6 ways to use the holidays for networking

You’re going to be talking to a lot of people this season anyway, so you might as well get the most out of it.


The holidays are the time for gatherings and good cheer, and that makes them a natural time for networking. Business is about relationships, and sharing kind wishes and getting some face time can help to strengthen them. Since the season is a busy one, make the most of your connections by creating a plan. Here are six ideas for effective holiday networking.


Be smart about the ones you attend, says James Cassel, chairman of the independent investment banking firm Cassel Salpeter & Co.

“[Attend] as many relevant holiday events as possible,” he says. “Taking advantage of them requires being strategic, disciplined, and committed to follow-up. Think of yourself as a smart marathon runner, not a sprinter. That means doing serious research as you target gatherings that you think will draw the people you see as your best prospects.

“In a digital age in which we’re losing the human touch, there’s nothing finer than a handwritten note,” says Cassel. “I begin my follow-up within a day or two after meeting people, and I’m careful to include something specific and personal about the encounter, as well as verbiage that reminds the prospect what it is my company has to offer. Sounds simple, but you’d be surprised how many people fail to execute it completely.”


Create a “meet list” of key individuals you’d like to connect with during the holidays and why, suggests corporate connections consultant Judy Robinett, author of Crack the Funding Code.

“Events can be jam-packed with opportunities,” she says. “Narrowing it down in order to ensure you’re being strategic, and maximizing the time you have with these key individuals, will help to ensure you’re making more lasting than fleeting connections.”

If you’re looking for conversations that can further your business, approach them with mentorship instead of profit in mind, she adds. “Mentors can be valuable players in your future success—and possible investors in the future—so building these early bonds can definitely pay off in the long run,” says Robinett.


It’s the season of giving, and being a connector is one of the most valuable things you can do for people in your network, says Kevin Hamilton, SVP of marketing at the restaurant technology platform Toast.

“The holidays are a great time of year to canvas your network and connect individuals that you think could be helpful to each other in the New Year,” he says. “This might include employees looking for a potential mentor, clients looking to break into a new region, or colleagues who want to acquire new skills. Use your wide network for good, and connect people to one another in a way that’s helpful, authentic, and meaningful.”


With all the festivities and conversations people are having throughout holiday networking events, it can be hard to remember who’s who, says Solomon Thimothy, CEO of Digital Marketing Agency. Instead, keep your phone on hand and take advantage of LinkedIn.

“Download the app and keep it on your home screen so it’s easy to access,” he says. “Then, as you’re meeting new folks, pull up the app and find them. This enables you to make that real-time connection and is an easy access point to avoid their crowded emails so that you’re able to send a more personalized, direct message.”

Added bonus: You might find out on the spot that you have mutual connections that can help continue to drive the conversation, Thimothy says.


Winter holidays of Christmas, Hanukkah, and Kwanza are often recognized, but the employees of cloud communications provider 8×8 use every holiday as a chance to connect with each other.

“We celebrate diversity and welcome all cultures,” says CEO Vik Verma. “If you’re smart and have good values, you’re of great value to us. We like to create an environment that demystifies different ethnicities. We celebrate Christmas and Diwali. We feel like if our employees can be themselves without having to create some act and be somebody they’re not, we create a safe environment.”

Every Wednesday, 8×8 employees get a chance to relax, mingle, and enjoy a catered lunch. “My general philosophy is that people work hard,” says Verma. “We try not to have evening parties that take them away from family. Why create an obligation to stay late for a beer bash? If we can gather at lunchtime, you’re providing value to employees.”


While the holidays are prime for networking, they’re also hectic. If you’re feeling overwhelmed, why not wait? asks Brian Rowe, CEO and founder of Perceivant, an educational technology company.

“December is such a busy and stressful time for everyone, so wait until the New Year to reconnect with current and new customers,” he suggests. “Thinking in this mind-set helps us kick off the year strong and connect with contacts straight away once January rolls around to stay more top-of-mind.”

Rowe has the same philosophy with his employees. “There are enough holiday parties in December. So, to avoid any added stress, we all gather together as a company in mid-January to celebrate,” he says. “This allows us to reconnect, discuss what happened in the previous year, and get excited about what’s coming ahead.”

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How businesses should conduct themselves socially in politically polarized times

By James S. Cassel

Growing at a furious pace, political polarization in America is creating a seemingly unbridgeable rift. Since President Trump’s election, the majority of likely voters believe America is more divided, and 31 percent think we may experience a civil war in the next five years, according to a recent Rasmussen Reports.

Given the highly charged political climate evident in the recent elections, when sensitive issues come up in social or business situations, middle-market business owners may want to tread thoughtfully — or risk losing business and friends, as well as their reputation.

There are several approaches a business can adopt to navigate political landmines, but the first step is for companies to make a conscious, deliberate decision on how to proceed.

One option is to avoid politics altogether. If, at a gathering, a politically charged issue like immigration, gun control, or healthcare comes up, simply don’t go there. Diplomatically deflect and redirect to common ground that everybody can agree on, such as the value of good schools.

However, avoiding politics also means carefully monitoring social media content. Google, Facebook and LinkedIn are usually the first stops for people you meet, and those platforms should reflect neutrality. As the saying goes, “social media is like a glass house and when you live in a glass house you must dress the part.” With profiles subject to ongoing scrutiny, people may not want to do business with you based on a post charged with political innuendo. Much care should be taken to filter out politics from online discourse if neutrality is what you have chosen.

Another alternative is taking a stance. For example, you may be willing to risk the loss of both customers and employees who are not like-minded. Not for the faint-hearted, this choice requires the courage to stick to your convictions, like the baker who refused to bake a cake for a gay couple and whose decision was upheld by the Supreme Court; or like Nike taking on the controversial Colin Kaepernik, the former San Francisco 49ers quarterback who kneeled in protest, for its commemorative 30-year “Just Do It” campaign.

As you decide if taking a stance is the right option for your business, consider the ramifications with those whose views are diametrically opposed to yours. For many, principles and doing what they feel is the right thing may be more important than maintaining or expanding a client base. If that’s the case, you may be surprised to find you might actually gain new business from people who share your beliefs.

A word of caution: the last approach should never be an excuse for undermining people with viewpoints that differ from yours. Be inclusive. Agree to disagree in a way that is civilized, thoughtful, and respectful of the rights and beliefs of others. Failure to do so not only runs counter to our democratic principles but can hurt you and your business’s image — even among clients who share your political inclination.

Regardless of the approach you adopt, establishing clear workplace policies will help guide employees with their own political agendas in the office or at networking or other business events.

Speaking with your company’s lawyers to get a comprehensive picture of federal and state laws governing what employers can do in relation to their employees is also important. As a general rule, businesses may have policies in place prohibiting all forms of solicitation, including political campaigning in the workplace. Speak to your employees about social media: help them understand the potential implications, both for your company, and for them as professionals. While you can’t necessarily dictate the content they post personally, you can develop clear rules regarding how social media should be used on the job.

In this era of unprecedented political divisiveness, it is essential for business owners to thoughtfully choose how they proceed. When confronted with emotionally-charged subjects, they must be prepared. Although employees cannot and should not be forced to adopt your political views, establishing pertinent guidelines for workplace and company-related social events can minimize sending conflicting signals.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle- market companies. He may be reached at jcassel@casselsalpeter.com or via LinkedIn at https://www.linkedin.com/in/jamesscassel.

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Why Technology Won’t Make Investment Bankers Obsolete

By Danielle Fugazy

With the explosion of technology, the question of what an investment bank’s role will be in the M&A process in 25 years from now is not a crazy one.

“You can take some guidance from looking at where banking was 25 years ago. There was huge information asymmetry. There were no web sites to find information on funds and you couldn’t compare groups so easily,” says Bryan Cummings, a managing director and head of financial sponsor coverage with D.A. Davidson. “Today, there are many more private equity firms to know and they have to work harder to convince business owners to sell to them. All this competition has driven more transparency in the marketplace. When you think about the future, it’s hard to think there won’t be more capital and more competition. Deals will be highly sought after. Buyers will have to figure how to portray themselves as the best in the sea of buyers and investment bankers have to figure out how to portray themselves as the best, most trusted advisor who will get the seller the highest price. How do they do that?”

Some argue technology will help and that it will play a larger role in helping investment banks do their job. The theory goes something like this: Through various technologies such as AI, automation, and big data, computer programs will be able to do much of what bankers spend their time doing today. Some believe technology will be able to spit out comprehensive buyer lists, and that they will be more comprehensive and precise than anything a human would be able to produce.

Lots of industries are using artificial intelligence today and more are expected to embrace the technology in the future. According to Hampleton Research, the AI market size is forecast to grow from $21.46 billion in 2018 to a whopping $190 billion by 2025 at a CAGR of 36.62 percent. While technology is slow to take hold of the banking industry, it is happening. According to an MIT Technology Review article, the U.S. equity trading desk at Goldman Sach’s New York headquarters employed 600 traders. Today they employ two; 598 traders have been replaced by automated trading programs and they are supported by 200 computer engineers. Apparently, 45 percent of the revenue from cash equities comes from electronic trades. Complex algorithms are being built that can understand what a trader would do, not just across equities but even asset classes like currencies and credit. AI has already been used by hedge funds in stock trading, according to Imarticus Learning Inc.

More technology and less human interaction wouldn’t be so different than what happened in the travel industry, for example, where the travel agent’s role became diminished with the invention of online travel booking services like priceline.com and Airbnb. In the mortgage industry, sites like Zillow.com and realtor.com have forced mortgage brokers to change how they do business.

However, some argue that just because technology can provide more information doesn’t mean it will be more useful to sellers. “Even if a computer can show a seller 1,000 potential buyers, why is that more helpful than showing the seller 100 of the right buyers? The computer can’t evaluate how a buyer handles closing negotiations or what the players will likely do, but a banker will have some past experience that will shed light on behaviors,” says Cummings.

The reality is many believe buyers and sellers will still want to work with investment banks and will favor those who use technology to enhance the process. Investment banking is dependent on human emotion, which is unique.  “The middle market and the lower middle market is still a very human business. Technology is enhancing what we do, but not replacing us,” says Cummings. “You still have to personalize the experience.”

Many believe bankers will play an important role moving forward. Algorithms or AI still require human input to make sure their suggestions make sense and that the right questions are being asked. What’s more, algorithms can’t negotiate. The human touch is essential in helping buyers and sellers come to terms for a deal.

James Cassel, chairman of Cassel Salpeter & Co., argues that most bankers are already using technology to their advantage already. “Many firms are already using tools like Capital IQ and Axial to help get information on buyers and sellers. It’s become much easier to put together a buyers list and gather intelligence. Technology will continue to make this easier, and more efficient, but those lists still need to be vetted by a human.”

A human voice is needed to tell the story. “Companies are complicated. You can’t just send a one-pager. Having the technology speeds up the processes, but there has to be a balance between the personal and the impersonal. Bankers are now challenged with finding the right balance between doing their jobs and using technology to help their clients to the best of their ability. Technology should continue to be an enhancement to good service, not the answer to providing it,” says Cassel.

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Palm Beach County pharmaceutical company files for Chapter 11 bankruptcy

By Ashley Portero

Riviera Beach-based Sancilio Pharmaceuticals Co. filed for Chapter 11 bankruptcy in June, and recently closed two asset sales in Delaware.

The Ocean Blue division of the company, a producer of fish oil supplements, was purchased by K.D. Pharma Group for $2.5 million in a sale that closed in August.

Micelle Biopharma paid $19.2 million cash for Altemia and the ALT Platform, a phase three-ready product for sickle-cell disease. It also purchased Sancilio’s plants, lab and prenatal and dental portfolio of prenatal vitamins and fluorides, according to Cassel Salpeter & Co., which advised Sancilio in its Chapter 11 sale of business assets.

The sale saved several Sancilio jobs in Palm Beach County, Cassel Salpeter Chairman James Cassel told the Business Journal in a statement. The Business Journal was unable to reach a representative for Sancilio.

“Many employees that were with Sancilio prior to and during the bankruptcy proceedings were hired by the two acquiring companies,” he said. “As is true with many distressed situations, some of the employees found other places of employment during the pendency of the bankruptcy, while others were offered opportunities with the acquirers.”

The U.S. Bankruptcy Court for the District of Delaware approved the sale of Sancilio assets to the two buyers in July, Cassel said, adding that a liquidation plan would likely be filed in the case.

In June, Sancilio reported it had about $11.9 million in assets and more than $25 million in liabilities, according to court filings. About $19.2 million of those liabilities wer e secured claims, including almost $19 million to MidCap Financial Services LLC.

Sancilio received $3.8 million in job-creation subsidies from the state, county and city in 2016 as part of a job-growth incentive deal. The company was given $3 million from Florida’s Quick Action Closing Fund, and $825,000 in tax rebates from Florida’s Qualified Target Industry program. In turn, Sancilio said it would retain 149 jobs and create 275 new jobs by mid-2019.

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As the Fed continues raising rates, middle-market business owners should begin preparing their businesses

By James S. Cassel

As the Federal Reserve continues to raise interest rates in today’s strong economy, middle-market business owners should keep a watchful eye on the economic and political developments during the next 18 months and beyond and take the necessary steps to best position their businesses. The key question is for what. Will it be a recession?

So much of government money is currently being spent on non-discretionary items. Defense, entitlements and interest payments on the national debt are examples. This type of spending will further tighten the squeeze on our government and cause potential problems for continued funding of such discretionary items as healthcare, infrastructure improvement and education. Very few are focusing on the deficit spending and the growing national debt.

While the jury is still out on whether we will see a recession in 2019 or 2020, the government will ultimately need more revenue unless spending is reduced. As a result, the government will have no choice but to raise taxes and/or cut expenses. It does not seem that the present growth in GDP will be sufficient to bridge the gap with increased revenues. It will be tough and overdue for the politicians to address these issues.

It appears the Fed will raise rates one more time this year. Despite today’s historically low rates, people will start to see the effects of this plus the prior rate increases in the form of higher borrowing costs. Americans, except those with substantial cash savings, will feel their spending power begin to diminish. Making matters worse, we have recently seen a spike in energy prices.

Another issue: tariffs and the trade war. While they do not seem to be hurting most people yet, they too are likely to have a negative impact on Americans by causing prices to increase on affected imported items, as well as goods that require affected foreign components or materials to produce. This will cause an increase in the inflation rate. According to recent news reports, polls show that large numbers of voters nationally and in key midterm states think tariffs will do more harm than good.

So, considering all this, what should middle-market business owners be thinking about and doing? For starters, they should closely reevaluate all areas of their businesses to confirm what expenses are necessary, look at efficiencies and determine how to protect their best interests. Expert guidance from trusted professionals, including accountants and consultants with proven experience, is always helpful and important to ensure the best outcomes.

Here is some general guidance and insight based on our experience working with middle-market business owners in all types of economic cycles:

  • Hiring. No matter how much you may think you need to hire, you might be overlooking ways to work more efficiently and minimize the expense of adding new employees. Consider more flexible hiring in terms of temporary staffing so you can stay nimble as you watch how things play out in the coming months. Be careful not to over hire. When managed correctly, paid internship programs, particularly those involving partnerships with local universities, are a great way for business owners to address certain business needs while also cultivating new talent and potential hires.
  • Capital expenses. As it pertains to capital expenses, such as purchasing new capital equipment, consider whether you are buying to support expansion or increase efficiency. Buying more efficient equipment can increase productivity while effectively reducing costs. Unless you have significant certainty, do not risk over committing your business.
  • Borrowing costs. Evaluate your borrowing costs and lock in any variable interest rates that you can. Certainty has benefits. If you have excess cash, it may be a good time to pay down some of your debt.
  • Manufacturing, supply chain and resource costs. If you believe tariffs will increase your costs, look for alternative supply sources and try to lock them up.
  • If things start to deteriorate, seek help fast. Do not wait. Time is not you friend.
  • A good consultant or investment banker can be a savior of your value.

Middle-market business owners who keep a close pulse on these issues and take the right steps will best position their businesses in the near and long term.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle- market companies. He may be reached at jcassel@casselsalpeter.com or via LinkedIn at https://www.linkedin.com/in/jamesscassel.

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Which MBA Programs Are Best for VC or PE Jobs?

Top B-schools are the most likely to lead to jobs in venture capital or private equity, experts say.

By Ilana Kowarski

If you admire the millionaire and billionaire investors on the TV show “Shark Tank,” then you might be interested in attending an MBA program where you will learn how to identify companies worthy of investment.

Many business schools offer courses in venture capital, an investing specialty which involves identifying and buying stock in startups that have the potential to become wildly profitable. Similarly, business schools also offer courses in private equity, a finance field which requires taking ownership of mature companies and transforming those companies into more profitable ventures. Strengthening a company typically involves a combination of financial engineering, organizational restructuring, adjustments in the company’s strategy and maximizing the efficiency of a company’s business operations.

Venture capitalists and private equity investors say that prospective MBA students who are looking for a business school that will help them break into either venture capital or private equity should know these two fields are difficult to enter.

“Have a Plan B, because there’s a lot more people coming out of business school that want those jobs than are going to get those jobs,” says James Cassel, co-founder and chairman of investment banking firm Cassel Salpeter & Co., which specializes in arranging mergers and acquisitions deals.

Here are five factors that experts in private equity and venture capital say MBA applicants should consider when applying to and choosing a business school.

Prestige matters. Cassel says that people with MBAs from highly ranked business schools have an enormous advantage when competing for venture capital and private equity jobs.

“The challenge in today’s market with many of the venture capital firms or private equity firms, when they go out to do their recruiting, is they’re trying to recruit from top business schools,” he says.

MBA hopefuls with an interest in venture capital or private equity should focus on applying to B-schools with an abundance of investment firm recruiters on campus, Cassel adds.

Dileep Rao, a former venture capitalist and a clinical professor at Florida International University, says the most important factor in whether an MBA program is likely to lead to a private equity or venture capital program is if the program is at a “top, top tier school.”

Networking opportunities are crucial. Rao says a key sign of an MBA program that offers solid prep for careers at private equity and venture capital firms is when partners at these firms serve as guest lecturers and speak at school events. Another positive indication is when a school touts key relationships for student internships or job placements at venture capital or private equity firms, he says.

Patrick Mullane, the executive director of HBX, the online education portal of Harvard Business School, says that one key way to tell if a school offers solid connections to private equity and venture capital jobs is to look at placement rates within those two fields. He says prospective MBA students should contact alumni at their target school who are working in venture capital or private equity to ask if the school helped them find venture capital or private equity jobs, if there were on-campus interviews for these types of jobs and if the school’s courses prepared them well for those roles.

The best B-schools for venture capital and private equity excel in multiple business disciplines. Experts say one common misconception about venture capital and private equity is that all you need to excel in these fields is finance and accounting expertise.

While knowing how to read a balance sheet and make financial forecasts is a fundamental component of success in venture capital and private equity investments, it’s also necessary to have a solid grasp of business operations and strategy principles and to be familiar with a variety of industries, Mullane says.

“I think being well-versed across a spectrum of industries and problems is very, very helpful,” he says.

Mullane adds that anyone who intends to work in private equity or venture capital needs to understand the concept of disruptive innovation, which is when startups transform an industry by introducing a new technology or a new idea that allows them to challenge long-established companies. With this in mind, it’s valuable to enroll in an MBA program that offers courses covering the influence of technology on business and teaches students how to make informed predictions about industry trends.

It’s valuable to attend a school that has expertise in a field where you lack expertise. Cassel says a prospective MBA student who has a depth of experience in finance should look for a school where he or she can learn other skills that matter in venture capital and private equity, such as entrepreneurship. In contrast, prospective MBAs who have deep expertise in a specific industry like fashion should look for an MBA program that will cultivate their finance skills. Cassel advises aspiring venture capitalists and private equity investors to choose an MBA concentration that complements their prior work experience by teaching them a new skill.

Look for lessons on how to successfully expand a company. Linda Darragh, a clinical professor of entrepreneurial practice at Northwestern University’s Kellogg School of Management and the Larry Levy Executive Director of the Kellogg Innovation & Entrepreneurship Initiative, says learning how to grow a company is essential. “At Kellogg, we focus on a growth and scaling track,” she wrote in an email. “While much media hype continues to focus on ‘launching’ new ventures, real value is created in actually ‘growing’ them.”

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More private equity firms moving to Florida as deal flow remains strong

By Brian Bandell

The number of private equity firms based in Florida has been steadily increasing, while the number of PE-backed deals in the state remained solid in the first half of 2018, according to an analysis of PitchBook data by Miami investment banking firm Cassel Salpeter & Co.

There were 118 PE deals in Florida in the first half of this year. That’s down from 145 deals in the first half of 2017, although that number was initially reported at 109 before being updated after the end of the year.

James Cassel, chairman and co-founder of Cassel Salpeter, said some PE firms don’t report their deals on time, so the deal total is typically updated later. He expects 2018 to finish with about the same or slightly fewer PE deals than the 281 recorded in 2017.

“It’s still pretty healthy numbers, especially compared to 2008, 2009, 2010 and 2011 when the market bottomed out,” Cassel said.

The biggest growth in PE deals in the first half of 2018 came from health care and IT companies. Cassel said there’s been major consolidation in health care, as companies seeks to combine services and become more efficient. IT and technology are seen as strong growth sectors, where a company can attract a capital transaction before it even brings a product to market, he said.

With the economy performing well, many company owners are considering whether this is a good time to sell since valuations are high, Cassel said. It’s better to sell before the economy eventually takes a downturn, he said.

Southeast Florida accounted for 36.4 percent of the PE deals in the state during the first half of 2018, more than any other region of the state.

The study found that 68 PE firms were based in Florida, up from 56 in 2017 and 34 in 2013.

Cassel said the state’s favorable tax climate, with no personal income taxes, has made this an attractive place to base a PE firm so many of them are moving here. In addition, some of the more mature Florida PE firms have seen junior-level executives leave to create their own firms and built investment portfolios, Cassel said.

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5 Things to Keep in Mind When Serving Underserved Markets

Going niche and catering to underserved markets has its pros and cons. Learn how you can determine whether or not going after an untapped market is right for you.

By Geoff Williams

Underserved markets sound like they would be a gold mine—but on the other hand, there may be reasons why businesses aren’t serving them.
Plenty of people go broke panning for gold, after all.

But some people strike it rich, too. So if you’re thinking of focusing your time and efforts on a niche, underserved market, here are some strategies you’ll want to consider.

1. Remember that “underserved markets” can mean a lot of things.

It’s important to think about underserved markets because you could be overlooking a potentially robust revenue stream. If you suddenly find a demographic that you had never considered to target as consumers, you could discover an entirely new customer base simply by shifting your marketing dollars.

Addressing an underserved market requires careful planning and consideration. Sometimes perception isn’t reality.
—James Cassel, founder and chairman, Cassel Salpeter & Co.

But remember, “underserved markets” can mean more than a gender or racial demographic.

It might be a location, such as a neighborhood or city that doesn’t have many or any businesses like yours. It could be a demographic that isn’t catered to much. Or it may be a group of people who have shared experiences. For instance, your business could target twins or military veterans or vegans.

2. Look for the barriers, and not competitors, in underserved markets.

If you own a burger joint, you compete with other restaurants selling burgers. And if you sell and install carpet, you’re competing against the other companies selling and installing carpet. (I could offer 23 more examples just like this, but you get the picture.)

Many underserved markets don’t have a lot of actual competitors (that’s why they’re underserved). But they often do have situations that you’ll have to consider.

Maybe the customers you want to target don’t have much extra money, and that’s why this market doesn’t have many businesses catering to them. (Would-be competitors may be afraid they can’t make a profit.)

Or maybe there are challenging zoning issues, and that’s why other businesses haven’t put themselves into a particular community.

In other words, while you may not have many competitors in your chosen market, your “competition” might be a knotty problem you have to untangle, like figuring out how to help cash-strapped people pay for your products or services or navigating city hall for those zoning issues.

And solving the issue may take time.

“We believe one of the keys to success in going after an underserved market is patience and being in it for the long term,” says Lou Hoffman, CEO of the Hoffman Agency, a communications consultancy.

“We entered China in 1998 and it took 10-plus years before it was a profitable enterprise,” Hoffman explains. “Today, it’s a growth engine not only for our Asia Pacific operation but [for] bringing business/revenue to the U.S.”

Last November, his agency opened an office in Jakarta, Indonesia.

“Indonesia looks similar to China 20 years ago,” he says, citing factors such as its population and it being a growing hub in a lucrative region in southeast Asia.

Hoffman expects the branch to be profitable by 2019 because of the lessons he learned in China. But he also recognizes that the money may not roll in right away. It takes patience and understanding to make it in underserved markets, he says.

“I think the biggest macro pitfall is you simply can’t predict how things will go in the early going. There’s too much variability and volatility,” Hoffman says.

3. Recognize that your business may not be the right fit for an underserved market.

Boy, that sounds mean, doesn’t it? But the business laws of gravity still apply here: Do your research and make sure your business can serve an underserved market and make money doing so. (You want to be able to stay in business and continue to deliver products or services to your customers.)

James Cassel, founder and chairman of investment banking firm Cassel Salpeter & Co., based out of Miami, recalls working with a prepaid cellular phone company that attempted to offer its products to an underserved market. But it didn’t go well.

“The company was trying to do good and be successful at the same time, but they overpriced their service at a price point too high for that specific market. The result was a real negative for the company’s image after it was repeatedly accused of overcharging an already vulnerable community,” Cassel says.

You really need to do your research, Cassel adds.

“Addressing an underserved market requires careful planning and consideration,” he says. “Sometimes perception isn’t reality. You may think a market is underserved, but careful research may reveal that it is not. Sometimes the consumer just doesn’t really need or want the product.”

4. Ask yourself if your company can make the sacrifices to cater to an underserved market.

You probably will end up spending a lot of money or time, or both, in making underserved markets work out for your business. (Of course, sometimes it’s no picnic trying to make it in an oversaturated market either.)

Chad Rixse is the co-founder of a Seattle-based wealth management firm Millennial Wealth, LLC, which targets millennials.

Obviously, as a group, millennials aren’t underserved at all. But financial advisors and wealth management firms tend to go where the money is. Older adults generally have it; younger adults, not so much.

“It’s been a challenge to be highly profitable early on,” Rixse says, but he thinks it’ll pay off eventually since “this generation is going to be the next great holders of wealth in our nation and somebody will ultimately need to fill the gap that exists. I’m playing the long game here.”

5. Be prepared for other competitors to follow you.

Tres Roeder is the founder and president of Roeder Consulting, a project management and training firm based out of Cleveland. Years ago his consulting firm identified and entered an underserved market, aiming a program to help project managers develop people skills.

Whether project managers lacking people skills is an underserved market may be debatable—it’s definitely a niche market—Roeder makes a great point when he discusses what happens next.

“We had a great run—and we were a key part of a major transformation in our profession, and then everyone else entered the market,” he says.

So if you find that you’ve successfully entered an underserved market, expect to see other competitors follow after you.

“We trademarked a name for our program but found it very difficult to copyright and protect our unique content within the program. The main lesson has been to make sure we are clear on how to protect our investments in new markets. Entrepreneurs see gaps. That’s what we do. But how will you monetize and protect your product or service offering? That’s something you should think through from day one,” Roeder says.

He adds that this year, his company is launching a new service aimed at project leaders. And his company is thinking of ways to handle any competitors in the rearview mirror.

That’s the good and bad thing about being successful at offering products and services to people who have long been ignored. Underserved markets don’t tend to stay underserved for long.

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Growth in Florida private equity firms creating new opportunities for middle market business owners

By James S. Cassel

The recent growth in the number of private equity firms headquartered in Florida and news headlines surrounding ongoing PE activity is piquing the interest of middle-market business owners in selling to or partnering with private equity firms. Further fueling their interest — particularly for those who had envisioned doing this in the coming years — is the awareness that today’s healthy valuations might not last. At the same time, many are uncertain how to position their businesses to seize such opportunities. Following is some insight based on our experience.

The number of PE firms is growing nationwide, particularly in Florida. According to our latest Cassel Salpeter & Co. Private Equity Deal Report, the first half of 2018 saw a record high of 12 new Florida-based PE firms since year-end 2017, and a compound annual growth rate of approximately 13.1 percent from 2010 through the first half of 2018.

These firms come in all shapes and sizes. Some specialize in specific industries, such as technology, healthcare or consumer products. Some do large, middle-market or lower middle-market deals. Some, like Trivest, focus on buying founder/family owned businesses, while others, like Sun Capital Partners, specialize in distressed companies with untapped potential. Firms like H.I.G. Capital have a family of funds, including private equity, growth equity, real estate, debt/credit, lending and biohealth.

Generally, PE firms do not want to run companies. They seek majority stakes where they buy control of companies or they seek significant minority stakes in companies. They want to back strong management teams or put in place new management teams that they consider better positioned to grow and run the companies. PE firms can provide middle-market businesses with valuable support in a variety of areas, including process improvement, sourcing and supply chains, recruitment and human resources initiatives, and mergers and acquisitions assistance.

How can you determine whether selling to or partnering with a PE firm is right? First, make sure you understand your motivations and have confirmed this would be right for your business. Next, do not limit your options to PE firms. You might consider selling to strategic buyers or family offices. A lot depends on what you want to accomplish.

If a PE firm is your best route, then you need to find the best fit for you and your business, based on your specific motivations. Are you selling for estate- planning purposes or to retire? Do you want to take some money off the table or rearrange equity with other family or team members? Do you want growth capital to expand or help develop a growth/acquisition strategy, including support with analysis and sourcing? You might want a PE firm to leverage its relationships on your behalf, bring in capital, or help you restructure your debt. Some family-owned businesses might want help attracting different and/or better management teams.

We always recommend middle-market business owners consider an array of candidates and choose the one offering the right cultural fit and valuation. While the ideal target for a PE firm is a proprietary deal with minimal competition, this may not be best for the business owner. Sometimes, it is best to just deal with one PE firm, but this may affect your ability to maximize value. Running a competitive process is best to maximize value and understand all available options.

When conducting due diligence, speak with sellers or management of companies that the PE firms bought or partnered with and see how everything went. Ask lots of questions.
How do you find the right PE firm? Talking to industry experts, doing research and attending conferences and events is a great place to begin. Some PE firms have calling efforts or industry initiatives and attend events where they seek potential opportunities. It always is best to have an experienced investment banker and attorney assist you and serve as your advocates. Finding the right PE firm and protecting your interests in a deal is an art that requires experience and expertise, and it is critical to have the right professionals in your corner.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle- market companies. jcassel@casselsalpeter.com or via LinkedIn at https://www.linkedin.com/in/jamesscassel.

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Private equity deals, PE-backed companies on the rise in Florida, new report says

By Margie Manning

After a record 2017, private equity deal flow in Florida remained strong in the first half of 2018.

A new report from Cassel Salpeter & Co. shows there were 118 private equity deals in the Sunshine State from Jan. 1 through June 30. That number may go up, the report said, because data reporting generally lags behind actual activity.

There were 145 private equity deals in the first half of 2017, including deals reported after the six-month period ended, the report said.

About 17.8 percent of the private equity deals in the first half of 2018 were in the Tampa Bay area, the report said. More than a third of the total deals, 36.4 percent, were in Southeast Florida. Central Florida had slightly more deals than Tampa Bay (18.6 percent of the total) while southwest Florida and northeast Florida had slightly fewer than Tampa Bay (15.3 percent and 10.2 percent, respectively).

Private equity is a key factor in business growth, said James Cassel, chairman and co-founder of the Miami-based investment banking firm.

Private equity is different than venture capital, Cassel said. Venture capital provides funding for earlier-stage companies and is usually the first institutional money after a round of funding from friends and families and angel investors. Private equity is generally more of a buyout and can be growth oriented or used to turn around a distressed company.

A private equity deal provides an exit strategy for owners, including those who still want to remain involved with their companies, or those who want to give their management teams a chance to partner with private equity investors to get an ownership stake. Private equity investors often bring expertise in management, mergers, recruiting and sourcing production material.

“They bring a depth and breadth the company may not have in its present configuration,” Cassel said.

The report shows the number of Florida companies backed by private equity firms has increased six-fold from 2000. There were 73 private equity-backed companies in Florida in 2000, compared to 449 by June 30, 2018.

“Because Florida is the third-largest state, there should be a fair amount of activity here,” he said.

One reason for more private equity activity is the growth of entrepreneurial initiatives in the Interstate 4 corridor, from Tampa to Orlando.

“Florida has companies that are maturing and as companies grow and mature they get to a point where it’s time for an exit or the next opportunity,” Cassel said.

The report tracked private equity exits for Florida firms. There were 32 private equity exits the first half of 2018, 19 of them corporate acquisitions and 13 of them secondary buyouts.

There’s also an increasing number of private equity investors based in the state. There were 27 private equity firms headquartered in Florida in 2010, and 68 PE firms by June 30, 2018.

In the first half of 2018 alone, there were a dozen new private equity firms opening up shop in Florida, the report said.

There are a couple of reasons for that growth, Cassel said.

“We’re a very tax advantageous state. When firms are considering where they want to be based, Florida and Texas have an advantage over New York, New Jersey, Connecticut and California. It puts 5 percent to 10 percent more in the pocket of principals and general partners,” Cassel said.

In addition, as the market matures, people leave firms to start their own private equity shops, and they don’t need to leave Florida to do that, Cassel said.

That’s what happened when veteran Tampa dealmaker Scott Long left Palm Beach Capital and founded Canopy Capital Partners, a private equity firm focused on the lower middle market. Additionally, Scott Lee, previously a principal at HealthEdge Investment Partners in Tampa, opened a satellite office in Tampa for BelHealth Investment Partners, a New York-based private equity firm.

A strong economy now should keep private equity growth on track, but Cassel said there are a few factors that could derail it: interest rates rising too fast, labor shortages and restrictions on immigration. A smaller pool of potential workers drives up employee pay, he said.

Still, Florida private equity firms are positioned well, he said.

“Florida private equity firms are doing deals all over the country, partnering to make companies better and more efficient, and that gives the companies the ability to grow and survive longer term,” Cassel said.

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