Why Florida is the 5th-best state for entrepreneurs

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By Celia Ampel
December 22, 2014

Florida is one of the best states to start a business, according to a Small Business & Entrepreneurship Council report released this month.

Ranjini Chandirakanthan Director

Ranjini Chandirakanthan Director

The state ranked fifth for its entrepreneur-friendly policies, after South Dakota, Nevada, Texas and Wyoming. The Washington D.C.-based nonpartisan research organization ranked states based on small business-related taxes, regulatory environment and government spending.”From a federal and state tax standpoint, [Florida is] a very attractive place to start businesses, or frankly, to relocate businesses,” said Jim Cassel, chairman and co-founder of Miami investment banking firm Cassel Salpeter & Co.

After all, the state doesn’t take personal income tax, estate tax or inheritance tax — but that’s just one piece of what will draw entrepreneurs to Florida in 2015, Cassel said.

Here are three reasons South Florida entrepreneurship experts believe small businesses will grow here in the coming year:

Venture capital and angel investors are moving in.

This year, venture capital firms Scout Ventures and Richmond Global Ventures opened offices in Miami, demonstrating national and international interest in the South Florida startup scene.
But that’s just the beginning, Florida Venture Forum President Kevin Burgoyne said.

“Just in the last three weeks, I’ve had meetings with four different venture investors who are in the process of opening offices in Miami,” he said.

As more investors set up shop in South Florida, there will be less reason for startups to move outside the state, Burgoyne said.
“There’s always been a little bit of money in South Florida,” he said. “But money that is willing to invest in early- and mid-stage companies often comes from outside the state, and there is an increasing amount of money that is based here in Florida. That’s very encouraging.”

South Florida entrepreneurs have more resources than ever before.

It’s more than just money, said Ranjini Chandirakanthan, who leads the technology practice at Cassel Salpeter & Co. South Florida entrepreneurs have more access to mentorship, workspace and other resources than ever.

“Money, culture [and] access to human capital all make an ecosystem,” she said. “And I think it’s here. For the savvy entrepreneur with a great idea, I think it’s easier to tap into that network here.”
Coworking spaces like the LAB Miami, accelerators such as Venture Hive and scores of other organizations and events have helped change the landscape for local startups, Burgoyne said.

“It really is just remarkable what resources are available — in almost all cases, at little or no cost to an entrepreneur,” he said.

Local universities are training the next generation to think like entrepreneurs.

South Florida’s universities are focusing resources on entrepreneurship through startup resource centers and world-class researchers, Cassel said.

Florida Atlantic University opened its Tech Runway accelerator this year, while Miami Dade College announced plans for its Idea Center.
Opko Health CEO Dr. Phillip Frost has also put his checkbook into recruiting top-notch researchers to the area, Cassel said.

“Unlike LeBron, they really do bring their talents to South Beach and stay,” he said.

Tiger Media Announces Agreement to Acquire Interactive Data, LLC

From: Business Wire

Dec-15-2014 8:00 AM

Publicly traded Media Company to enter U.S. data fusion market
through strategic acquisition

Tiger Media, Inc. (“Tiger Media” or the “Company”) (NYSE MKT: IDI), a
Shanghai-based multi-platform media company, today announced that it has
entered into a definitive agreement to acquire The Best One, Inc.
(“TBO”), parent company of U.S.-based data solutions provider
Interactive Data, LLC (“Interactive Data”) (the “Acquisition”).
Interactive Data is headquartered in Atlanta, GA and has its primary
technology office in Seattle, WA.

Interactive Data’s recently expanded management team has been executing
on an aggressive growth plan in a multi-billion dollar market of risk
management and marketing data solutions. The Acquisition will give the
integrated company a strong foothold in the data fusion industry with a
management team that has helped mold the entire sector.

“As a founding shareholder of Tiger Media, Inc., I am enthusiastic to
enter into the rapidly growing, multi-billion dollar industry of data
fusion,” said Dr. Phillip Frost, CEO and Chairman of OPKO Health, Inc.
(NYSE:OPK), and Tiger Media’s largest beneficial owner. “The
impressive track record of TBO’s management team in building the
dominant companies in this industry speaks for itself, and I believe
this will be a major player in the space.”

Commenting on the Acquisition, Robert Fried, Chairman of Tiger Media
stated, “We are excited to acquire TBO. We were looking for a U.S.
partner who would also be able to expand our China operations. We
believe this Acquisition with TBO will give our shareholders an
excellent opportunity to realize increased value on their investment.”

TBO’s executive leadership represents over half a century of combined
experience in the industry and is led by Chairman Michael Brauser. An
investor and operator in the data fusion market since its infancy, Mr.
Brauser has built market leading companies with revenues totaling over
$2 billion.

Chief Scientific Officer of TBO, Ole Poulsen, was primary systems
architect of the data fusion industry’s leading products. The products
that Mr. Poulsen designed led to the sales of multiple companies
totaling over $1 billion in the aggregate.

Under the terms of the merger agreement, current shareholders of Tiger
Media and TBO will own approximately 34% and 66% of the combined
company, respectively, following the Acquisition. Approximately 65% of
the shares to be issued to TBO shareholders in the Acquisition will be
non-voting preferred stock, and 30% of those shares will only be issued
upon achievement of certain revenue targets. The Acquisition is expected
to close in the first quarter of 2015, is subject to customary
conditions to closing as detailed in the merger agreement, as well as
the affirmative vote of a majority of the outstanding shares of Tiger
Media entitled to vote.

In connection with the Acquisition, Tiger Media will be redomesticating
as a Delaware company. The affirmative vote of 2/3 of the votes cast at
the Tiger Media meeting will be required for domestication in Delaware.
The structure of the transaction will be in the form of an acquisition
with TBO merging into a wholly-owned subsidiary of Tiger Media, with the
Tiger Media subsidiary as the surviving corporation that will now be
headquartered in Atlanta, GA.

Following the Acquisition, Derek Dubner, CEO of TBO, will join Tiger
Media as Co-CEO along with Peter Tan, current CEO of Tiger Media. Robert
Fried will remain Chairman of the Board. Also, following the
Acquisition, Derek Dubner and Daniel MacLachlan will join the Tiger
Media Board, increasing the Tiger Media Board from five members to seven

Cassel Salpeter is acting as financial advisor and Akerman LLP is acting as legal counsel to Tiger Media. Nason Yeager is acting as legal counsel to TBO.

About Tiger Media, Inc.

Tiger Media is a leading Shanghai-based multi-platform media company in
China which provides advertising services in the out-of-home advertising
industry, including iScreen Outdoor LCD screens, billboards and street
furniture. Tiger Media’s network of street level LCD screen displays,
which captivate eye-level awareness, is complemented by outdoor
billboards which are mostly built on rooftops with good visibility from
far distances. Tiger Media’s network attracts advertising clients from a
wide range of industries including telecommunications, insurance and
banking, automobile, electronics and fast moving consumer goods. Learn
more at www.tigermedia.com.

About Interactive Data, LLC
Interactive Data is a data solutions provider, historically delivering
data products and services to the Accounts Receivable Management (ARM)
industry for location and identity verification, legislative compliance
and debt recovery for over a decade. Interactive Data has served a niche
segment of the risk management industry, consisting of collection
agencies, collection law firms, and debt buyers. Interactive Data has
recently expanded the executive leadership team, adding significant
industry experience. Immediate capital infusion drives an enhancement
and broadening of current offerings as well as expansion into new
markets and services. Learn more at www.id-info.com.

This press release contains “forward-looking statements,” as that term
is defined under the Private Securities Litigation Reform Act of 1995
(PSLRA), which statements may be identified by words such as “expects,”
“plans,” “projects,” “will,” “may,” “anticipate,” “believes,” “should,”
“intends,” “estimates,” and other words of similar meaning. Such forward
looking statements include statements about the anticipated benefits of
combining Tiger Media and TBO, expectations for closing the Acquisition,
as well as other non-historical statements about our expectations,
beliefs or intentions regarding our business, technologies and products,
financial condition, strategies or prospects. There are a number of
important factors that could cause actual results or events to differ
materially from those indicated by such forward-looking statements,
including: the ability of each of Tiger Media and TBO to satisfy the
closing conditions and consummate the transaction, including Tiger Media
obtaining the required shareholder approvals; the risk that the business
of TBO may not be integrated successfully; the risk that the transaction
may involve unexpected costs or unexpected liabilities; the risk that
synergies from the transaction may not be fully realized or may take
longer to realize than expected; and the other risks set forth in Tiger
Media’s Annual Report on Form 20-F, filed with the SEC on March 31,
2014, as well as the other factors described in the filings that Tiger
Media makes with the SEC from time to time.
The forward-looking statements contained in this press release speak
only as of the date the statements were made, and we do not undertake
any obligation to update forward-looking statements, except as required
under applicable law. We intend that all forward-looking statements be
subject to the safe-harbor provisions of the PSLRA.

This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote or approval nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any
such jurisdiction. In connection with the proposed Acquisition, Tiger
Media will file with the Securities and Exchange Commission (the “SEC”)
a proxy statement in connection with a Special Meeting of its
IMPORTANT INFORMATION. Shareholders of Tiger Media will be able to
obtain a copy of the proxy statement, as well as other filings
containing information about Tiger Media and TBO, without charge, at the
SEC’s website (www.sec.gov).
Shareholders of Tiger Media may also obtain copies of all documents
filed with the SEC, without charge, by directing a request to Tiger
Media, Inc., ir@tigermedia.com.


Tiger Media and its directors, executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies from Tiger Media shareholders in connection with
the proposed transaction. Information regarding the persons who may,
under the rules of the SEC, be deemed participants in the solicitation
of Tiger Media’s shareholders in connection with the proposed
transaction will be set forth in the proxy statement when it is filed
with the SEC. Also, information about Tiger Media’s directors and
executive officers is set forth in its Notice for Annual General Meeting
of Shareholders, which was filed with the SEC on November 19, 2014, and
its Annual Report on Form 20-F for the year ended December 31, 2013,
filed with the SEC on March 31, 2014, respectively. These documents are
available free of charge at the SEC’s website at www.sec.gov,
or by going to Tiger Media’s Investor Relations page on its corporate
website at www.tigermedia.com.

Hiring, training and managing employees for outstanding results

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By James S. Cassel
Special to the Miami Herald
December 14, 2014


Although most business owners recognize that success depends in great measure on their employees, many do not fully understand how to hire the right team members and train and empower them to perform at their peak.

If you want to build a world-class company that will last, and you rely on human assets to achieve success, it’s important for you to correlate your business goals to the types of team members you need to help you succeed.

For example, this means much more than employing accountants at your accounting firm — it requires identifying your key performance indicators, the quantifiable values and skills that rise and fall with your business success, and making strategic hiring decisions based on these considerations.


If your customers spend more in months when you’re receiving high customer service satisfaction ratings, then you should be hiring team members with phenomenal customer service skills as well as technical knowledge.

In most cases it will not be so obvious, and even when it is, how do you gauge customer service skills based on résumés and interviews? You may be better served to rely on tools such as skills and aptitude tests. There are many to choose from.

For example, Publix is widely renowned for its customer service, and that’s no mistake — when applying for a job there, applicants complete aptitude tests that assess how they might react in different customer service situations. This process determines those applicants who already have certain predilections that correlate with strong service.

For more active or specialized recruiting efforts, keep in mind that your prospects’ personal lives should be compatible with the professional lives they’re expected to maintain. When recruiting managers, directors and C-level executives, watch closely: personal demeanor can typically reveal a good deal about what type of professionals they are. You might consider having dinner with prospects to observe how they treat their spouses or significant others.

Curious about how a potential executive might manage your team? Pay attention to how he or she treats the waiter or his or her significant other in a restaurant. A condescending or overbearing guest in a restaurant is not likely to behave much differently at work, and those kinds of personalities can poison employee sentiment. All it takes is one rude or self-absorbed person with an inch of authority over other team members to create a toxic atmosphere. This rule of thumb has been vouched for by so many CEOs that it’s become known as the Waiter Observation.

Furthermore, create a positive work environment with rewards and incentives that are customized to your team members. Some associates respond best to monetary incentives, and there’s nothing wrong with that. It doesn’t necessarily mean they only care about money, or that they care about what they earn more than they care about doing a good job; in most cases, employees and managers included, salary is correlated with one’s sense of worth on the job. That’s not to say that there are not a variety of ways to incent performance, such as better job titles, internal or external recognition, and gifts. Find out what best motivates your team members to keep them fully engaged.

Pushing for results is not the only way to glean top results. People are most energized when they are able to apply their skills and flourish doing something they know they’re good at and enjoy doing. Training as well as coaching can be worth the time and expenditure. This shows that you care enough to invest in the team’s future.

You need to be in tune with these kinds of aptitudes in order to recognize hidden opportunities to empower your associates. This applies to all roles, from the bottom to the top. An excellent creative director might not necessarily be the best person to manage client relations, to supervise the team or run the whole agency.

Don’t confuse exceptional, role-specific aptitudes with the duties of adjacent roles.

Finally, people work differently. Some are myopic and others are better at multitasking. Some can take a task from start to finish with very little oversight. Others pace when they’re thinking, and others listen to music while they work. Remember, they are all people first, so don’t assume they will all take the same course of action to get the same results. Even Google Maps and MapQuest diverge on some routes, but they’ll both get you to your destination.

One last point. A mis-hire or bad team member needs to go. You do no favor for the team member or your company by procrastinating the termination.

The bottom line is that there are serious dividends to be had from investing the necessary time and resources to more strategically acquire, train and manage what in many businesses is the biggest asset, your team members. While it begins with hiring the right people, internal success depends on how well you manage them over time. If you want your team members to bring more to the table, you owe them more personal consideration than your typical annual review. If they lack the perspective to see how they fit into the big picture, let them know. They will thank you for it, and you will be laying the foundation of a powerful, more potent team capable of supporting your goals.

James 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 can be reached at jcassel@casselsalpeter.com and www.casselsalpeter.com.


Scaling business development to drive growth

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By James S. Cassel
Special to the Miami Herald
November 16, 2014

James Cassel

James Cassel

Sustainable business development is a common challenge for growing businesses, particularly those in the lower and middle markets. Several hallmarks of successful business development and growth strategies have distinguished themselves in my years of experience at Cassel Salpeter. Those hallmarks include clearly defined business development responsibilities and roles; agile, relevant technological solutions (customer relationship management); and consistent sales staff training and benchmarking, among others.

The onus of business development tends to fall to the owners/founders of smaller businesses until the companies have reached a critical threshold. That threshold isn’t clearly delineated, but it could be summarily understood as the point at which the operation of the business and the development of new business are both demanding and granular enough that the roles warrant a “conscious uncoupling.” Whether the responsibility of business development is distributed to a sales team acting under a supervisor, or to a single (or pair) of executives, largely depends on your business model, potential customer base, market size and internal dynamics.

Making matters more complicated, it is often difficult for founders to give up the business development role that they have personally handled for a long time and empower the new people. When the decision is made to delegate business development responsibilities, identifying the right personnel for the role and for your company is mission critical. While there are a plethora of potential sources to utilize when searching for strong talent, many businesses take one of several routes: relying on a current team member who can be cultivated into the role, recruiting from a competitor, or recruiting from an organization that meticulously trains its sales people. If you choose the latter, be mindful that your candidates’ organizational training is compatible with your business, goals, scope and scale.

Selecting who steers your ship is only the beginning of a robust business development program. The value of a lead will be determined by your business model, but whether you can get leads for a penny or a pound, how will your team begin qualifying, managing and screening leads? As far as customer relationship management solutions, SalesForce is a multi-industry favorite, but there may be value in a proprietary or modified CRM solution. It’s important to keep in mind that while these technologies and platforms seem brimming with bells and whistles, you’re buying a product off the shelf, and it may not fit as well as a tailored CRM solution might.

Whether you recruit or promote from within, providing ongoing mentoring, training and development opportunities will greatly enhance a successful business development program. You may decide to create an internal training process unique to the needs of your organization, or you may send your sales team to conferences like DreamForce, the SalesForce annual conference responsible for virtually shutting down the streets of San Francisco this past October with an attendee count that pushed above 130,000. It is just one of the many programs available today.

Recruiting, hiring and training your sales team is no small task for any busy, buzzing organization, but it’s crucial to see these necessary steps as an opportunity to refine your own lead management and business cultivation processes so that your newly minted sales force isn’t inheriting a broken or outdated system. Revisit your client or customer identification methods and hard-bake best practices for accessing them into your training processes. Consider your business model — if you’re selling products as opposed to selling services, your sales strategy is likely taking a different tack.

If you’re selling products, remember that distribution does not necessarily equal sales. For example, if you own a liquor company, getting your product distributed by Southern Wine & Spirits might not necessarily be huge for sales. You will still have to close the sales loop through promotions and activations, branding and awareness campaigns, otherwise your bottles are going to gather dust and eventually the person who manages inventory is going to notice that those bottles aren’t moving and may decide to replace your product with one that’s more likely to fly off the shelf.

Finally, and most importantly, stay focused on your business objectives. If you are scaling your distribution to include the likes of the Walmarts or Saks Fifth Avenues of the world, it should be because placement in those retailers will drive sales. Obtaining those distribution routes for vanity will only disappoint you and the retailers with whom you’re working.

These hallmarks of good business development are by no means exhaustive or all-encompassing, and seasoned veterans will tell you scaling business development presents unique obstacles and opportunities for every business. There are no purple pills or cookie-cutter approaches. The right solution for you depends on your business model, your industry and your organization. By taking the time to consult qualified professionals and develop the right plans and processes, you can significantly increase your chances of achieving your business goals.

James Cassel is co-founder and chairman of Cassel Salpeter & Co., an investment-banking firm with headquarters in Miami that works with middle-market companies. www.casselsalpeter.com or jcassel@casselsalpeter.com.


iOS Health Systems

Talking Turkey about Networking, Outside Investors, & Education

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By Jim Fried

November 2014

This month our show had some awesome guests.

Ivan Misner, the Founder and Chairman of BNI – the world’s largest networking organization – was fascinating. He’s often called the father of modern networking.

We discussed mindfulness and networking – being present while you are meeting someone in a networking situation. I sometimes have jitters when I am anticipating an important event. The jitters melt away when I shake the first hand. Ivan mentioned that this is common and that many people have a problem focusing during networking. Their eyes jump around the room looking for the next person to meet. I find myself doing that and simply apologize to the person I am speaking with.

Ivan also mention that it’s a good idea to make sure the back of your card is easy for people to write on. He likes to take notes on the back of the business card as soon as he meets somebody. I do the same thing. Ivan had some other great networking tips as well. You may want to check out his interview on my website.

Another great guest this month was James Cassel. He is the chairman and co-founder of Screen Shot 2014-12-08 at 6.23.03 PMCassel Salpeter & Co. a Miami-based mid-market investment banking firm.

We discussed how to fund of the growth of your midsize company. There are many businesses based in Miami that are family run that need outside growth capital. James discussed what outside investors are looking for and what the business owners could expect when they took their company to market. Solid historic cash flow and the ability to execute a business plan going forward are two of the keys.

Our discussion also touched on the current state of the financial markets as it relates to bank financing for closely held mid-size companies. Cassel said lending is still tight, but community banks are leading the way in trying to loosen things up.

I round out this month’s review with Dr. Joe Glover, who is the provost at the University of Florida. That makes him second-in-command at the state’s flagship university.

We talked about the University of Florida’s preeminence campaign. It is focused on raising dollars to take the University of Florida to the top of the public university field. Joe started out as a mathematics professor and worked his way up to Provost. As the world becomes more competitive it becomes increasingly important for Florida to have a university that’s ranked at the top. The Florida Legislature recognizes this and is funding an intensive Preeminence program for UF as it races to the top.

Joe and his team are enhancing programs ranging from the impact of big data to creative writing. Joe was fascinating but what’s going on at UF is even more interesting.

It was truly a month of great interviews.


IOS Health Systems has been acquired by Intermedix Corp.

  • Background: Headquartered in Miami, FL, IOS Health Systems is a leading innovator of cloud-based medical practice software platforms marketed under the Medios® brand. All of IOS’ products are provided as a Software as a Service (“SaaS”) offering and are fully integrated to address every aspect of the physician practice including clinical, financial, and patient engagement, by providing innovative solutions that enhance the way these organizations create, interact, and access health information technology.
  • Cassel Salpeter:
    • Served as exclusive financial advisor to the Company
    • Ran a competitive sales process, identifying and contacting over 100 strategic and financial parties
    • Provided assistance throughout all phases of the sales process, due diligence, and auction through closing
  • Challenges:
    • Successfully monetizing intellectual property and technology in the sales price
    • Navigation through three different technology audits in addition to the financial and operational due diligence
  • Outcome: In November 2014, IOS Health Systems, Inc. was sold to Intermedix Corp., a Fort Lauderdale, FL based healthcare services and solutions company, owned by Thomas H. Lee Partners.

James Cassel: Business Capital Options

James Cassel, co-founder and chairman of investment banking firm Cassel Salpeter & Co., LLC, recently met with columnist and radio host Jim Fried to talk about how mid-sized companies can locate and access capital to grow their businesses. The taped segment was featured on Miami radio station 880 AM “The Biz” and can be listened to by clicking the media player below.

IPO’s: To go public or not to go public, that is the question

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By James S. Cassel

Special to the Miami Herald

October 19, 2014

James Cassel

James Cassel

Everyone knows initial public offerings can flood company coffers with cash, make people wealthy, and based on my experience in investment banking, I often get asked the following question by middle-market and growth-company business owners: “Should I take my company public?”

Fact is, in recent years being public has become much tougher as a result of increased regulations requiring tremendous disclosure and compliance with the Sarbanes-Oxley Act as well as other rules and regulations. For public companies, keeping up with compliance requirements alone can cost hundreds of thousands of dollars per year. Moreover, the required disclosure could give information to your competitors that you might not want them to have. So, as you would do with any major business decision, you should carefully weigh the pros and cons to make sure this is the right step for you as well as your company.

Here is some general advice I have found to help business owners as they begin to navigate these important questions.

Although the decision-making process that precipitates a business going public is thorough and multifaceted, it can generally be boiled down to one or more of these four considerations: to raise cash for general or specific business purposes to spur growth; to have a public currency for acquisitions; to provide liquidity for current shareholders; and to use the public currency and options to recruit, incentivize and retain employees.

There also are other intangible but equally valuable benefits, such as credibility.

A successful public offering is considered a major milestone and achievement for a company. It can create a sense of corporate stability and strength. An IPO, particularly if it gets positive media coverage, also can create good “conversational capital” for companies in terms of putting them in the limelight and making them more top-of-mind among key audiences. Depending on the type of company you own, this could be very good for your business.

A Deloitte survey conducted by OnResearch, a market research firm, polled 509 executives from March through April 2014 at U.S. mid-sized companies about their expectations and plans for becoming more competitive in today’s economic environment. Of these, 8 percent said they were likely to go public in the next 12 months (twice the number recorded in the fall) and cited the following reasons for doing so: broader exposure for their brands and products (36 percent); the cost-effectiveness of equity capital (35 percent); the desire to provide liquidity for owners (34 percent); and the need for capital to fuel growth (33 percent).

According to the survey, the most common reason private companies would want to stay privately owned is the need to control or have greater flexibility in spending, which was cited by almost three-quarters of the respondents. Other reasons for wanting to stay privately owned include: the size of the organization (too small to consider an IPO); the desire to keep financial information private; and concerns about compliance with the strict regulatory requirements of being public.

How do companies go public? Though there are other avenues, companies go public primarily through an IPO or by merging with an existing company in a reverse merger. In some cases, this can be accomplished through a shell company that may or may not have cash, although that may not be the preferred way to go depending on the circumstances. Every situation is different, so it’s up to the parties to confirm whether they are getting the value they are looking for and whether there is a liquid market for stock of the company.

Bear in mind, there are all sizes of underwriters, and not every business goes public through firms like Goldman Sachs or Citigroup. Many notable middle-market investment banking firms have similar expertise for smaller offerings, such as Ladenburg Thalmann, with headquarters in Miami, Noble Investments in Boca Raton, and Maxim or Aegis Capital Corp. in New York City, to name a few.

Each might look at different size offerings and each may have a different industry focus.

While the costs of going public are as voluminous and complex as the reasons, a few stand out as unavoidable and considerable expenses. Chief among those are legal expenses, accounting fees and investment banking fees as well as the internal costs of manpower. Many of these costs are ongoing. So in addition to the upfront costs of going public, there are costs of staying public that businesses incur when they make this transition. The rigors of the IPO regulatory process require tremendous disclosure and require much time and attention. The costs of staying in compliance can easily run from several hundred thousand to more than a million dollars per year in additional expenses.

With this in mind, it’s crucial that companies approach going public with a clear picture and realistic expectations. In an ideal world, companies should spend time working with a financial advisor with experience in public offerings to evaluate the offering options that might be available as well as the most appropriate parties to consider working with. There is no linear path to a public offering, but intelligent planning and forethought can make navigating the process more manageable for companies of any size and help ensure they minimize the obstacles and maximize the benefits.

James 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 can be reached at jcassel@casselsalpeter.com and www.casselsalpeter.com

The Certainty Cash M&A Offers in a Volatile Market

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By Robert Barba

October 16, 2014 

Last week’s conservatism can become this week’s wise move in bank M&A. Take Greater Sacramento Bancorp, the holding company of the $468 million-asset Bank of Sacramento, which on Wednesday announced plans to sell itself to AmericanWest Bancorp in Spokane, Wash., for $60 million — in cash.

“Cash looks far better right now. Stocks go back and forth and our board made the decision that it was of the attitude that ‘cash is cash,'” William Martin, president and chief executive of Greater Sacramento, said Thursday, the most intense day of a weeklong stock market slide. “You know what you’re getting.”

That attitude had become passé until recently. So much of the M&A activity of the past couple of years has been predicated on the market’s treatment of bank stocks. Sellers could be sold on the upside potential of taking another bank’s supposedly undervalued stock as a consolation for a low premium. As the rally matured, banks with high-flying stock multiples had the type of currency where they could offer sellers a decent price without incurring too much dilution.

But the recent market volatility is a reminder that cash offers, despite their lack of potential upside and real tax implications, can provide a sense of certainty that stock deals cannot.

The Greater Sacramento deal has been in the works for more than a year, long before the market falloff of the past week, but persistent volatility contributed to the company’s decision to take a cash offer, Martin said. Bank stocks rose roughly 40% last year and the board just could not buy into the idea that there was still more room for them to go up.

“We had a couple of stock offers, but we were very nervous in some of the stock that was offered,” Martin said. “They were high-flying and we wondered how much can it continue to go up? It can’t happen forever.”

More sellers may start to share that view, says James Cassel, chairman and co-founder of Miami investment banking firm Cassel Salpeter.

“It all depends on how you perceive the buyer. Is its stock undervalued, fairly valued or overvalued?” Cassel said. “You might have a great opportunity if it is undervalued or fairly valued, but some of the bank stocks that we thought maybe had some upside have shown us recently that maybe they didn’t.”

AmericanWest is paying Greater Sacramento shareholders 152% of the seller’s tangible book value, or $22.05 per share. The price is high — the average price paid in the third quarter was 128% — but worth it, said Scott Kisting, the CEO of AmericanWest. The deal fleshes out the company’s presence in northern California, where it currently encircles Sacramento. It will also push the bank’s assets to roughly $4.5 billion, with $1 billion in northern California.

The above-average premium “is what it took to do the deal,” Kisting said in an interview on Wednesday. “But we expect it be accretive in the first year — very accretive — and will cover our one-time merger costs.”

AmericanWest is the bank unit of SKBHC Holdings, a private-equity-backed entity formed in 2010 with $750 million in capital; SKBHC bought AmericanWest in a bankruptcy auction. Since then, the company has announced eight other acquisitions, including the Sacramento deal, and has tapped $485 million of the capital. Its last deal, for the $1.2 billion-asset PremierWest in Medford, Ore., was completed in April 2013.

The company took some time away from M&A to focus on the PremierWest deal, but Kisting said he returned to a much more difficult M&A environment. The company has been on the prowl but has been beaten out on several occasions by buyers with rich stock premiums.

“We’ve been looking, but as a cash buyer it is harder,” Kisting said.

His comments echo the problem several of the roll-up vehicles around the country are experiencing. The number of bank failures did not live up to expectations, and healthy sellers have often favored stock. Even those companies that have gone public are struggling to do deals because their stocks are not trading at the same multiple as more established buyers.

But Kisting returns to the idea that when the market gets topsy-turvy, cash suddenly looks better.

“When volatility goes up and down the certainty of cash has a huge advantage,” he said.