Does Your Company Need a Research and Development Team?

If you’re a big company that depends on growth and finding new revenue streams, it can be very important to have one. Read on to learn what goes into building a research and development wing in your business.

By Geoff Williams

Do you think your business needs a research and development department? That may be a sign that it’s time you started one—or at least started seriously thinking about it.

After all, if your company sells products and services, those products and services aren’t going to materialize out of thin air. You may need to devote money, time and resources to inventing them.

So if you’re exploring the idea of starting an R&D department, you may want to consider trying these steps.

1. Think about the size and scope of your research and development department.

According to brand consultant Peter Friederichsen, having some sort of research and development department can be beneficial. (Friederichsen is also partner at the Blake Project, a brand strategy consultancy headquartered in Westlake Village, California.)

“[Management consultant and author] Peter Drucker once observed that the only purpose of business is to create a customer,” he says, “therefore the two most important functions a business has are marketing and innovation. The rest is just overhead. So every business needs R&D to some degree in order to continue to innovate.”

Research and development can certainly be vital to the health of some companies. These companies use their departments to create products and services that can end up generating millions, if not more, in new revenue. If it wasn’t so important, companies wouldn’t invest as much as they do in R&D.

According to the data gathered by financial research company FactSet and supplied by a FactSet representative, spent the most on R&D in 2017: $16.1 billion. Plenty of other firms are spending billions, too: Intel spent $12.7 billion on R&D, while Microsoft spent $12.3, Johnson & Johnson, $9 billion and Ford, $7 billion.

If you own a small accounting firm staffed with three accountants, you might not be in the position to hire another two or three people to run a research and development team, much less spend billions on R&D. But you can still could devote some time and money to R&D.

There are plenty of informal ways of having a research and development team.

In the example of the small accounting firm, that can look like:

  • staying on top of customer trends, by, say, attending an industry conference once a year.
  • discussing with your employees once a month how customers and trends are changing.
  • collecting and organizing feedback from your customers.

“Every business should consider R&D,” says James Cassel, co-founder of the investment banking firm Cassel Salpeter, based out of Miami. “Even a company like a restaurant might want to develop new recipes or technology to better operate, innovate or simply cut its costs.”

2. Ask yourself how much funding you want to devote to your R&D.

“Different categories have different needs for R&D,” Friederichsen says. “Obviously electronics, technology or pharmaceuticals will always have a greater need than many other categories and will spend more against that in their business plan.”

Marketing can be a form of research and development, if you’re using marketing dollars to learn more about your consumer (think: focus groups).

“Small companies should allocate at least 1 to 2 percent of their marketing budget against ongoing research to their target, to make sure they stay on target and are aware of and addressing changing needs of their customers,” he suggests.

But there really isn’t a formula to help you determine how much your company should spend on research and development.

“Every business is different, and different industries can afford varying amounts,” Cassel says. “There are no given set of numbers that will fit every circumstance as to how many people or how much money a company should spend towards R&D.

“The important point,” he continues, “is to spend on it and not be left behind. Companies need to innovate, and they shouldn’t need to go outside the company to buy or license everything they need.”

3. Check with your tax accountant.

You may be eligible for the research and development tax credit, also known as the research and experimentation tax credit, which has been around since 1981.

According to the HR technology and payroll firm Gusto, which analyzed over 60,000 businesses from June 15, 2017 to April 16, 2018, the average federal R&D tax credit claim for Gusto customers was $31,890.

The same report also noted that while tech companies are the top claimants of the federal R&D tax credit on Gusto’s platform, numerous non-tech firms also routinely claim the credit, such as furniture stores and wholesalers.

Interested in the credit, but aren’t sure you qualify? Take heart: You don’t need an official research and development department to get the credit.

“The research and experimentation tax credit is a general business tax credit for companies that spend resources on research and development costs in the United States,” says Paul Joseph, a certified public accountant at Joseph & Joseph Tax and Payroll in Williamston, Michigan.

“There are a number of exclusions to the research and development credit and each individual company may qualify for the general tax credit,” he continues, “however, you should consult with a tax professional to determine whether or not an exclusion applies.”

That’s a good idea. There’s a special formula involved to come up with the dollar amount for the credit, which includes wages, cost of supplies, your overhead and other expenses. Unless you own a tax accounting firm and are an expert on these sorts of things, you may want a tax accountant or software to help guide your credit claim.

4. Make sure your R&D’s goals are identifiable and measurable.

As Nancy Shenker, CEO of theONswitch, a marketing firm in Scottsdale, Arizona, says, “You need to define what research means for your organization. Understanding and tracking trends or competition? Analyzing your current customer base?… Knowing what questions you’re asking, and why, is the first and most important step.”

Whatever your goals are, it’s important to make sure the people running research and development have a mission. It’s easy for a team to lose focus when a lot of time is spent brainstorming and being told, “Hey, if you fail, that’s okay, because it’s all part of the experimentation process.”

Don’t misunderstand: All of that encouragement—and being fine with ideas flopping—can be helpful. After all, a research and development team needs to take creative risks to come up with useful ideas; failure and a lot of dead ends and false starts are often part of the innovation process.

That said…”Hold R&D as accountable as every other department,” says Jan Bednar, CEO of ShipMonk, a fulfillment and shipping company based in Deerfield Beach, Florida.

“Obviously, R&D has different KPIs [key performance indicators] than your marketing, sales or customer support departments, but the team still updates me on their progress weekly along with every other department,” Bednar says. “This way, we can eliminate navel-gazing and ensure that we are moving forward towards the path to long-term solutions.”

It’s all too easy to imagine your research and development department as a place where money and time go to die. But as you saw earlier, some of the biggest and most successful companies generally have people working on R&D. If you’re able to create a successful research and development department, someday you may wonder how your company managed without one.

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40 Under 40 Class of 2018 reveal Part 3: Here are the next 10

By Emon Reiser

Philip Cassel Director Cassel Salpeter & Co.

Here it is: The third installment of the South Florida Business Journal’s 2018 Class of 40 Under 40 honorees.

This year, we are announcing the honorees in four installments. We announced the first 10 on June 22the second 10 on June 25 and will reveal the final 10 on June 27. Honorees are revealed in random order.

See the third set of 10 honorees in the gallery above.

SFBJ received hundreds of nominations for our 40 Under 40 program.

The 40 Under 40 Awards recognize young professionals in Broward, Miami-Dade and Palm Beach counties for outstanding success and contributions to their community. They were selected from hundreds of nominations and represent some the region’s most entrepreneurial and influential young leaders.

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Cassel Salpeter & Co. Secures Senior Debt Financing for Lakewood Organics

Cassel Salpeter & Co., LLC, a middle-market investment banking firm providing merger, acquisition, divestiture and corporate finance services, represented Florida Bottling, Inc. d/b/a Lakewood Organics (“Lakewood”) in securing senior debt financing from Fifth Third Bank. The financing will support numerous growth initiatives.

Lakewood, based in Miami, FL, is an independent family juice company bottling a diverse line of pure organic and premium fruit juice products. The Lakewood story began in 1935 with its founder, Fred Fuhrman, and a small fresh fruit facility in the Allapattah neighborhood of Miami from which Fred would deliver fruits and juices to the hotels on Miami Beach. From that modest beginning, Lakewood has expanded its distribution across the U.S. and dozens of countries. Fred’s son, Thomas, took over from his father in the late 1970’s and pioneered Lakewood’s trademark “Fresh Pressed” line of not-from-concentrate juices. Fred’s grandson, Scott Fuhrman, eventually took the reins from Thomas and currently serves as Chairman and Chief Executive Officer. Scott’s three daughters – Eleanor, Amelia, and Penelope – are the fourth generation of Lakewood ownership. The Fuhrman family takes great pride in being a responsible steward of the Lakewood brand, and holds true to its mission to provide the best quality juices to its customers.

Cassel Salpeter advised Lakewood in evaluating its financing options and provided assistance throughout the due diligence and closing process. Cassel Salpeter Director Philip Cassel led the assignment. Cassel has years of experience helping quality, middle-market businesses raise capital and complete mergers and acquisitions.

Lakewood’s Chairman and Chief Executive Officer Scott Fuhrman said: “I am grateful for the good advice and guidance that Cassel Salpeter provided in connection with the financing transaction. The financing will support numerous growth initiatives to capitalize on the fast-growing organic shelf space.”

About Cassel Salpeter & Co.

Cassel Salpeter & Co., LLC is an independent investment banking firm that provides advice to middle market and emerging growth companies in the U.S. and worldwide. Together, the firm’s professionals have experience providing private and public companies with a broad spectrum of investment banking and financial advisory services, including: mergers and acquisitions; equity and debt capital raises; fairness and solvency opinions; valuations; and restructurings, such as 363 sales and plans of reorganization. Co-founded by James Cassel and Scott Salpeter, the firm provides objective, unbiased, results-focused services that clients need to achieve their goals. Personally involved at every stage of all engagements, the firm’s senior professionals have forged relationships and completed hundreds of transactions and assignments nationwide. The firm’s headquarters are in Miami. Member FINRA and SIPC. More information is available at

About Lakewood Organics  

Lakewood, based in Miami, FL, is an independent family juice company bottling a diverse line of pure organic and premium fruit juice products. The Lakewood story began in 1935 with its founder, Fred Fuhrman, and a small fresh fruit facility in the Allapattah neighborhood of Miami from which Fred would deliver fruits and juices to the hotels on Miami Beach. From that modest beginning, Lakewood has expanded its distribution across the U.S. and dozens of countries. Fred’s son, Thomas, took over from his father in the late 1970’s and pioneered Lakewood’s trademark “Fresh Pressed” line of not-from-concentrate juices. Fred’s grandson, Scott Fuhrman, eventually took the reins from Thomas and currently serves as Chairman & CEO. Scott’s three daughters – Eleanor,  Amelia, and Penelope – are the 4th generation of Lakewood ownership. The Fuhrman family takes great pride in being a responsible steward of the Lakewood brand, and holds true to its mission to provide the best quality juices to its customers.

Is the decline in truth, accountability in Washington lowering standards for ethics in middle-market businesses?

By James S. Cassel

As the definition of truthfulness and the standards for personal accountability continue to decline in our nation’s capital, and many do not seem to care, are similar patterns trickling into middle-market businesses? Is it becoming more acceptable to have 50 shades of truth in business dealings?

Recent news reports of comments by 60 Minutes correspondent Lesley Stahl that President Donald Trump admitted to attacking the media to “discredit” journalists and minimize negative stories about himself are making these questions more pressing today. With our President publicly calling one of the leaders of our closest allies “dishonest,” who would have thought? Further intensifying matters, others around the President are reportedly following suit. Sometimes, after they learn what they said is not true, they seemingly fail to acknowledge or rectify their mistakes. They even double down! One wonders how anyone doing this could sleep at night. What lessons are our children learning?

It seems that years back the traditional values of integrity and honesty were more important than today, which is quite sad. Where is Honest Abe when we need him?

So, what should we do if we catch employees telling half-truths, some of which we know are deliberately fudged or outright lies? I never would have imagined myself having to dedicate a column to a topic that should be common sense, but unfortunately our nation’s current state of affairs leaves me no choice.

First, let us be clear: Our word should be paramount. It is not OK to be dishonest, lie or misrepresent the truth in any way. Honesty in business dealings starts at the top of a company and is set by example.

If one of our employees did to us what some members of our current administration are doing, would we give a warning or fire him or her outright? Of course, before doing anything, we should check with our human resources departments and legal counsel to help ensure we take the appropriate corrective measures to not create exposure or liability.

As it pertains to our clients: Is it OK for employees to make promises they know they cannot deliver? Is there a distinction between when they are lying to themselves versus lying to us or our clients? Simply put, any form of misrepresentation or alteration of the truth to clients is never acceptable. No matter how difficult, it is always best to deal with others with honesty, transparency and authenticity. In addition to it being the ethical and moral thing to do, it is also good for business — because ultimately, people find out and their trust in us deteriorates or is irreparably lost, which will hurt our business.

There is a big difference between a mistake and a lie. How should mistakes be handled? Again, it goes back to traditional values: Take ownership, apologize and do whatever is necessary to fix the problem and prevent it from happening again. Taking ownership and apologizing defuses the situation and helps us retain something priceless: our reputation and credibility. Additionally, in the event of a serious misrepresentation, including one that might involve criminal offenses, proactively taking the right steps such as immediately seeking legal counsel and notifying the authorities can reduce the penalties and/or jail time. The news is riddled with examples of high-profile business leaders brought down by wrongful acts that were further intensified by attempted cover-ups.

Without a doubt, as social media and sites like Glassdoor continue to put businesses in a glass house, it is critical to dress the part and follow the right protocols.

Regardless of what may be happening in our government, business owners should always do the right thing and heed the wise words of our mothers who told us that “honesty is the best policy.”

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19 Small Business Trends and Predictions for 2018

By Adam C. Uzialko

As we near the end of the second quarter of 2018, it’s important to take stock of how the year has panned out for businesses. Whether in the realms of technology, marketing, finance or public policy, this year has held some unexpected developments, as well as the continuation of some ongoing trends. Where do we stand today, and where might we be heading tomorrow?

Business News Daily got in touch to find out some of the major things on businesses’ radars. Here are 19 key ideas, trends, and predictions to keep in mind to make the most of the second half of 2018, for both your business and your customers.

Technology and cybersecurity

A shift in IT spending: “A significant number of enterprises will begin to invest in a dedicated security operations center as part of the shift away from prevention towards detection and response … Hybrid security offerings combining on-premise and SaaS/Cloud solutions will become the dominant architecture with customers beginning to integrate these offerings.” – Prakash Nagpal, vice president of Infoblox.

The rise of the sharing economy: “Digitization and the sharing economy will disrupt more industries. Already, retail (Amazon), automotive (Uber and Zipcar), and the server market (Google, Amazon) have been disrupted – and we have had two years without another major industry being disrupted. Given this, financial services and healthcare are ripe for disruption.” – Prakash Nagpal

Marketing and advertising

The personalization of marketing: “Marketing is becoming increasingly personal, and this trend will keep going as we move into the new year. No longer will stock images, generic nurturing campaigns, or impersonal calls to action convince consumers. In order to succeed, you’ll have to provide high- value and personalized content every step of the way.” – Harrison Doan, director of analytics at Saatva.

Modern marketing tools make personalization possible: “While email marketing has traditionally been a one-to-many medium, it’s a great example of this trend being brought to life as we continue to see an increased focus on more customized messaging. A major catalyst behind this shift toward one-to- one has been advances in personalization technology, especially click segmentation. Personalizing email marketing is especially valuable because small businesses often have a variety of products, yet not every offering will necessarily appeal to every customer on an email list.” – Dave Charest, director of content marketing at Constant Contact

AI will emerge as a critical marketing tool: “In the past executives may have tinkered with AI to schedule their calendars, but 2018 will see the end of the experimental phase and the beginning of applying artificial intelligence to solve the most soul-crushing marketing problems. For example, conversational AI companies like Conversica will make it possible for PR companies to harness conversational AI for lead nurturing and finding new clients. CRM companies like Helpshift will streamline customer service. AI however will not replace traditional media relations. Journalists deserve a human touch that AI will not yet be able to mimic.” – Curtis Sparrer, principal at Bospar PR

Social advertising will become more competitive: “For paid social ads in Facebook, the 2018 landscape will continue to get far more competitive. Facebook advertising is still in its ‘Golden Age,’ but the company is growing the number of advertisers at a very rapid pace. While large companies jumped on the Facebook ad bandwagon some time ago, there is significant long-tail growth among SMBs which still have not embraced Facebook ads fully and the vast majority are not advertising there. The end result of this, Facebook will continue to accelerate the number of advertisers it has with SMBs and CPM and CPC costs will rise for all Facebook advertisers.” – Toby Danylchuk, co- founder of 39 Celsius Web Marketing

There will be growth in small business cross-channel marketing: ” Very few small businesses today do any sort of cross-channel strategic advertising. Many owners even have separate vendors for Facebook, Google, web content, web maintenance, etc. Large brands do this rather well, and I believe … we will see small businesses utilizing integrated strategies – and these small businesses will outperform their competitors.” – Bil Gaines, digital marketing director of Custom Creatives


The economy is doing well, but tariffs create uncertainty: “The economy is in very good shape right now. It appears that we can absorb two or three more quarter-point interest rate hikes before year-end without any great material negative effect. However, the uncertainty around tariffs and the impending trade war could change that outlook.” – James Cassel, co-founder and chairman of Cassel Salpeter investment banking firm

The deficit must be addressed: “At present, nobody is talking about the deficit. With the recent tax cut increasing the deficit substantially, the increased borrowing needed to fund the deficit will ultimately become a problem. To reduce the deficit going forward, either taxes will have to increase, or alternatively, expenses will have to be reduced.” – James Cassel

Banking models will begin a radical shift: “Millennials want to bank wherever they want and whenever they want, which does not align with the traditional banking model. It’s predicted that digital banking will grow to more than 2 billion users by 2020. As a result of this shift, the traditional brick-and-mortar banking solution will be replaced with a technology first- mindset. In essence, your wallet will be your phone.” – Dave Mitchell, president of NYMBUS

Speed is key in modern banking: “The banking channel will strive for speed. Lending, banking services, statement processing and other banking channel players are scrambling to get online and get faster. We expect the scramble to continue as the industry seeks to eliminate middle men – like brokers – and better serve their customers.” – Vernon Tirey, co-founder and CEO of LeaseQ

Mobile banking means more mobile cyberattacks: “All are experiencing a big increase in attacks on their mobile banking and transactions. Expect that to continue. Approximately 80 percent of financial institutions’ customers are doing online banking, 50 percent are on mobile and that’s growing. More customers equals more opportunity for attacks.” – John Gunn, CMO of OneSpan

Artificial intelligence and machine learning

Machine learning and Blockchain will grow more prominent: “Two of the most interesting IoT developments to emerge [recently], with the most potential for innovation, were blockchain and machine learning. They likely won’t go straight to market … [this] year – we’ll likely see more proofs of concept instead – but, we have seen some fascinating PoCs already.” – Mike Bell, chief technology officer of Laird

Machine learning will become more responsive in customer service: “Machine learning will play a bigger role in sales and customer support. Lower costs and increased availability of speech analytics tools mean more businesses will record and monitor calls within their contact centers. Instead of simply guiding callers through prompts, speech analytics will help to categorize them and analyze responses in terms of what you say and how you say it. Insights like these will be used to guide agents, in real time, to get the best results from each interaction.” – Chad Hart, principal consultant at

AI implementation will help business capitalize on large troves of data: “Although discussions on the topic of data may not be new, until now most business have been focused on forming teams and building data pipelines, but the data itself has not produced much disruption. With the right people and tools in place, companies can now focus on using data to drive growth. Companies will look to incorporate artificial intelligence (AI) to gain a competitive edge.” – Jennifer Shin, founder and chief data scientist of 8 Path Solutions

The Internet of Things

IoT cyberattacks will become more common: “There will be an increase of random IoT hacks and attacks because the tools are easy to find and use, and also because of all the unsecured IoT devices – Gartner says there [were] 8 billion connected things in 2017 and expects 20 billion connected devices by 2020. Anyone can go onto the dark web and start using available malware code, not to mention the readily available services such as hacking, malware- and ransomware-as-a-service, which can all be hired for next to nothing. It’s very easy these days for someone with little knowledge to launch a sophisticated attack, and there’s clear financial incentive – in the last three years, business email compromise alone made $5.3 billion.” – Christian Vezina, CISO at VASCO Data Security

IoT devices will become more secure: “Expect to see at least two or three large-scale, botnet-style attacks on IoT-related hardware. To remedy this, the industrial space may pick up a trend from the consumer space, where device updates are downloaded automatically, and give the user little say in the process.” – Mike Bell

The modern workplace

The evolution of the workplace: “The physical workspace as we know it today is going to significantly change next year as businesses start to get smart about how they use space to drive productivity and adapt to new employee behaviors and tech tools. Large companies will also look to reduce their real estate commitments and move more to flex desk options as more employees work away from the office, while being connected to it by making use of better tools that help them do their work more effectively.” – Craig Walker

Workplaces will unveil bolstered anti-harassment policies: “With such a magnifying glass being put on men’s behavior in the workplace, [2018] is going to see a lot of anti-sexual harassment training in workplaces, as well as anti-harassment policies being beefed up.” – Rob Swystun, business communication specialist


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Aerospace and defense M&A will soar, says Cassel Salpeter

By Keith Button

Sky high

Factos driving Aerospace M&A

  • Global passenger air traffic growth
  • U.S. tax reform and defense spending
  • Historically low cost of capital
  • Increased competition throughout sector

Aircraft and aircraft parts companies–including maintenance, repair and overhaul businesses–will feed a strong environment for middle-market deal making in aerospace and defense in 2018, according to new report from a Miami investment bank.

Cassel Salpeter & Co., which chiefly advises middle-market sellers in the sector, predicts in its Aviation Investment Banking Q1 2018 Update that tax reform and increased defense spending in the U.S. will help boost overall aerospace and defense M&A. Robust new jet plane orders and parts manufactured for those new planes will also contribute.

The key driver for the entire sector is the global increase in commercial passenger plane travel, says Joseph Smith, director, aviation services for Cassel Salpeter. According to the International Air Transport Association, passenger air traffic increased 7.6 percent in 2017, well above the 10-year average annual growth rate of 5.5 percent.

While the epicenter of the air traffic growth is in Asia, the effects are felt worldwide. The growth is fueling not only new passenger plane orders for Boeing Co. (NYSE: BA) and Airbus at the top of the food chain, but also business for the smaller maintenance, repair and overhaul companies— especially on engines; parts manufacturers, suppliers and distributors; providers of pilot flight simulators; airplane leasing companies; and secondary-market aircraft sales, repair and parts companies, Smith says.

“There are so many different levels and sublevels to the aviation/transportation supply chain marketplace,” Smith says. “It’s really very exciting from a growth driver perspective.”

The market for cargo planes—typically refurbished, middle-aged passenger planes–has also tightened recently with Amazon gobbling up aircraft to build its own fleet, in addition to demand from the traditional carriers like FedEx Corp. (NYSE: FDX), DHL and UPS (NYSE: UPS), Smith says.

Generally in the aerospace and defense M&A space, companies with Ebitda of more than $10 million can command acquisition prices of 10 times Ebitda or higher, Smith says. Prices fall to eight times Ebitda for companies under $10 million of Ebitda, and to five to seven times Ebitda for companies under $5 million. That means that sellers are looking for private equity firms as partners to help build their companies to the $10 million -plus Ebitda range for a “second bite of the apple” deal, when another PE firm or a strategic buyer will pay the higher prices.

“There’s a big delta between large middle-market and smaller middle-market companies,” he says. “The good news for those entrepreneurs and business owners is that the private equity world will pay up for being in the 10- to 15- plus Ebitda level. There’s so much money out there, and there’s so many different levels of financial sponsor buyers.”

According to the Cassel Salpeter report, 2017 was a record year for overall M&A in the aerospace and defense sector, with global deal value exceeding $70 billion. There were 454 total deals in 2017, about even with 2016, but the average deal size was $411 million, which was about 19 percent higher than 2016.

The volume of deals and the premium valuations are evidence that the sector continues to be a seller’s market, according to the report. The deal volume and price premiums, plus a historically low cost of capital, have produced some of the largest acquisitions ever for the industry. Increased competition throughout the aviation sector has put pressure on profit margins, creating demand for strategic growth, consolidation, supply chain synergies and partnership opportunities, according to the report.

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CORD:USE has been acquired by Cryo-Cell International

  • Background: CORD:USE Cord Blood Bank (“Cord”), based in Orlando, FL, owns and operates a cord blood bank that focuses on building an inventory of umbilical cord blood stem cell units for patients in need of a life-saving transplant.
  • Cassel Salpeter:
    • Served as financial advisor to the Company
    • Advised Cord in evaluating its strategic options and provided assistance throughout the due diligence and closing process
    • Ran a broad sales process, contacting 115 parties
  • Challenges:
    • Small footprint – Marketing in select markets
    • Sizeable amount of debt
    • Complex capital structure
  • Outcome: In June 2018, Cord was acquired by Cryo-Cell International, Inc. The upfront consideration consisted of cash and shares of Common Stock with the potential for contingency cash payments based upon pre-determined milestones.