How To Build A Business To Go Public

Find a need in the market and service it well. That need may be closer and more familiar to you than you may at first think.

By Breana Patel

James Cassel, chairman and co-founder of Cassel Salpeter & Co., is an investment banker who uses his unique experience as a dealmaker and attorney to guide clients and help them achieve their goals. Focused on representing middle-market companies, Jim has successfully negotiated, structured, and executed a broad spectrum of transactions including mergers, acquisitions, and divestitures, corporate and transactional financings, and public offerings for clients nationwide and worldwide.

Can you tell us a story about how you were able to build a business from scratch, scale and sell it to a bigger firm?

I, along with two partners, started the investment banking firm Capitalink. When we started in 1998, we thought we would raise money primarily for technology companies. Unfortunately, we were not successful at it, so we pivoted in a new direction providing financial advisory services to lower middle market companies. I had provided legal services to these same type of companies when I practiced law. We went on to build a successful M&A and advisory shop becoming known as “Mr. Fairness Opinion” in South Florida and New York. In 2006, we were approached by Ladenburg Thalmann, one of the oldest members of the NYSE, which was looking to expand its South Florida presence. It was a great opportunity and as a result we sold our firm joining to become part of Ladenburg. I became Vice Chairman and Head of Investment Banking.

Can you share a story about the funniest mistake you made when you were first starting?

The biggest mistake we made when we started the firm was believing we could raise capital for technology companies. Turns out although just about anybody could raise money in 1998 for technology companies, we couldn’t. It’s funny now, but it wasn’t at the time.

Can you tell us what lesson you learned from that?

What we learned was that we should stick with what we know. We also learned that when we were ready to expand, we should hire experienced talent with the right skill and relationships to assist as we ventured into new areas.

Can you share with our readers “6 Things You Need To Know If You Want To Build, Scale and Prepare Your Business For a Lucrative Exit”:

1: find a need in the market and service it well. That need may be closer and more familiar to you than you may at first think. Remain focused.

As I mentioned earlier, when I started out in investment banking, I thought we could raise capital for tech companies and soon discovered that it was much more challenging than I, or my partners, had anticipated based on our prior experience. Many entrepreneurs looking to fill a need in the marketplace also assume the answer may lie in the tech sector. But, more often, the tech market can prove to be a bit of a Wild West, with new players emerging to service customers who have yet to settle into predictable behaviors related to these emerging products. It’s difficult to plan for and to serve a market that is still in a state of flux.

Though our firm eventually was able to find success in tech M&A, we learned from the many different industries of companies we have worked with, that sometimes finding your niche is less about relying on tech, than on having a new spin on a conventional product or service.

We encounter opportunities for improving products and services more than we know. A small innovation in this area could mean a huge payoff if executed correctly. In this vein, I often think of the success of Proctor & Gamble’s Swiffer mop. The mop, in one form or another, has been around probably as long as humans have wanted to keep their floors clean and dry. But it took a bright mind in the 1990s to rethink the mop and see it like a razor blade and handle combo: cheap handle, disposable and replaceable blades. That product continues to successfully circle the world. I use it myself.

2: While this article is focused on the ultimate sale of a successful company, you may be taking the wrong approach if you are only thinking about your lucrative exit. Build a business that you envision as being around for a long time, with or without you, not necessarily one you want to sell. But when the opportunity appears, don’t be scared to seize the moment.

3: Hire the right people. You can’t go it alone. Succeeding, which means growing, is a team effort. From the perspective of an investment banker who often helps companies prepare for an exit, I know that growth and success starts with the people you hire.

My own success has come in great part from carefully choosing who joins our team. I can tell you from experience that if you have chosen badly, you have to react quickly. Don’t delay the termination. Your team is everything. Hiring the right people means everyone works together and is contributing, doing their part. Those who don’t fit the program have to go. The sooner you cut your losses, the better for all concerned.

When you go to sell your business, you will be rewarded for a good management team and penalized if you do not.

4: Treat your people well. When you’ve found the right people you have to let them know they are the right people. You do this by compensating them for their talent, expertise and labor. You treat them with respect and you present them with opportunities to grow and excel. And, you give them the loyalty which you, in turn, expect from them.

5: Treat your clients and customers well, too! Seems simple and obvious, but you’d be surprised how many business owners fail to extend their regard for their own company to their clients, who not only deserve the best service but optimal transparency about it.

6: Dreams and hunches about growth are a beautiful thing, but if they aren’t tied to reality you won’t get any traction when it comes to scaling up. To ensure you can really grow your company you have to see what that growth would look like on paper first. Do you know how much you want your business to grow? Can you assign a number to that? How many more customers are you thinking of reaching? Can the market sustain that number? Are there going to be that many consumers flocking to your product? Do you know, in detail, how you will attract them? Do you know how much it will cost to attract them? You have to game all of this out as if it were really happening. Now ask yourself, if I had all of those customers, how would my business need to change to accommodate them? Now you are into a whole new set of predictions, analysis and research. Do you need new staff or a new facility? Will you need to visit an investment banker like myself to find the funding you need? The dream of your company’s growth must be built on these hard facts.

Can you give a few examples of things to avoid when trying to build a business to sell?

Try to avoid a business being dependent on one person, being a one product or service company, or having large customer concentration.

What are some of the differences in approach for building a service- based business versus a product-based business with an intent of selling the business at a lucrative price?

When it comes to service businesses, it’s all about the people and the brand. Quality is very important in finding the appropriate niche. The more value that is perceived for your service, the more the value of your company. When it comes to a product-based business, it is about quality, design, functionality and value.

How does one go about the process of finding a buyer?

You should not do this alone. One of the benefits of hiring an investment banker is that they have the relationships and can get to the right people. They do research. There are different databases one can use such as capital IQ or PitchBook. Generally, you’re looking at one of three types of purchasers: strategic, financial buyers such as private equity firms, or family offices. Finding the right buyer is difficult and finding the right people at a prospective buyer to make contact with can be even more difficult. One of the benefits of hiring an investment banker is that they do this day in and day out and have many relationships.

How can one decide if it is better to build a business in order to exit, or if it is better to stick around for the long term and let the company bring in residual income or go public?

If one is looking to replace their income from the sale of their business, it is difficult to do. In order to determine whether one should sell their business versus retain it for residual income there are many things to consider. Some might have to do with your personal wishes as to involvement, or whether you believe you can hire the right people to lessen your involvement. Other issues to think about are technological obsolescence or when your business is no longer needed. Imagine if you still owned a Blockbuster franchise. Best to have sold it years ago.

Can you share a few ways that are used to determine a good selling price for the business?

The best way to determine the value of a business and therefore a good selling price is to go to market. The market will determine what a business is worth. Many people hire firms to perform valuations prior to sale. I generally do not believe this is a worthwhile expenditure as it’s more of an academic exercise than determining the true value. One can certainly find a range of value by looking at comparable transactions and comparable public company values. However, every company is different, therefore valuations can vary by a large amount. The larger the company, the higher the multiples they generally will get upon sale.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be?

My movement would have to do with the environment. I am scared for my children and grandchildren as to the earth that we might be leaving them with. I remember over 30 years ago the first Earth Day. I’m not sure the strides that we sought to take have been accomplished. These days, many businesses are more concerned with the immediate rather than a long-term view. This is very troubling.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“God gave you two ears and one mouth. Therefore, try to listen twice as much as you talk,” which was my father’s variation on the famous quote from the stoic Greek philosopher Epictetus.

How can our readers follow you on social media?

I can be found on both LinkedIn and Twitter

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What your middle-market business needs to consider going into 2019

By James S. Cassel

We live in unsettled, unpredictable times, as the end of 2018 has proven. For business owners, now is the season to reflect on the past year and gauge what is coming for the economy and your business in 2019. There is much to consider.

This past year, we saw a major corporate tax cut yield a short term bump and mixed results (dividends paid and stock repurchased, as opposed to massive capital expenditures, as were promised), interest rate increases (with a few more indicated), tariff battles and trade wars contributing to higher costs and uncertainty, the shuttering of manufacturing plants, agricultural bankruptcies and stock market volatility. There are also signs of an economic slowdown possibly leading to the next recession. Meanwhile, continued uncertainty about immigration policy and looming technology disruptions raise even more questions for business owners looking to plan.

What does all this mean for your business?


inRead invented by Teads
Notwithstanding the Federal Reserve chairman’s comments indicating a slowing of rate increases, the central banking system is still predicting growth, despite a slowdown in housing, car sales and agriculture. As the Fed seeks to strike a balance between continued expansion and limiting inflation, middle market companies may face greater challenges securing capital, refinancing debt and higher interest rates, and M&A activity could slow.

And what about the trade war? The full tariffs war fallout remains hard to predict. While the G-20 summit in Buenos Aires yielded what appears to be a 90-day tariff truce with China, mixed messaging from the White House helped turn that win into more market volatility. Meanwhile, the signing of a trade agreement with Canada and Mexico seems to promise some stability. Now we will see whether Congress ratifies it in its present form.

One thing is certain: As tariffs begin trickling down to the consumer, we can expect diminished consumer purchasing power. Although there remains hope that this will be offset by lower energy costs, the outcome for your business may be decreased revenues and higher expenses.

Does this mean we can expect an economic slowdown? The answer depends on whether you watch MSNBC or Fox News.

On one side, leading economists from Goldman Sachs predict an economic slowdown in the third quarter of 2019, and a possible 2020 recession. With interest rates rising, making borrowing costs more expensive, earnings growth may have peaked. There is also a global economic slowdown to consider and a slowing of GDP growth.

But according to Larry Kudlow, President Donald Trump’s top economic advisor, no national economic downturn is coming, and you have nothing to worry about.

Immigration policy uncertainty is another concern for companies. The administration’s anti-immigrant stance is leading to a brain drain as the number of highly-skilled foreign workers and students decreases. Meanwhile, low-cost labor shortages are pushing farmers towards robotics and technology innovation to pick up the slack. With unemployment at the current low rates, finding qualified workers is a challenge.

What is happening in the agriculture sector — and other sectors — may reflect an inevitable technological sea change set to remake many businesses. Take, for example, General Motors. Following the tariff fight escalation, GM announced the closing of certain plants in the U.S., causing thousands of job losses. Was it only because of the tariffs? Or was it also because technological disruptions, like self-driving cars and manufacturing plant automation, ushering in a new era in mass production jobs? Or could changing consumer tastes in vehicles be a key reason — or a slowing economy?

It seems inevitable that technological innovation and automation will eventually result in millions of lost jobs. If that’s the case, “retrain and retain” may emerge as the operative slogan for economic survival as workers replaced by robots or other technology must be retrained for new and shifting positions. New jobs and job categories must be created.

Taking stock of all these major developments and changes in 2018 can be dizzying, but your middle market company should be picking up on cues and making its own hard decisions to adapt to the changing and future landscape. In my next column, we will discuss how companies should be making those adaptations and be set for success in 2019.

Until then, happy holidays and a (hopefully) prosperous New Year!

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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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inRegen sold certain assets to Orgagen

  • Background: InRegen, with headquarters in the Cayman Islands, is a leader in three-dimensional regenerative medicine.
  • Cassel Salpeter:
      • Served as exclusive financial advisor to the Company in its divestiture of the Neo Urinary conduit assets
      • Ran a competitive sales process for the assets and assisted the Company in evaluating offers received
      • Assisted in the structuring, negotiating, and closing of the transaction
    • Challenges:
      • Complex technology
      • Small universe of potential buyers
  • Outcome: On December 31, 2018, InRegen closed on the sale of the Neo Urinary Conduit assets to Orgagen, Inc.