raquel Welch program. I sometimes use iStock pictures, too which isn’t that costly. NHJ: So, one of the privileges of having a relationship with a distributor or manufacturer is access to their marketing materials. That’s better than buying a cheapie hair replacement direct from a factory you don’t know in Qingdao. BG: [Laughs] Yeah, our suppliers have been really good to us. Just ask your own distributor if they have any pictures. A lot of times they do; you just have to ask. NHJ: Any other tips? BG: The only other thing I would say is don’t neglect the medical market. I’ve just reprinted my brochures for the “Recover with Confidence and with Style,” program and this will go to all the doctors’ offices. We do a lot with Kaiser Hospital and Riverside Community Hospital. They’ll give these out to their patients, which is been very beneficial for us. I also host trichology seminars; you were one of my guest speakers. We do that like twice a year. RS: That reminds me of a quote I heard from Steve Jobs. He said, “We don’t hire smart people and tell them what to do; we hire smart people to tell us what to do.” So, I think you just got to keep an open mind, do your research, do your due diligence, make sure that the vehicle or the medium that you’re looking at is really going to the type of clients that you want, and then work with them to find the right mix. It still all boils down what mix works for you? It used to be, if you were fixing washing machines, the only ad you needed was the Yellow Pages. Well, now that’s all changed. There’s no Yellow Pages. So, those washing machine repair people have to figure out different ways to find their clients and their customers. Well, that’s true for any business. NHJ You’ve got to find the right mix for you.
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The National Hair Journal Winter 2016/17
SELLING YOUR BUSINESS
PRE-AGREEMENT CONSIDERATIONS
By Joel Morgenthau In a previous issue, we discussed the ways in which a small business owner can prepare his or her business for sale by making their company more valuable and therefore more attractive to a potential buyer. This article assumes that the owner has prepared her business for sale and is now ready to put her business on the market. Again, the type of business we will focus on is a small to medium sized closely held corporation operating in one or more locations and employing fewer than 50 people. The sale of a business involves many aspects including financial, personal and legal considerations. Once the owner has decided to sell, her first step will be to assemble the proper team of professionals: an attorney, an accountant and a business broker. From the outset, the business owner will want to make sure that she is protected by confidentiality agreements with her business broker and any potential buyers the broker may select. These agreements provide that all information disclosed to a third party will be kept in strict confidence and they usually require that all documents given to such parties be returned at the seller’s request. Prior to putting her business on the market, the owner will most likely need help in determining a suitable sale price. Though it may be tempting, she must be careful not to put too high a price tag on the business because overvaluation may lead to the rejection of qualified buyers and may ultimately delay the sale. Depending on the circumstances and the particular background of the professionals advising the owner, the owner may be able to rely on her accountant, attorney and/or business broker. However, unless the owner is very sophisticated in financial matters or has someone on her staff who is, she may want to hire an independent appraiser or valuation expert. Her goal will be to arrive at a ballpark price, i.e., a price to use as a starting point for negotiations. If the owner decides to have an independent valuation performed, she should be careful in selecting an appraiser and should only
use an individual or organization with verifiable references, experience and credentials, as well as specific knowledge of the hair industry. Regardless of whom the owner hires or uses to help her arrive at a sale price, she would be well advised to have a basic understanding of valuation techniques for closely held businesses. While there are many approaches to valuing a company, the income approach is most commonly used to value small closely held companies. The income approach focuses on the bottom line or the ability of a business to produce income for the potential buyer. In the hair industry, income is often measured based upon EBITDA (earnings before interest, taxes, depreciation and amortization). EBITDA, unlike net earnings, is used to measure a company’s operating profitability before deducting non-operating expenses such as interest and non-cash charges such as depreciation and amortization. The most common method of valuation under the income approach is known as the capitalization of earnings (or EBITDA) method. Under this method, the appraiser will take a single year’s income or the average of several year’s income and divide it by a capitalization rate (“cap rate”) that has been computed by taking the chosen discount rate (annual rate of return required by the buyer for the risk of the investment) and adjusting it for annual future growth. This sounds complicated, but let’s see if we can make it simple with the following example. Assume that the owner’s company had EBITDA of $1,000,000 for the year 2002; the
“Unless the owner is very sophisticated in financial matters or has someone on her staff who is, she may want to hire an independent appraiser or valuation expert.” appraiser has determined that this is a fairly risky business, and that the estimated annual rate of return required by a buyer for the risk of the investment is 25%. If the inflation rate is 2% and the business has historically grown at an additional 3% annually, the cap rate would be 20% (25% - (2% + 3%)). Therefore, the value of the company using this method of analysis would be $5,000,000 ($1,000,000 ÷ 20%). Another way of expressing this would be to say that this company is being valued at five times EBITDA. It should be noted that once the appraiser makes a preliminary assessment of the value of the company using the income approach, other adjustments will need to be made before arriving at a sale price or range. While discussion of these adjustments is beyond the scope of this article, the most obvious and common one is a deduction of any long term
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debt burdening the company. Once the owner has determined an acceptable sale price, she should begin to consider the form of payment for the sale. The seller should be aware of the fact that when a small business is sold, the seller (as opposed to a lending institution) often agrees to finance a portion of the sale price. To the extent that the buyer needs to borrow funds for the sale, seller financing may be a less costly alternative than a conventional loan. If the seller is willing to do this, the buyer may also request the seller to allow the borrowed funds to be used as security for breaches of the seller’s indemnification obligations under the purchase agreement. Obviously, these are complex issues and the seller should consult her attorney about these matters.
The National Hair Journal Winter 2016/17
• All of the company’s corporate obligations remain intact. As a result, the parties may not have to comply with the assignment provisions in contracts between the seller and third parties. In most instances, this will eliminate the need to get the consent of the landlord or other third parties to the assignment of a lease or other contract1. In addition, the company’s permits and licenses will remain intact, although in certain cases the appropriate licensing authorities will need to be notified of a change of control. Before any decision with respect to structure is made, the seller would be well advised to consult her attorney so that an analysis of the assignability of the company’s contracts can be made in advance. • The seller will not have to dispose of unwanted assets in a stock deal.
Before the business is placed on the market, the owner should consider the structure of the sale. This discussion will focus on asset sales and stock sales. Other types of transactions, such as mergers, consolidations and tax-free reorganizations, are beyond the scope of this article.
Disadvantages of a Stock Sale: • If the seller wishes to retain certain assets, she will be unable to do so. •The seller may have to provide more extensive representations and warranties to protect the buyer from carryover liabilities.
One of the most important decisions the owner of a small company will need to make is whether to sell the assets or stock of her company. The decision has far-reaching consequences in terms of consents, documentation, ongoing liability and, perhaps most significantly, tax results. The structure of the transaction will undoubtedly be one of the major points of negotiation between the buyer and the seller because, as will be described below, the respective interests of the parties are often competing.
Advantages of an Asset Sale: • In an asset sale, the seller sells some or all of the specified assets of her business and the buyer generally assumes some or all of the specified liabilities. The buyer generally prefers this structure for a number of reasons, including the ability to write up the value of the acquired assets and to depreciate them over a specified period of time. This will result in tax savings to the buyer. While the seller will generally prefer a stock sale, there are certain advantages to an asset sale from the seller’s point of view, including the following:
Advantages of a Stock Sale: In the vast majority of cases, a stock sale will be far more advantageous to the seller than an asset sale for the following reasons:
• The seller may retain certain assets (such as real estate, automobiles or intellectual property) or lines of business.
• With a stock sale, the buyer purchases all of a company’s stock from its shareholders and thereby purchases the entire corporate entity. Since the company stays intact, the seller will not need to liquidate the business or dispose of its assets after the closing (other than distributing the cash proceeds). However, as noted below, generally the buyer of a small closely held corporation will prefer to purchase assets of the seller in order to limit the buyer’s liability for obligations of the seller and to gain the ability to depreciate assets off of a “stepped-up” basis. • Perhaps the greatest advantage of a stock sale from the seller’s point of view is the tax treatment. Except to the extent that a portion of the purchase price is allocated to the selling shareholders’ covenant-not-to compete, the seller (i.e., each of the selling shareholders) will realize capital gains, as opposed to ordinary income, on the sale of her stock. Under the recent changes in the federal tax laws, the maximum long-term capital gains rate on the sale of stock is 15% and the maximum ordinary income tax rate is 35%. Obviously, the 20% differential on federal taxes alone is a powerful incentive for a stock sale.
• The seller and its shareholder(s) may be able to provide less extensive representations and warranties and/or guarantees. Disadvantages of an Asset Sale: • The major disadvantage of an asset sale from the seller’s point of view is that if the seller is a “C” corporation, the sale generally results in “double” taxation, once at the corporate level and a second time at the shareholder level when the remaining assets and cash proceeds from the sale are distributed to the shareholders. The double taxation problem is not an issue with a subchapter S corporation, because the tax consequences of the sale of assets by the corporation flows through to the individual shareholders. However, if an S corporation was formerly a C corporation and was in existence for less than ten (10) years, it still may have a “builtin” gains tax. • An asset sale involves more legal and accounting work as appropriate documents need to be prepared to accomplish the transfer of individual assets to the buyer. In addition, in most cases, the corporation will need to be liquidated after the transaction has been completed. When an asset sale is selected as the structure of the transaction, allocation of the purchase price will be an
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The National Hair Journal Winter 2016/17
important issue, even though it will ultimately be more important to the buyer then the seller. The buyer will want to allocate more of the purchase price to assets with shorter tax lives so that such assets can be depreciated or amortized over shorter periods of time, thereby resulting in tax savings to the buyer. If the seller is an S corporation, amounts allocated to depreciable assets in excess of their tax basis may result in depreciation recapture. The shareholder of the S corporation will be taxed at ordinary income rates instead
“One of the most important decisions the owner of a small company will need to make is whether to sell the assets or stock of her company. The decision has far-reaching consequences in terms of consents, documentation, ongoing liability and, perhaps most significantly, tax results.“ of capital gains rates on the sale of these assets. Given the difference between ordinary income and capital gains tax rates at the federal level (i.e., up to 20%), the shareholder of an S corporation will want to allocate purchase price away from assets which are subject to depreciation recapture. While there are various methods for allocating purchase price, generally the allocations are agreed to between the parties and respected by the Internal Revenue Service. Regardless of the structure of the transaction, another major consideration involved in the sale of a business is the seller’s role after the transaction has been completed. Very often, the buyer will want the principal shareholders of the seller to help with the transition of control from the seller to the buyer. The buyer will also want the seller and its principal shareholders to enter into non-competition covenants. As will be explained below, the decision to enter into an employment agreement, consulting agreement or non-competition agreement has both tax and personal consequences. The selling shareholder should initially consider whether she wishes to enter into an employment or consulting agreement with the buyer. An employment or consulting agreement can be drafted to require the full time or part time services of the employee or consultant and to provide that the employee or consultant can work at home and render services over the telephone. All amounts received by the selling shareholder pursuant to an employment or consulting agreement are considered ordinary income. However, payroll taxes are deducted from salary payments to an employee, whereas there are no such deductions from the payment of fees to a consultant. The selling shareholder will generally end up with more money in her pocket under a consulting agreement because the seller/consultant will receive payment of the gross amount of the consulting fees with out deduction of payroll taxes and the seller/consultant
can deduct business expenses that she incurs in connection with her performance of consulting services. Non-competition covenants are one of the most highly negotiated aspects of an acquisition. The general rule is that the income derived from non-competition covenants is considered ordinary income to the seller and they are amortizable by the buyer. Non-competition covenants may be included in the employment or consulting agreement or in the purchase and sale agreement. Sometimes, these covenants are contained in a separate non-competition agreement and are accompanied by the recital of separate consideration. The reason for this is to make clear that the covenants are not considered part of the sale price for the stock in a stock deal and to justify the amortization of the covenants by the buyer. There is one notable exception to the general rule that income derived from non-competition covenants is deemed ordinary income. This exception involves the sale of personal good will. If the selling shareholder has a plausible argument that one of the items being sold to the buyer is the personal good will, which is based on the personal relationships that the selling shareholder has developed with customers, suppliers, landlords, employees and other parties with whom the company does business, she can sell her personal good will to the buyer as a separate asset and the income derived from the sale will be treated as capital gains. Prior to taking this position, the selling shareholder should consult with her attorney or accountant and confirm that she qualifies for this treatment. The selling shareholder should consult with an attorney who has expertise in this area, because the agreement needs to be carefully drafted in order for it to pass possible review by the Internal Revenue Service. As can be seen from the foregoing discussion, there are a number of items which an owner will need to take into consideration before entering into an agreement to sell her company. These considerations will often have a direct impact on the selling price and will inevitably be a hot subject of negotiations between the buyer and seller. The need for good accounting, tax and legal advice is critical at this stage of the game. The sale of an owner’s business, including the price and the ultimate structure of the transaction, will undoubtedly be among the most important decisions she will ever make.
Footnotes Real estate leases sometimes provide that the sale of stock of a corporation constitutes a “change in control”, which requires the consent of the landlord. Joel Morgenthau is a partner at Morgenthau & Greenes, LLP, a New York based law firm with over 25 years experience in the hair industry. Barbara Comer, an associate at the firm, assisted in the preparation of this article. Inquiries about this article may be directed to: jmorgenthau@mg-llp.com
NHJ
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The National Hair Journal Winter 2016/17
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