SciVac, Oct. 2015

Swisher, August 2015

Succession plans are key to protecting your business when the unthinkable happens

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By James S. Cassel
August 17, 2015

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Although there are probably many things you would rather discuss with your CEO than how to proceed if he or she unexpectedly dies or falls victim to some other tragedy, the fact is that you must. Companies without crisis-succession plans are at significant risk.

History has proved that the way companies handle these crisis situations can make or break them. A 2014 survey by the National Association of Corporate Directors reveals that two-thirds of publicly and privately held companies in America had no succession plan. This is for planned or unplanned succession.

Public companies are more likely and may be required to have succession plans in place, but very few private companies do, particularly those that are family-owned.

Losing a CEO to an unforeseen circumstance such as a tragedy, termination or resignation can create more turmoil than losing a leader to a situation you can see coming, such as a terminal illness or an orderly, planned change. Sudden losses can leave employees and other key stakeholders devastated and bewildered. Without a designated leader or clear path to the future, the business can suffer. This can be particularly disastrous for smaller companies.

While it is not uncommon for people to think their company could never survive the death of the CEO, the fact is that more often than not, it could survive with proper planning. Well strategized, efficiently executed succession plans bring benefits on multiple levels. In addition to providing a roadmap to help your company deal with the crisis, they put investors and shareholders at ease.

Of course, the core of your succession plan should be more than processes — you also must identify who will assume your CEO’s responsibilities. You should build a bench of candidates. In some family businesses, a family member with little history with the company might step in, so it is critical to have a succession plan to ensure the successor has adequate background and knowledge.

You also will have to address training: What kind of knowledge will the ascending CEO or interim leader need? Was there sufficient knowledge transfer prior to the need for it? Appointed successors, like an understudy in a Broadway production, must be well informed and ready to hit the ground running. This preparatory training should be an ongoing process.

Some businesses may need outside help on an interim basis, and there are companies that provide interim leadership assistance.

Succession planning should not only apply to your CEO; it should also include other senior positions such as President, CFO, CTO and CMO. Passwords, systems and processes should all be documented so your business can continue operating as usual.

A sound succession plan will contemplate how you will communicate with clients, customers, vendors, employees, investors and partners. Your key audiences should not learn about the death of your CEO from the news media, so you will need a public-relations and crisis-communications strategy that outlines how to best notify all your key internal and external audiences. It is interesting to observe the upfront, open manner in which Warren Buffett of Berkshire Hathaway (NYSE:BRK.A) is dealing with his succession. Buffet’s approach is much more well received than the way former U. S. Secretary of State Alexander Haig announced that he would be in charge after former President Ronald Reagan was shot (especially given the fact that the transition plan in the Constitution calls for the vice president to assume the leadership role).

If your business is family-run or family-owned with one family member playing a key role such as CEO, part of the succession plan should include not only a replacement CEO, but should also ensure there is an appropriate family member designated to maintain communication between the business and the family.

Consider “key person” insurance policies that can be owned by the company. The liquidity of these policies can offer the company the breathing room to survive a crisis. Some bank loans provide for calling the loan due if a certain person passes away, and that can be strategically insured around with a key person policy.

Another key consideration: bereavement services for grieving employees. In Miami, the Children’s Bereavement Center, which provides assistance to people of all ages, offers varied support groups and other services for bereaved adults, and resources for professional organizations and businesses dealing with trauma or crises. They are available on short notice.

Although the days and weeks following a tragic loss will certainly not feel like business as usual, they should be guided by a sound succession plan to keep the company on track with as few disruptions as possible. Investing a little time now to put the necessary plans and infrastructure in place can make all the difference when the unthinkable happens.

James Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle-market companies. He may be reached via email at jcassel@casselsalpeter.com. His website is www.casselsalpeter.com

Attracting and retaining top talent: a growing obstacle for South Florida businesses

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By James S. Cassel
July 12, 2015

Cassel pictureMaintaining a strong workforce is becoming an increasingly significant barrier to growth for South Florida’s middle-market businesses. Finding, attracting, and retaining quality talent is a tricky proposition in a region with a limited labor pool and low unemployment rates.

Deloitte’s newly published “Mid-Market Perspectives: 2015 Report on America’s Economic Engine” identifies employee turnover as a major concern for middle-market companies.

Clearly, there is more value in cultivating existing talent than having a revolving door of employees. So, how can you build a strong, loyal team in South Florida?

First, have the right perspective. Do not feel overwhelmed and assume that sweeping corporate changes will be required. Often, we can achieve a great deal by making a series of small adjustments, and continuing to make other adjustments as we build on our success. Develop a practical plan and identify realistic, attainable goals and objectives.

At all times, keep a close pulse on your employees. It can be easy for business owners to get so consumed by day-to-day operations that they lose touch with their teams, a costly mistake. Are your employees engaged, motivated and happy? How can you maximize engagement? If you have good employees who are unhappy in their current positions, can you find other opportunities within the company so you can keep them around? If not, outplacement may be best for all parties.

Your compensation packages, including cash and benefits, should be competitive. While many companies in recent years have tended to avoid raises, increased competition and poaching of employees is making it critical for employers to become more generous. Competitive compensation packages can reduce your exposure to turnover too. Even Walmart is having to address the need for wage increases.

Usually, employees will reject job offers for lateral moves unless they perceive significant disparities in working conditions and compensation. Keep your eyes and ears open so you know what other businesses in your industry are doing. Websites like PayScale and Glassdoor can help you assess average compensation data about different industries and job roles.

Working conditions, benefits and flexibility also are important. While it is important to offer 401(k) programs (ideally with matching contributions), these benefits will not support retention if your employees do not use them. This is often the case with younger employees who opt not to contribute to their 401(k) plans (although they should). Ensure that your employees are educated on the importance of contributing, no matter how entry-level their salaries.

It also helps if your office has a “cool factor.” Every generation of employees has different needs and wants. Trendy-looking, modern offices in desirable neighborhoods and touches such as free gourmet coffee and snacks in break rooms appeal to millennials and Gen X-ers.

When recruiting and hiring, conduct as much due diligence as possible. Personality tests can help, as well as meticulously following up with references. Your current employees can be great resources for recruiting. Leverage them when appropriate, as they probably know your company better than outsiders and would be more engaged to stay at companies where they are surrounded by colleagues they helped recruit.

Routine evaluations can also boost employee loyalty and performance. Embrace the opportunity to let your team members know how they are performing, praise their strengths and achievements, and provide guidance on how to reach their career objectives. At the same time, use the opportunity to solicit their thoughts and feedback, take good notes, and follow through on their comments.

Encourage employees to interact in structured social environments, such as barbeques, movie nights or whatever tickles their fancy. While many companies have stopped providing annual company picnics, it may be time to resurrect them. The more your employees enjoy each other’s company, the more apt they are to work well together. Consider employee recognition initiatives too, and perhaps pair them with these social activities. Corporate community involvement projects can help increase job satisfaction and engagement. Identify organizations your employees would be most inclined to support.

Career development is critical. Employees who feel challenged and believe they are learning are more likely to stick around. A current issue with the millennial generation, for example, is that most recent college grads will have four or five jobs in their first decade of employment. Bearing that in mind, many companies are offering less training and investing fewer resources to advance employees out of fear of wasting time and money. This can be a mistake: Bored employees are more likely to begin looking elsewhere for stimulation.

Attracting and retaining quality employees is no easy task. By taking the right steps to build a strong team, you can gain a competitive edge and position your business for maximum growth and success.

Middle-market businesses should help growth industries

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By James S. Cassel
June 14, 2015

Cassel pictureWhile the technology and healthcare/biotech industries in South Florida continue to gain strength and momentum, the region’s middle-market businesses are not properly positioning themselves to serve these industries and benefit from their growth.

There can be significant revenue opportunities for those that make the financial and other commitments necessary to position themselves to fulfill the needs of these growth businesses for highly qualified suppliers, subcontractors, and service providers. Too often, these growth businesses feel a need to look beyond South Florida for support because they do not believe their needs can be handled locally — a void that must be addressed. Right or wrong, this is the perception in the marketplace.

Based on our experience advising middle-market businesses seeking growth opportunities, the following is practical guidance for businesses that cater or want to begin catering to these growth industries:

Create a business-development strategy. Identify the key businesses you want to serve and pinpoint the ones you are best-suited to begin serving in the near or long term. Develop a plan for getting in front of these businesses to assess their needs and offer your services.

Identify the areas of your business, including products or services that you provide, which you may need to trim or expand in order to serve growth industries. Some of this may require partnering with or outsourcing work to other companies, locally, or in other parts of the United States, or internationally.

Consider investing in your team by providing educational or training opportunities and/or by adding head count. Hiring the best talent can be an expensive commitment, especially for business owners who are not sure if they will ultimately have enough business to support the additional head count. Thus, it may be wise to consider hiring temporary personnel or independent contractors who can eventually become permanent team members after you have gotten to know them and confirmed that they are a good fit, and when you are sure you have enough business to justify their compensation.

Consider acquiring or merging with competitors in the market. This is a great way to acquire quality talent. It is not uncommon in some industries, such as technology, for companies needing talent to buy younger, smaller companies to gain a competitive advantage.

Evaluate your client roster and eliminate the bottom 10 percent of your clients that may be too problematic, unprofitable or a disproportionate drain on your resources. One of the main obstacles for South Florida’s middle-market businesses is that many of them are running at or near capacity and lack the necessary talent and infrastructure to effectively handle the higher level of work required by companies in these growth industries. While parting with paying clients can often be a difficult decision, it is critical for long-term success. Part of the trouble with keeping clients that are cumbersome or not profitable is that they can drain your business in terms of time, energy and other resources. They can diminish your ability to provide quality service to other customers. Just as important, they can hurt your company’s employee morale and job satisfaction. For these reasons, bottom-tier clients might not be sustainable over the long term. Simply put, these clients are not good business and should be let go in order to make room for clients that will better support your growth.

Consider increasing your capacity by incorporating advanced solutions. Manufacturers, for example, may consider using robotics to reduce costs and increase capacity and productivity. 3D printing is another great way to increase efficiency. For example, manufacturers can use 3D printing to put together product prototypes that are quicker, less expensive, and easier to produce, and are thereby speeding up the manufacturing process and using technology to enhance their productivity and competiveness.

Develop a marketing-communications strategy. In order to hire you, companies need to know you exist and that you are able to serve them. When you have completed your business plan and implemented the necessary changes within your company to execute on those goals, you should work with experienced marketers to determine how to best position yourself to your target audiences, differentiate yourself from competitors, elevate visibility of your company among these audiences, and motivate them to want to hire you or buy your products. Your marketing strategy also should include a plan for building direct relationships with key decision-makers by attending key events, providing seminars and workshops, distributing e-newsletters, etc.

Without a doubt, South Florida’s middle market is missing opportunities to serve local companies in industries that are growing right in our own backyards. Serving these growth industries is not only important to our local middle-market businesses — it will also bring significant benefits to our local economy by creating more local jobs, financial opportunities and economic growth.

James Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC. He may be reached via email at jcassel@casselsalpeter.com or via LinkedIn at https://www.linkedin.com/in/jamesscassel. His website is: www.casselsalpeter.com

Join Us in Celebrating Our Five-Year Anniversary

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We are thrilled to celebrate our five-year anniversary and thankful for the support from all our friends, clients, and colleagues that made our success possible. As the market has continued to expand, our firm has enjoyed tremendous growth based on the highly valued investment banking and financial advisory services we provide our clients in middle- and emerging-growth markets. These services include mergers and acquisitions; equity and debt capital raises; fairness and solvency opinions; valuations; and restructurings.

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Our key achievements include:

  • Completing more than 200 transactions and assignments nationwide – totaling more than $10.8 billion in value – in varied industries, including financial and business services, healthcare, retail, aviation, and technology
  • Growing our professional team by 100 percent
  • Publishing, in partnership with PitchBook Data, the Florida Private Equity Deal Report, a semi-annual, top-level breakdown of private equity in Florida
  • Sharing our firm’s subject-matter expertise and thought leadership in national media outlets such as Bloomberg, The Deal, American Banker and Mergers & Acquisitions Magazine, and local outlets such as Florida Trend and The Miami Herald

Looking ahead at the next five years, we will continue to invest in our business and expand in order to meet a growing demand for the quality investment banking services and advice we are known to provide.

Thank you again for your support – we could not do it without you. Please contact us if we can be of assistance.

YOUR MONEY-Graduating Into the Family Business

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By Beth Pinsker
June 2, 2015

There is one big advantage 23-year-old Clint Morrison has found joining his family’s business fresh upon graduating from Rider University: he has a job, while most of his friends do not.

“They’re all still sort of scrambling,” Morrison says.

The Morrison family business, Benefit Design Specialists Inc, administers employee benefit plans for small businesses and is based in Mechanicsburg, Pennsylvania. Dad Tim employs not only his youngest son, Clint, but also two older sons, ages 27 and 29, as well as his own sister, a sister-in-law, a cousin and about 10 other non-related employees.

The key to a harmonious office with so many family members? “You have to find a spot for them to be productive or they won’t make it in the family business,” the patriarch says.

Here are some tips on joining the workforce – with your relatives, according to family business experts:

START ELSEWHERE

There is no official tally of how many “& Sons” or “& Daughters” are among the 28 million small businesses in the United States, according to the Small Business Association.

Yet one of Clint Morrison’s business professors advised him not to start in the family business. The advice: go elsewhere and garner some knowledge of the industry first. Given the state of the job market and his family’s specialty niche, Morrison decided that was not feasible.

The strategy worked well for Laura Salpeter, who got a law degree and then worked for a few years at a law firm before joining her father Scott Salpeter’s Miami-based investment banking firm, Cassel Salpeter. Also working there, after a few years of getting experience with other companies, is Philip Cassel, son of Scott Salpeter’s partner. Both offspring are now 30.

“Working with my father was something I’ve always contemplated. So I dived into the business world and found out more about what it is,” said Cassel.

WORK YOUR WAY UP

Even if you spent your childhood playing in the family factory, that does not mean you are going to walk into a corner office once you get your diploma.

Robert Spielman, a partner in the tax and business services unit at Marcum LLP, advises clients that it is their job to make sure their kids are exposed to all aspects of the business, especially if they expect to hand it over to them one day.

For example, one of his clients, a fish distributor, hired several family members for its sales force. “But none learned how to manage the business, and eventually, they had financial troubles,” Spielman said.

The best way is to start at the bottom and experience all areas of the enterprise. If the family business is a trucking company, start out in maintenance, then drive for six months, go into sales and then assist in the financing side before managing the fleet and employees, Spielman says.

MANAGE EXPECTATIONS

The family business dream – that someday, all of this will be yours – can be a great motivator, but it can also instill an unwieldy sense of entitlement.

This happened to one family business owner client of Steve Faulkner, head of private business advisory for J.P. Morgan Private Bank’s Advice Lab. The son was lording his status over his coworkers and superiors, saying “Someday, I’m going to own all of this, and fire everyone I don’t like.”

When the son’s manager finally had the courage to tattle to the boss, he fired his own son. However, two months later, when the son could not find another job, the boss asked another manager to hire him back.

“That’s a horrible succession plan,” said Faulkner.

It is better, he says, for business owners to get their relatives to work harder than they ever have to be worthy to take over the reins.

Another of Faulkner’s clients does exactly this, down to a formalized training program for the fourth generation that is now joining the business. Newcomers spend up to six years training at international subsidiaries before being brought back to headquarters for management jobs.

The process drills respect into the employees, something Laura Salpeter says she has learned on the job.

Her top advice for those joining the family business? Understand you are working for your parent, not with your parent.

Navios, May 2015

Giving back to the community is smart business

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By James S. Cassel
May 17, 2015

James S. Cassel

Giving back can be great for the community and your business.

Companies and their people who support a healthy mix of charitable, community and business organizations tend to reap significant rewards. In addition to helping the community, this helps companies foster employee satisfaction, strengthen bonds with potential clients and referral sources, develop brand awareness, and position their brands in a more positive light. The relationships cultivated throughout this process also can create business and social opportunities that last a lifetime.

While many business owners recognize this potential, some struggle with implementing the right programs. They wish they had a crystal ball to know which organizations will bring the greatest personal satisfaction and business growth. Until we find that crystal ball, I can share some practical guidance I have found helpful for business owners navigating these issues.

First, identify and focus on your goals. Where do you see the future of your business and its growth? Then, determine what audiences you must reach to help you get there, and identify the community, charitable or business organizations with which these audiences are most involved.

Based on these considerations, examine your personal interests that align with these organizations. Are you more interested in organizations that mentor children or support technology growth? Focus on organizations that reach your target audiences while engaging you and your employees. This CANNOT be just for business. There must be a genuine interest in getting involved or it will not benefit anyone.

This is particularly true for board involvement. If you join a board but seem disengaged and rarely attend meetings, everyone will recognize that your heart is not in the cause. Conversely, serving actively on a board where you can roll up your sleeves, support the organization’s mission and demonstrate your skills is a powerful way to build relationships and therefore business.

Generally, organizations can be divided into three categories:

▪ Charitable organizations support philanthropic goals and social or public interests, such as the National Parkinson Foundation or World Wildlife Fund.

▪ Community organizations serve specific communities and may address specific interest or needs. Examples include United Way of Miami-Dade, Children’s Bereavement Center and Lotus House.

▪ Business organizations are nonprofit entities supporting commercial goals. They service civic needs and are a good place for networking as it plays a central role in chambers of commerce and other business organizations.

There are many ways to get involved. While writing checks is important, it is not enough for relationship-building. Depending on your company size, you may limit the involvement on company time, or you may offer your employees paid time to volunteer. You may provide a donation-matching program, schedule charitable group activities and encourage employees to find causes they’re passionate about. You can also support involvement after business hours.

The most basic involvement is attending events. This is a good way to meet new people and become more familiar with organizations and their people and confirm whether the organizations will be a good fit.

If you seek to build relationships, you should get involved with the committees or boards. Make sure you are comfortable with the organizations and their operations, and at that point, consider how you can get more involved. Again, follow your passions so it will be easier for you to stay committed long-term.

To build the right relationships, you must have a plan. Set realistic, quantifiable goals and specific steps to achieve them. For example: “I want to build a relationship with John Smith and Jane Doe.” So pay it forward and help them out. John is a fan of the Miami Heat, so invite him to a game. Jane wants to get more business from real-estate developers, so introduce her to some of your contacts.

When the time is right, however, you must ask for the business. Some people never get business because they don’t ask.

As the saying goes, “fish bite when they’re hungry,” so it’s important to keep your bait in the water. Stay top of mind with people after you have met them, such as a company newsletter or an occasional email to touch base, so that they will think of you when a business opportunity arises. Don’t make the mistake of meeting people and never following up.

Without a doubt, you can actively give back and support worthy causes while growing your business. The key is to develop a plan that will best support your goals and objectives in terms of personal satisfaction and business growth.

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

Ruthigen March 2015