How to Help Spot and Minimize Employee Stress

Employee stress is a common problem that harms morale and productivity. These steps can help you identify and manage stress in your company.

By Julie Bawden Davis

April is Stress Awareness Month, and that’s probably a good thing for your business. According to the American Psychological Association’s 2017 Stress in America survey of 3,440 U.S. adults, employee stress is pervasive. Sixty-one percent of Americans are stressed about work.

“Stress is present in many areas of people’s lives, and the workplace is no exception,” says Daniel Clark, CEO of Brain.fm, which produces music to help people focus and sleep better. “Stress distracts employees from getting their jobs done. The distraction can be a few minutes an hour, but compounded over days, weeks and multiple employees, costs employers millions in lost time and productivity.”

Employee stress may very well be at an all-time high thanks to today’s advanced technology, believes James Cassel, chairman and founder of Cassel Salpeter & Co, a midmarket investment banking firm.

“The internet and the assumption it fosters that one should respond immediately is a great stress for many,” says Cassel. “Employees face constant deadlines and expectations to move quickly, many times without the opportunity to really think things through. This can cause substantial friction.”

There is perhaps no greater inhibitor to an employee’s performance than stress, notes Jason Hall, founder and CEO of FiveChannels Marketing. “If employees are stressed, they’re not thinking clearly, their creativity is reduced, and they’re more prone to mistakes, all of which can negatively impact your company.”

Causes of Employee Stress

A variety of factors in the workplace can lead to employee stress. “Unreasonable and unreachable deadlines, toxic coworkers with bad attitudes and poor job fit for a person’s skills are the three most common driving factors I see that cause unnecessary stress,” says Brian McHugh, owner of McHugh Construction

Tash Jefferies is co-founder of Hirekind.io, a company that helps women and people of color find their dream tech jobs. She believes that stress often leads to people leaving their positions. “Stress results when people work long days, experience high job demands (too many tasks and responsibilities) and a lack of a community of peers or executive level support.”

It was a survey of his employees two years ago that alerted Justin Goodman, president of Goodman Insurance Services, to the pervasiveness of stress at his company. “The survey was performed in person by an outside company, and the employees were guaranteed anonymity,” he says. “The results were pretty sobering. Most of our employees explained that their stress came from fear of not performing to company expectations. They also feared that I as the president didn’t understand some of the day – to-day challenges they faced.”

Identifying Employee Stress

Without performing an employee survey or looking at the statistics, how can you spot employee stress? Here are some signs that your workers are heading for anxiety and burnout.

  • Confusion. “If you know tasks have been explained thoroughly and clearly and employees show confusion, this is a sign of stress,” says Casey Thomas, co-founder of the Creative Soul Music School . “In my opinion, confusion is the precursor to frustration.”
  • Change in behavior or performance. “Any real sudden change of performance and/or behavior is a good indicator that the job is getting to the employee,” says Lior Rachmany, founder and CEO of Dumbo Moving + Storage. “Changes for employers to look out for that indicate stress include lack of focus and attention to detail, taking longer than usual to finish tasks and showing up late to work.”
  • Physical clues. “Changes in skin coloring, hair texture, redness of the eyes, consistent nodding off and lack of energy, failure to eat or overeating are common signs of stress,” says Hirekind.io’s Jefferies.
  • Mood swings. “Stress can cause people to experience emotional roller coasters more frequently, sometimes on a daily basis,” says Jefferies. “Be on the lookout for crying, anger, frustration, temper tantrums or any other disruptive emotional behavior.”

When an employee who is usually positive and outgoing suddenly seems overwhelmed and negative, suspect stress, according to Mike Grossman, CEO of GoodHire, an employment screening company. “If someone is more withdrawn than usual or displays unusually aggressive behavior, these can also be signs of stress.”

6 Tips to Help Ease Employee Stress

Once you’ve identified that employee stress may be at play and the potential causes, it’s ideal if you can ease the stress so that everyone can have a better work experience. Try the following ideas to help reduce stress.

1. Create an open door policy. “It’s important to foster an environment where employees feel comfortable speaking to their managers about stress-related issues,” says Kareem Bakhr, head of risk management at Selby Jennings, a recruitment company. “There’s often a stigma to admitting feeling overworked or overwhelmed. The first step to successful stress mitigation is establishing an open and accepting platform for people to feel comfortable sharing their challenges without being judged.”

2. Openly discuss the issue. “The best thing leaders can do when they spot employee stress is to bring it to the surface,” says Heather Younger, founder and CEO of Customer Fanatix, LLC, which provides coaching in leadership development and employee engagement. “Let employees vent, if they’re open to it. If they’re not forthcoming, make it clear that you’ve noticed a change in them and that you’re there to help.”

When you discuss the source of stress, you may even find that the employee’s state of mind has nothing to do with the workplace. “Employees have lives outside of work where stressors could be impacting both their home and work life,” says Jonathan Marsh, owner of Home Helpers of Bradenton, which provides in-home care.

3. Make expectations clear. “Prevent unnecessary stress by setting clear expectations about timelines and deadlines and follow up to ensure that the expectations are reasonable and that employees are able to meet those goals with a positive attitude,” says McHugh of McHugh Construction.

4. Provide opportunities to unwind during the workday. “Offer employees an area where they can socialize and decompress during breaks. Sitting at a desk all day alone is not conducive to a relaxing and enjoyable work atmosphere,” suggests Bob Ellis, owner of Bavarian Clockworks, an online shop that sells German cuckoo clocks.

“Find ways to create relaxed environments with an open communication policy and culture,” adds Nick Murphy, host of The Job Lab Podcast. “Whether it’s an employee lounge with beanbags and a Ping-Pong table or frequent team building events that get people away from their screens and out together in a relaxed environment—it’s important to encourage and support time to decompress.”

5. Ensure job fit. “Often, employee stress comes from someone being in the wrong role for the person’s personality type and abilities,” says Michael Maibach, CEO and founder Lab Society, which offers lab supplies and equipment. “It’s not easy finding the right set of tasks to suit each individual in a complex team with a lot of moving parts, but dedicating time to discover how to modify employee roles to better suit their personalities and skill-sets is well worth the effort.”

6. Provide workplace flexibility. “When possible, give employees the flexibility to choose the hours they work and to work from home if needed,” says Shane Green, founder & president of SGEI, a corporate training company.

Being open to giving employees some leeway in their schedules goes a long way toward a less stressful workplace, agrees Chris Padgett, co-founder and CEO of Fusion3 3D Printers. “Allowing workers to start a little later and leave a little earlier or work from home on occasion can have a positive impact on their overall quality of life.”

Click here to view the original article.

Private Equity Sees Profit Potential in U.S. Malls

By Myra Thomas

To say that the American mall is dead is a gross exaggeration. While many shopping centers across the country are struggling, so-called Class A mall real estate, typically in densely populated major metropolitan areas with attractive demographics and innovative concepts, is doing well and piquing investor interest.

While the shopping center of the past was largely dependent on large, well- known retail anchor stores, today’s mall developers are retrofitting space to become lifestyle hubs, relying on a mix of fine dining, entertainment, hotels, offices, health care providers and retail, among other concepts, to help generate traffic.

“There are more upscale restaurants and more activity in malls today,” says James Cassel, chairman and co-founder of Cassel Salpeter, a Miami-based investment banking firm. “Malls have to change to bring people through the doors to help out their other tenants.”

Brookfield Asset Management’s $14.8 billion takeover bid for publicly traded General Growth Properties in November made it abundantly clear that Class A malls are still in vogue. The following month, Australia-based mall owner Westfield Corp. disclosed that it was looking at a “potentially significant” corporate transaction.

While only 20 percent of malls qualify as Class A, they account for 72 percent of mall sales, with the top 10 in the U.S. averaging more than $1,000 per square foot, or 2.5 times the industry average, according to data from Fung Global Retail & Technology.

As they evaluate opportunities, investors are doing more legwork before taking on projects, looking closely at population trends and lease terms, says Greg Ross, national managing partner for the construction, real estate, hospitality and restaurants industry practice at accounting firm Grant Thornton. According to historical deal volume data from real estate research firm CoStar, private equity investment in U.S. malls in the past decade peaked in 2015, and 2017 appears to have had significantly less activity, though numbers are still being compiled.

“The focus for private equity is on major metro areas,” Ross says. “Location is the key.”

Location, Location, Location … and Creativity

The creativity of developers is as important as location as innovative retailers look for ways to compete with online sales, says Ronald Goldstone, senior vice president of NAI Farbman, a suburban Detroit-based real estate developer and brokerage. And that means coming up against 1970s zoning laws that don’t take into account the more sophisticated, mixed-use plans of today.

Despite complicated ordinances, repurposing must happen without delay, says Steve Agran, managing director at New York-based investment bank Carl Marks Advisors. “They’ve got to view (a property) as something they can turn around in a short period of time—something they can monetize quickly,” he says, adding that PE investors simply can’t afford to sit on large real estate holdings.

Agran contends that the shopping mall needs to foster a sense of community, incorporating residential space into the commercial mix. “We have a complete upheaval in the industry, and we are running up against (retail) overcapacity … so we’re seeing heavy-duty repurposing, whether it’s a car dealership in a section or housing and condos above ground,” he says.

Paul Laudano, chair of the real estate department of Boston -based law firm Choate Hall & Stewart LLP, notes that the shifts in retail are not a brand – new phenomenon. “These are gradual trends, and it is a fair hypothesis that the better-located and more flexible assets will survive just fine in the foreseeable future,” he says.

Choose Wisely

High-end malls are attractive to investors for their revenue potential, but the most deeply discounted real estate assets lie outside major metropolitan areas. Many remaining malls in the United States, especially those in rural areas, have seen a drop in sales, as their anchor retailers, such as Sears, Macy’s and JCPenney, shutter stores.

“Everyone is certainly talking about anchors going away and the need to completely reposition regional malls,” Laudano says.

Despite lower levels of private equity activity, mergers and acquisitions of mall real estate are trending upward, according to JPMorgan Chase & Co.

“There is increased activity globally in the regional mall space in the form of mergers and acquisitions, shareholder activism, and buying from well- known value investors,” the bank wrote in a note, reported by Bloomberg, before Westfield’s announcement. “This activity reflects a sector trading at a material discount to fundamental valuations.”

The Private Equity Advantage

Filling space left by a massive anchor store can be challenging but not insurmountable, says Joshua Harris, academic director and clinical assistant professor of real estate at New York University’s Schack Institute of Real Estate. He points to the addition of a Xerox SunPass customer service center and a Bed Bath & Beyond commerce call center at the lagging West Oaks Mall in the Orlando metropolitan area; department stores Sears and Belk had vacated the property, which is now owned by private equity firm Moonbeam Capital Investments.

According to Harris, private equity players have an advantage. “They don’t have quarterly reporting requirements, and they have the free cash needed to do rehabs and conversions, and to change the configuration for new tenants,” he says. “Private equity is looking for deals, bu t it’s very individualistic.”

It takes the right spot, the right government incentive, and the right people to make the repurposing work. Once a big retailer goes under, that’s when a value-oriented investor can come in, add capital, and turn a property around, he says.

“For a mall to work, it has to be all about innovation—delivering on experience, whether it’s concerts, spas, consumers going hands-on in an Apple store, upscale dining,” says Grant Thornton’s Ross. “In the past, the retail anchor was the thing. Now malls have to rebrand as family and entertainment centers.”

Click here to view the original article.

How Small Businesses Can Prepare for Impending Inflation

By Adam C. Uzialko

If you watch or read the news, you’ve noticed more references to potential inflation on the horizon. Inflation means the purchasing power of a dollar has decreased; put simply, there is a general increase in prices for goods and services.

Naturally, as a small business owner, increases in prices affect you, but if you’re not a board member of the Federal Reserve, there’s not much you can do about inflation, right?

On the contrary, staying aware of inflation and anticipating its impact on your business is key to crafting a comprehensive strategy to retain customers despite rising prices across the larger economy.

Inflation isn’t inherently good or bad

The first thing to take note of is that inflation isn’t good or bad; that’s a matter of perspective. For some businesses, inflation could be a bad thing, forcing businesses to raise their prices and contributing to a loss in customers. For others, it could be a benefit, spurring activity in their industry that would otherwise occur elsewhere if prices were lower. Moreover, the level of inflation matters; a little bit might be desirable, while too much could grind consumer spending to a halt and send the economy into a tailspin.

“Inflation can hurt some small businesses while providing a boost in profitability to others,” said Jeff Miller, a realtor for AE Home Group, who used

his industry as an example. “Inflation in real estate causes an increase in home prices as new construction becomes too expensive and an increase in demand is met by a stagnant housing inventory. This is great for real estate agents who will then earn commissions on higher sale prices.”

On the other hand, Miller said, too much inflation has the opposite effect. If inflation rises too drastically and prompts the Federal Reserve to hike interest rates, it could reduce the demand for home loans, which would become more expensive as a result. If that were to happen, he said, small real estate businesses would feel the sting.

Inflation can also sometimes signal that an economy is growing, and as long as wages are rising along with inflation, it shouldn’t be a bad thing that will hamper consumer spending. In other cases, too little inflation could mean an economy is stagnating. While nobody likes rising prices, everybody likes a growing economy. Managing inflation, and our collective expectations surrounding it, is the real key.

There are things you can do before raising prices

While inflation means the purchasing power of a dollar has decreased, it doesn’t necessarily mean you have to (or should) raise prices right off the bat. Even if you have to raise prices, you can balance increases with cost reduction to keep hikes manageable over time and avoid shocking the market. Drastic increases scare your customers off, while gradual, measured increases are often expected.

“From a business perspective, what drives increased costs?” said James Cassel, founder of investment banking firm Cassel Salpeter & Co. “Labor costs are starting to go up a bit, service costs are starting to go up. If you’re a manufacturer, you’ve got your material costs [which are rising as the economy gets better.]”

While inflation is often the natural byproduct of a growing, healthy economy, it’s important to take steps to manage inflation ahead of time. You don’t want the rising costs of goods and services to eat into your profit margins, after all.

Cassel offered some tips for small businesses thinking about how they will deal with inflation.

  • Consider productivity: One way to combat inflation without hiking prices is to figure out how to maintain the same levels of productivity with less staff. This is particularly useful when labor costs are what’s driving inflation, Cassel said. “If labor is going up, is there a way to do the same amount of business with nine people, instead of 10?” Cassel said. “Assuming there’s [resistance to raising your prices,] you’ve got to figure out how to take the same amount of people and produce more goods and services.”
  • Implement new technology: In some industries, such as manufacturing, labor costs can be reduced through automation. This trend is largely underway as a means of staying competitive, Cassel said, but it can help curb rising costs. The same could be true in the fast-food industry, he added, where automated kiosks are reducing the number of in-store staff.
  • Reduce material costs: Finding efficiencies wherever you can is a good thing. If you can get necessary materials at a reduced cost from a different supplier, for example, that could offset the effects of inflation, Cassel said. However, there is a danger in “going cheaper, as opposed to less expensive,” he added. “Where you have to be careful is cutting corners,” Cassel said. “If quality starts to fail, it becomes a bigger headache than the problem you had before, because that’s how you ultimately destroy the value of a business.”

How to raise prices the right way

Unfortunately, raising prices is inevitable. You can stave off hikes for some time, or reduce the impact to your customer base all at once by using cost- cutting measures, but there will always come a time when you must adjust your pricing.

“You can only do so much. At some point you have to see if you can raise your prices,” Cassel said. “Test it, bump your price and give your customers some notice, enough so they appreciate it, but not enough that they move elsewhere.”

How can you know when it’s time to increase your prices? Cassel suggested watching your closest competitors, knowing what they’re doing and then determining whether undercutting them will force you to sell at a loss or if your profit margin can support it. He also added that staying transparent with customers goes a long way, especially if you can find a way to add value to your product or service without increasing your costs.

“Be careful, pay attention,” he said. “Know your competition, know your customers, and be sensitive to their needs.”

Click here to view the original article.

Wall Street Braces for a Rate Hike

By Tirthankar Chakraborty

Timing a Fed rate hike is no doubt tricky. But if you ask the market participants, they are almost certain that Jerome Powell led Federal Reserve will increase its benchmark rate by 0.25%, at the conclusion of the FOMC meeting on Mar 21. They further anticipate the Fed to continue their hawkish stance this year, on the back of a healthy labor market and steady rise in inflation.

With the Fed set to raise rates for the first time this year, expect financials, technology and home improvement suppliers to benefit. Home builders and utility players, on the other hand, could lose from the Fed’s rate decision.

Fed Set to Hike Rates for the First Time in 2018

At the conclusion of the FOMC meeting, the Fed will issue a rate decision. Market pundits consider a quarter-percentage point rate hike a near- certainty. The futures market is already indicating 100% chance of a rate hike, culminating into the sixth rate increase since December 2015. Market participants also widely expect the Fed to project four rate hikes this year. So far, a maximum of three rate hikes are expected for the year.

But why we are expecting a hawkish Fed? This is because the current economic backdrop paints a rosy picture, especially, when you consider steady rise in wages, record low unemployment rate and upbeat consumer confidence levels. The Trump administration, in the meantime, has decided to add extra stimulus in the form of tax cuts and deregulations.

Perhaps the even more crucial factor for the Fed to hike rates is hotter-than- expected signs of inflation. Recent signs indicate that inflation is tilting toward the central bank’s 2% annual target. Needless to say, the near-term inflation expectations have climbed this month to the highest level in three years. Thus, the Fed is likely to reiterate its January’s statement that inflation “will move up this year.”

Winners & Losers in a Rising Rate Environment

With an overwhelming majority of observers seeing an imminent rate hike with more to follow this year, certain sectors stand to gain, while some will suffer.

Winners: Asset-Sensitive Banks

Banks are definitely the go-to rate trade. As a general rule, higher interest rates will boost bank profits as they increase the spread between what banks earn by funding longer-term assets, such as loans, with shorter-term liabilities.

National banks like the Bank of America Corporation BAC are very much rate- sensitive and have consistently seen earnings jump from a quarter-point rate hike. In the year-to-date period, the SPDR S&P Bank ETF (KBE) generated steady returns of 4.2% on increasing expectations of a rate hike this month.

Winners: Insurers

Very few companies are rooting for a rate hike as much as those from the insurance industry. And why not? The relationship between interest rates and insurance companies is linear and straightforward, meaning the higher the rate, the greater the growth.

Insurers derive their investment income from investing premiums, which are received from policyholders in corporate and government bonds. Yields and coupons on these bonds rise in response to a rise in Fed fund rates and bank interest rates. This enables life insurers to invest their premiums at higher yields and earn more investment income, expanding their profit margins. Not only investment income, which is an important component of insurers’ top line, annuity sales should also benefit from a higher rate environment.

As of the last filing, the top three holdings of the SPDR S&P Insurance ETF (KIE), Validus Holdings, Ltd. VR , XL Group Ltd XL and Everest Re Group, Ltd. RE have soared 44.6%, 58.1% and 18.2%, respectively, so far this year on rate hike expectations.

Winners: Asset Managers

Brokerage firms and asset managers advantage immensely from a rising rate environment since an increase in rates generally concurs during periods of economic strength and upbeat investor sentiments.

Notably, a wealth management firm like The Charles
Schwab Corporation SCHW has said time and again that each quarter point increase in rates generally adds to interest revenue, much of which flows directly to pre-tax profits.

Winners: Technology & Home Improvement

Other than the broader financial sector, technology firms also stand to gain from a rate hike. Interest rates correlate with an economy that is getting stronger day by day. And a stronger economy could easily boost the bottom lines of smartphone makers like Apple Inc. AAPL and Samsung.

Rising rates may also compel would-be home buyers to stop searching for new houses and instead look for improving their existing ones. Sesha Dhanyamraju, CEO of Digital Risk added that “remodelers and home- improvement suppliers benefit from a rising-rate scenario.” Thus, home improvement majors Lowe’s Cos. L and Home Depot HD stand to gain the most.

Losers: Home Construction

But, with the Fed expected to hike rates, the average American will bear the brunt of higher borrowing costs. This is surely a dampener to real estate activities.

James Cassel, chairman and co-founder of the investment banking firm Cassel Salpeter in Miami added that if rate hike happens, losers might include “construction-related businesses, like homebuilders.”

Losers: Utilities

Investing in utilities won’t be a good idea in a rising interest rate scenario. Utilities are capital intensive business and the funds generated from internal sources are not always sufficient to meet their requirements. Hence, these companies have high level of debt loads. Low interest rates will help them pay off debts and book profits.

But higher interest rates along with an increase in the debt level, for that matter a steep debt/equity ratio, impact the credit ratings of these utility operators. If the credit ratings go down, a company will find it difficult to borrow funds from the markets at reasonable rates, leading to a rise in cost of operations.

The industry’s bellwether ETF, Utilities Select Sector SPDR (XLU), has yielded a negative return of 4.9% in the year-to-date period on rate hike concerns.

Will You Make a Fortune on the Shift to Electric Cars?

Here’s another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It’s not the one you think.

Click here to view the original article.

Wall Street Braces for a Rate Hike: Who Wins, Who Loses

By Tirthankar Chakraborty

Timing a Fed rate hike is no doubt tricky. But if you ask the market participants, they are almost certain that Jerome Powell led Federal Reserve will increase its benchmark rate by 0.25%, at the conclusion of the FOMC meeting on Mar 21. They further anticipate the Fed to continue their hawkish stance this year, on the back of a healthy labor market and steady rise in inflation.

With the Fed set to raise rates for the first time this year, expect financials, technology and home improvement suppliers to benefit. Home builders and utility players, on the other hand, could lose from the Fed’s rate decision.

Fed Set to Hike Rates for the First Time in 2018

At the conclusion of the FOMC meeting, the Fed will issue a rate decision. Market pundits consider a quarter-percentage point rate hike a near- certainty. The futures market is already indicating 100% chance of a rate hike, culminating into the sixth rate increase since December 2015. Market participants also widely expect the Fed to project four rate hikes this year. So far, a maximum of three rate hikes are expected for the year.

But why we are expecting a hawkish Fed? This is because the current economic backdrop paints a rosy picture, especially, when you consider steady rise in wages, record low unemployment rate and upbeat consumer confidence levels. The Trump administration, in the meantime, has decided to add extra stimulus in the form of tax cuts and deregulations.

Perhaps the even more crucial factor for the Fed to hike rates is hotter-than- expected signs of inflation. Recent signs indicate that inflation is tilting toward the central bank’s 2% annual target. Needless to say, the near-term inflation expectations have climbed this month to the highest level in three years. Thus, the Fed is likely to reiterate its January’s statement that inflation “will move up this year.”

Winners & Losers in a Rising Rate Environment

With an overwhelming majority of observers seeing an imminent rate hike with more to follow this year, certain sectors stand to gain, while some will suffer.

Winners: Asset-Sensitive Banks

Banks are definitely the go-to rate trade. As a general rule, higher interest rates will boost bank profits as they increase the spread between what banks earn by funding longer-term assets, such as loans, with shorter-term liabilities.

National banks like the Bank of America Corporation BAC are very much rate- sensitive and have consistently seen earnings jump from a quarter-point rate hike. In the year-to-date period, the SPDR S&P Bank ETF (KBE) generated steady returns of 4.2% on increasing expectations of a rate hike this month.

Winners: Insurers

Very few companies are rooting for a rate hike as much as those from the insurance industry. And why not? The relationship between interest rates and insurance companies is linear and straightforward, meaning the higher the rate, the greater the growth.

Insurers derive their investment income from investing premiums, which are received from policyholders in corporate and government bonds. Yields and coupons on these bonds rise in response to a rise in Fed fund rates and bank interest rates. This enables life insurers to invest their premiums at higher yields and earn more investment income, expanding their profit margins. Not only investment income, which is an important component of insurers’ top line, annuity sales should also benefit from a higher rate environment.

As of the last filing, the top three holdings of the SPDR S&P Insurance ETF (KIE), Validus Holdings, Ltd. VR , XL Group Ltd XL and Everest Re Group, Ltd. RE have soared 44.6%, 58.1% and 18.2%, respectively, so far this year on rate hike expectations.

Winners: Asset Managers

Brokerage firms and asset managers advantage immensely from a rising rate environment since an increase in rates generally concurs during periods of economic strength and upbeat investor sentiments.

Notably, a wealth management firm like The Charles
Schwab Corporation SCHW has said time and again that each quarter point increase in rates generally adds to interest revenue, much of which flows directly to pre-tax profits.

Winners: Technology & Home Improvement

Other than the broader financial sector, technology firms also stand to gain from a rate hike. Interest rates correlate with an economy that is getting stronger day by day. And a stronger economy could easily boost the bottom lines of smartphone makers like Apple Inc. AAPL and Samsung.

Rising rates may also compel would-be home buyers to stop searching for new houses and instead look for improving their existing ones. Sesha Dhanyamraju, CEO of Digital Risk added that “remodelers and home- improvement suppliers benefit from a rising-rate scenario.” Thus, home improvement majors Lowe’s Cos. L and Home Depot HD stand to gain the most.

Losers: Home Construction

But, with the Fed expected to hike rates, the average American will bear the brunt of higher borrowing costs. This is surely a dampener to real estate activities.

James Cassel, chairman and co-founder of the investment banking firm Cassel Salpeter in Miami added that if rate hike happens, losers might include “construction-related businesses, like homebuilders.”

Losers: Utilities

Investing in utilities won’t be a good idea in a rising interest rate scenario. Utilities are capital intensive business and the funds generated from internal sources are not always sufficient to meet their requirements. Hence, these companies have high level of debt loads. Low interest rates will help them pay off debts and book profits.

But higher interest rates along with an increase in the debt level, for that matter a steep debt/equity ratio, impact the credit ratings of these utility operators. If the credit ratings go down, a company will find it difficult to borrow funds from the markets at reasonable rates, leading to a rise in cost of operations.

The industry’s bellwether ETF, Utilities Select Sector SPDR (XLU), has yielded a negative return of 4.9% in the year-to-date period on rate hike concerns.

Will You Make a Fortune on the Shift to Electric Cars?

Here’s another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It’s not the one you think.

Click here to view the original article.

Setting Up Shop in the Sunshine State

By Laura Cooper

More private-equity firms are sprouting up in Florida as sponsors branch out on their own.

The number of firms in the state has climbed steadily over the past several years, according to Cassel Salpeter & Co., a Miami investment bank that tracks the growth of private-equity firms based in Florida.

The number of such firms rose to 56 in 2017, up from 47 in 2016 and 27 in 2010, according to a report by the bank that cited data from PitchBook Data Inc.

James Cassel, chairman and a co-founder of the bank, said private equity’s presence in the state is increasing, in part, because investment professionals from large Florida-based firms such as H.I.G. Capital and Comvest Partners are striking out on their own.

Hidden Harbor Capital Partners, for example, was launched about two years ago in Fort Lauderdale, Fla., by founders who previously held positions at H.I.G. or Comvest.

Mr. Cassel said perceptions about starting firms in Florida have changed over the years.

“There was previously a concern of how to staff these firms,” he said, adding that firms had been concerned that people would be inflexible about moving to Florida from other states with historically more robust private-equity activity.

“It [will] be interesting to see what happens this year with the tax bill impacting individuals,” he said. “I think more people are considering moving down to Florida for lower tax rates.”

In addition to H.I.G., Comvest and Sun Capital Partners, a number of homegrown firms dot the state. New entrants in the past several years include Hidden Harbor, Three20 Capital Group, Canopy Capital Partners and 777 Partners, according to data collected by Mr. Cassel.

Although time will tell whether more private-equity firms find Florida a favorable place to put down roots, there is no question that the state is experiencing more private-equity activity. Deals have been on the rise in the state in the past several years, according to PitchBook data featured in the report. In Florida, private-equity deal flow last year remained strong for the fourth year in a row, with 259 Florida deals—including add-on acquisitions— completed in 2017, up from 256 deals in 2016.

Click here to view the original article.

Plan now for the potential ‘long-term’ impacts of the tax cuts and new tariffs

By James S. Cassel

Should we make long-term plans based on the notion that the tax cuts are permanent? Although the personal tax cuts have an expiration date, currently the corporate cuts are permanent. Alternatively, should we assume that at some time we will realize the deficit is unsustainable and have to take proper measures to tame this lion? What Congress gives, Congress may take away.

At some point, Congress will have to face reality and govern by raising taxes on the richest among us, as well as cut expenditures for social programs and entitlements programs — all of which may be politically unpalatable and tough medicine. What if the projected growth assumed in connection with the tax cuts fails to materialize, generating the anticipated taxes? Are the new tariffs on steel and aluminum going to hurt us, start a trade war, and increase inflation due to higher material costs? At some point, this will keep us all up at night, if it does not already.

The following is some practical guidance based on our experience guiding middle- market business owners through all types of economic cycles:

  • Save as much money as you can now. Planning for retirement will depend more on your individual planning than on government programs. Social Security and Medicare might not be as untouchable as some would like to believe. Medicare, for example, continues to raise premiums to recipients. At some point, the age to receive Social Security will need to increase again, therefore delaying access to benefits for some. Past proposals have protected people close to retirement age.
  • Consider selling your business or a majority stake now. It is prudent to diversify. If the lower tax rates are temporary, you are probably better off selling sooner, and taking advantage of the lower tax rates and more desirable pricing. Rising interest rates, potential inflation, and potential trade issues with the recently enacted tariffs could diminish the profitability — and therefore the value — of your business.
  • Consider how you structure agreements. It is probably better to require more payments upfront where appropriate. This way, you can enjoy the lower tax rate if rates go up. From a tax standpoint, the structure of your agreements is very relevant. Seeking good counsel is always important.
  • With increased inflation as the economy strengthens, and as a result of the new tariffs and a possible trade war, you may want to secure longer-term supply agreements to ensure stable costs. Airlines have done this successfully with fuel costs. Since new tariffs have been put on steel and aluminum, you need to consider how this will affect your business and that of your suppliers. There is a lot of uncertainty around a possible trade war that might have many unintended consequences. Other countries will not sit idly by. Tariffs on steel and aluminum will hike costs of many products — for example on cars and potential steel used in the construction industry — and spur increased inflation. There are already rumblings from foreign countries to increase tariffs on products that might be exported from the U.S. If you are a target of foreign tariffs, consider whether it is prudent to move all or a portion of your production offshore.

With so much uncertainty surrounding the longevity and impact of the tax cuts and the effect of tariffs, middle-market business owners should work with qualified experts to assess their business needs and develop appropriate plans to protect their best interests.

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Cassel Salpeter & Co. Represents Systems 2000, Inc in its Sale to Serent Capital

Cassel Salpeter & Co., a middle-market investment banking firm providing financial advisory services, represented Systems 2000, Inc. (“Sys2k”) in its sale to Serent Capital.  The acquisition will enable Serent Capital to broaden its portfolio of system-of-record software businesses and automobile technology investments.

The Cassel Salpeter team, led by President and Co-Founder Scott Salpeter and Vice President Marcus Wai, supported Sys2k through the closing of the transaction.

Sys2k is a SaaS business that provides a mission-critical dealership management system for the specialty vehicle market. With over 350 customers throughout the U.S. and Canada and a strong recurring revenue base, the Sys2k platform is highly regarded due to its true multi-company, multi-location system offering full DMS capabilities across all departments of a dealership.

Carl Sconnelly, Sys2k’s founder and former President and CEO said, “The Cassel Salpeter team helped guide me throughout the sales process from marketing and LOI negotiation through to due diligence and closing.  The complexity of the Transaction combined with the vigorous due diligence process was made much easier with their help and resulted in the ideal outcome for me and the Company. The support provided by the Cassel Salpeter team was invaluable and I couldn’t have asked for a better outcome.”

“It was a pleasure working with the Sys2k team to find the best fit to take the company to the next level of its growth trajectory.  We believe Sys2k to be a highly attractive investment to Serent Capital given their ownership experience with SaaS based businesses and potential synergies with their other portfolio companies,” said President and Co-Founder Scott Salpeter of Cassel Salpeter & Co.

Ira Rosner, Jordan Schneider, and Ashley Hamilton with Holland & Knight provided legal representation to Sys2k.  Carl Erhardt, Elliot Franklin, and Lori Bibb with Morris, Manning & Martin, LLP provided legal representation to Serent Capital.

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. For more information, visit www.CasselSalpeter.com.

About Sys2k  

Sys2K is a premier provider of Powersports, Bus, Marine, Automotive, Class 8/Heavy Duty, and RV dealership software. Sys2K’s Infinity software is a fully integrated, Windows-based DMS that features modules including CRM, F&I, Parts and Service, Payroll, Accounting, Rental, Advanced Reporting, as well as offering Premium Websites, Cloud Hosting, and Mobile Apps. Founded in 1984, Sys2K prides itself in developing the highest-quality software solutions for the dealership environment. For more information, visit www.sys2k.com.

About Serent Capital

Serent Capital invests in growing businesses that have developed compelling solutions that address their customers’ needs. As those businesses grow and evolve, the opportunities and challenges that they face change with them. Principals at Serent Capital have firsthand experience at capturing those opportunities and navigating these difficulties through their experiences as CEOs, strategic advisors, and board members to successful growing businesses. By bringing its expertise and capital to bear, Serent helps growing businesses thrive. For more information on Serent Capital, visit www.serentcapital.com.

Private equity deal flow up in Florida

Sys2k has been acquired by Serent Capital

  • Background: Systems 2000, Inc. (“Sys2k”) is a SaaS business that provides a mission-critical dealership management system for the specialty vehicle market, including RV, marine, auto, heavy duty trucks, bus and emergency vehicles. With over 350 customers throughout the U.S. and Canada and a strong recurring revenue base, the Sys2k platform is highly regarded due to its true multi-company, multi-location system offering full DMS capabilities across all departments of a dealership.
  • Cassel Salpeter:
    • Served as financial advisor to the Company
    • Ran a limited sales process, contacting 19 specifically targeted financial and strategic buyers
  • Challenges:
    • Management required guidance and support to satisfy due diligence requests due to small size and limited resources
  • Outcome: In March 2018, Sys2k was 100% acquired by Serent Capital, broadening their portfolio of system-of-record software businesses and automobile technology investments.