1H 2018 Florida PE Deal Report

Pay higher wages? Here’s what many successful companies are doing

By James S. Cassel


As more middle-market business owners begin bumping compensation to offer their employees a true living wage, they are creating a more empowered workforce with more disposable income. While an unintended consequence might be inflation, in general these wage increases are further strengthening our economy and, by extension, our middle market.

Starbucks was among the first to lead the pack in an emerging trend that is trickling to middle-market businesses, making headlines by offering employees noteworthy compensation packages with stronger benefits, wages, stock options and job perks. The overwhelmingly positive impacts on Starbucks and its employees have been well-documented in the media. Similarly, Walmart and Target are raising salaries and making headlines. This is particularly noteworthy as it benefits those at the lower end of the earning spectrum.

Across the country, what is driving the trend to higher wages?

Companies are not just doing this out of benevolence. Rather, this is a case of supply and demand in a tight labor market where higher wages are a necessity to attract and retain talent. It also is important to note another factor driving this trend: the early growth of robotics. Advances in robotics are enabling companies to achieve more with fewer people and become more efficient and profitable, while lowering the total cost of labor and the number of people needed to perform a variety of tasks. As a result, companies can offer better compensation for their remaining employees, including those involved in the robotics operations, many of whom are required to have specialized technical training and skills.

Without a doubt, increased compensation and better benefits for employees helps diminish the need to work second jobs to make ends meet, and also reduces turnover and financial stress. This results in greater productivity and job satisfaction, loyalty and retention, as well as a stronger company culture. A more dedicated, productive workforce enables companies to derive greater value from their existing employees and run leaner operations.

How can you implement these models at your business?

Here is an overview of what many successful companies today are doing:

  • Increasing compensation and health benefits, and ensuring they are appropriate and competitive.
  • Eliminating certain employee perks, such as free breakfast in the office, for which deductibility is changing under the recently enacted tax code, and finding more tax-friendly perks.
  • Shifting insurance/healthcare costs to employees by raising deductibles to help employers save significant money. However, it is important to keep in mind that this can be problematic. While this money saving initiative can bring significant short-term benefits to the company, businesses (not to mention their employees’ health) can be hurt in the long run. Higher deductibles can discourage employees from seeking necessary medical care as soon as needed, including regular checkups or early detection of issues, causing them to become sicker and to need more sick leave. This creates additional expenses for their employers as well as their health insurance companies.
  • Adding wellness and mindfulness training and benefits, which have a positive impact on everything from employee job satisfaction to mental health.
    Offering innovative ways to provide assistance and education to employees as well as to new recruits, including using paid internship programs to recruit and train employees. This can enhance productivity and support recruiting while helping defray the growing costs of replacing lost employees.
  • Building a culture of innovation. Empowering employees to think outside the box and take risks can increase productivity and efficiency. Smart companies are using this to promote and retain younger employees, while maximizing profitability and providing financial rewards to their employees.

In today’s economy, middle-market business owners should consider the incredibly positive impact of innovative measures such as these on successful companies like Starbucks and find appropriate ways to implement measures at their own companies. Those who do will better position themselves – and the middle market as a whole – for continued success.

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Get to know the 40 Under 40 Class of 2018

Welcome to our 2018 40 Under 40 Awards package, which honors 40 business executives age 39 and younger for their innovation, leadership and community contributions.

While young, these men and women drive success at leading South Florida businesses and organizations in fields such as law, real estate, engineering, manufacturing, finance and sports.

And, despite their busy work schedules, these leaders understand the importance of giving back. They spend countless hours aiding nonprofits like Habitat for Humanity, Mary’s Kids, Special Olympics and United Way.

Vetting the nominations is never easy, due to the region’s breadth of talent. But that’s what makes reviewing these executives’ contributions to South Florida’s business and community landscapes so rewarding.

We feted our Class of 2018 at a fun-filled luncheon at Jungle Island in Miami. Thanks to our corporate sponsor, Florida International University’s College of Business.

Name: Philip Cassel
Title and company: Director, Cassel Salpeter & Co.
Age: 33
Twitter handle: @philcassel
Education: B.S. in mathematics, Massachusetts Institute of Technology, 2007 Birthplace: Miami
Residence: Coconut Grove
First job: Camp counselor at Swim Gym
Ultimate career goal: To build Cassel Salpeter into a business that outlasts its founders and my generation
Hot topic in my field: High valuations for family-owned business
Greatest business achievement: Working with Boxycharm, a high-growth consumer products business, to help it complete a minority recapitalization and majority recapitalization – all within the same year.
Civic/charitable organization involvement: Ransom Everglades School (co- chair, Young Benefactor Society); Lotus House (volunteer); Children’s Bereavement Center (volunteer)
Biggest professional mentor: My dad, James Cassel
Best career advice received: From my brother Seth: “Those who do what others won’t get what others don’t.”
Fantasy job: Owner of the Miami Dolphins
Guilty pleasure: Waffle and chocolate milk for breakfast every morning
Best stress reliever: Playing water polo
Favorite book: “The Orphan Master’s Son” by Adam Johnson
Favorite website: Twitter
Favorite local spot: Hard Rock Stadium
Favorite vacation spot: Cape Town, South Africa
In a movie, I’d be played by: Colin Farrell
I’d most like to have a business lunch with: Michael Bloomberg
My six-word memoir: Family first. The rest is secondary.

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Sancilio sold certain assets to K.D. Pharma Bexbach

  • Background: Sancilio Pharmaceuticals Company, Inc. (“Sancilio”), based in Riviera Beach, FL, is an integrated specialty pharmaceutical company that develops, manufactures, and commercializes pharmaceutical products, over-the-counter and behind-the-counter products, and dietary supplements in the dental and women’s health markets.
  • Cassel Salpeter:
    • Served as financial advisor to the Company
    • Ran a competitive sales process, identifying and contacting over 300 strategic and financial parties
    • Provided assistance throughout all phases of the Chapter 11 Section 363 sales process, due diligence, and auction
  • Challenges:
    • Expedited sales timeline with less than six weeks to identify and solicit interest from potential bidders
    • Simultaneous, multiple sales processes for different divisions of the Company
  • Outcome: On August 1, 2018, the Ocean Blue division of Sancilio Pharmaceuticals Company, Inc. was purchased by K.D. Pharma Bexbach GmbH, headquartered in Bexbach, Germany.

Sancilio sold certain assets to Micelle Biopharma

  • Background: Sancilio Pharmaceuticals Company, Inc. (“Sancilio”), based in Riviera Beach, FL, is an integrated specialty pharmaceutical company that develops, manufactures, and commercializes pharmaceutical products, over-the-counter and behind-the-counter products, and dietary supplements in the dental and women’s health markets.
  • Cassel Salpeter:
      • Served as financial advisor to the Company
      • Ran a competitive sales process, identifying and contacting over 300 strategic and financial parties
      • Provided assistance throughout all phases of the Chapter 11 Section 363 sales process, due diligence, and auction
  • Challenges:
      • Expedited sales timeline with less than six weeks to identify and solicit interest from potential bidders
      • Simultaneous, multiple sales processes for different divisions of the Company
  • Outcome: On August 8, 2018, Altemia and the ALT Platform, a Phase III ready product for the treatment of sickle cell disease; a prenatal and dental portfolio of prenatal vitamins and fluorides; and the plant and labs of Sancilio Pharmaceuticals Company, Inc., were purchased by Micelle Biopharma, Inc.

Convert has been acquired by Abbey Road Capital

  • Background: Convert IT Marketing, LLC (“Convert”), founded in 2011 and based in Ft. Lauderdale, FL, provides outsourced pay-per-click marketing solutions for local law firms in specialty practices throughout the U.S. Convert IT’s unique and proprietary strategies deliver superior performance to its 500+ customers in terms of cost and quality of leads, placing it in the top 1% of all digital marketers serving the legal vertical.
  • Cassel Salpeter:
      • Served as exclusive financial advisor to the Company in its divestiture of the Neo Urinary conduit assets
      • Ran a competitive sales process, identifying and contacting strategic and financial parties
      • Provided the owner with advice from pre-engagement to post-close
    • Challenges:
      • Limited buyer universe
      • Multiple offers ahead of the completion of initial calls
  • Outcome: On August 31, 2018, Convert IT was purchased by Abbey Road Capital.