Community Bank M&A Likely to Take a Twist With Covid-19, Advisors Say

By Surani Fernando
April 17, 2020



  • The ongoing economic crisis brought on by the coronavirus pandemic will likely see a shift in factors driving future M&A activity, including exposure to distressed industries and geographies, which may heighten the need for consolidation, advisors
  • Low valuations will dissuade sellers, and cash components of deals will need to be much higher, one advisor
  • Covid-19 may force even larger players to consider M&A options, and there could be more deals involving targets with $2 billion to $5 billion in assets, one advisor

The trend of community bank M&A will likely take a twist in the wake of the coronavirus pandemic as new challenges will reveal additional vulnerable targets, FIG sector advisors said. However, deal activity may not pick up until the end of the year as banks will take time after the financial markets stabilize to assess loan book damage, they added.

Prior to the pandemic, the industry was seeing a wave of consolidation among community banks looking to grow in scale and compete with the larger super-regional players, and the surge in 2019 M&A activity was expected to continue well into 2020, four advisors said.

In 2019, there were about 270 transactions, the highest in the last three years, said Jonathan Roberts, managing director of transaction advisory services at BDO. Macro trends and the need for scale were driving the consolidation especially in some of the larger states like Florida, Illinois and Texas, said Roberts. According to the Federal Deposit Insurance Corp. (FDIC), there are more than 5,000 community banks in the United States, which represent 92% of insured institutions.

Significant merger of equal deals in 2019 include First Horizon National’s combination with Iberiabank for $3.9 billion, and Texas Capital Bancshares’ merger with Independent Bank Group in a $3 billion deal.

The ongoing economic crisis brought on by the pandemic will likely see a shift in factors driving future M&A activity, including exposure to distressed industries and geographies, which may heighten the need for consolidation, advisors said. The pandemic is also expected to affect deals that are yet to close, as evidenced by Flushing Financial’s $111 million acquisition of Empire Capital, which was announced in October and has been delayed due to financial and stock market volatility.

M&A Dynamics to Change

Potential buyers need to focus on their own businesses now, and it will take time to build an offensive strategy, said James Cassel, chairman and co-founder of boutique bank Cassel Salpeter and Weber.

The more likely buyers for the smaller regional banks with $1 billion to $3 billion in assets are perhaps the institutions with $10 billion to $30 billion in assets, said Timothy Johnson, partner at KPMG’s transaction services, adding that mergers of equals between two banks each with $3 billion in assets are also a possibility.

When M&A activity in the space regains momentum, community banks in a position to use cash for deals are the likely consolidators, as depressed stock prices will deter sellers from agreeing to typical stock deals, Cassel and Johnson said. Low valuations will dissuade sellers, and cash components of deals will need to be much higher, agreed Osnat Naporano, managing director at independent investment bank Brean Capital.

Geographies will play a big role in where community bank M&A might occur, said Naporano. Florida has historically seen a high number of community bank mergers, while Arkansas, Louisiana and Oklahoma have also been active states, said Johnson. Traditionally banks within the same geography merge to build a larger community presence, but this could be an opportunity for regional banks to expand into another geography, said Cassel.

But for the time being, pre-Covid-19 negotiations have been halted as the industry waits for the financial markets to settle, advisors said. Only then will it be possible to evaluate the extent of the damage caused by the global shutdown, particularly to small businesses, the advisors added.

Once the economy is in a less volatile state, it could take up to three months to fully assess credit losses and the credit quality of the loan books, said Roberts. If that initial stability comes sometime in the summer, it may mean no deal flow until the fourth quarter at the earliest, Roberts said, with the other advisors agreeing on the timeline.

In 2019, a larger majority of community bank M&A involved targets with less than $1 billion in assets that were struggling to compete, said Johnson. The trends of the past year spoke to long-term community bank consolidation, and at the start of this year, given margin pressures and the lack of economies of scale, there was anticipation for mergers among smaller banks going as low as $250 million in assets, said Roberts. But Covid-19 may force even larger players to consider M&A options, and there could be more deals involving targets with $2 billion to $5 billion in assets.

Covid-19 Direct Impacts

Covid-19 will amplify the yearn for digital enablement as citizens get used to accessing their online account for banking needs, and given that expansion requires capital investment, M&A among smaller banks may be the only way to achieve that, Johnson said.

The next few months will be telling, and the major difference between now and the global financial crisis is capital, Cassel said. Regulators did a good job of making sure banks had adequate capital to withstand stress in their loan portfolios, said Johnson. Even so, being liquid will be much more important, said Naporano, adding that better deposit franchises will be more attractive.

The U.S. Federal CARES Act has resulted in a surge in applications for the Paycheck Protection Program (PPP), and smaller banks may struggle to service this demand, Johnson said. Consolidation may be one avenue to maintain customer service standards, which is  the main draw for community banks, he added.

A big concern is around commercial real estate, and the exposure that banks have in their unique geographies, Naporano and Cassel said. Johnson agreed, saying over the next three months, institutions over indexed to commercial real estate may need help sooner than later, and if they have a decent franchise that is distressed, it may push them closer to a transaction.

It will be unique to the institution, but banks with a fair amount of business in the hospitality and leisure space, will be exposed to higher risk. Community bank books reflect the health of the economies in their geographies. Florida and Southern California, for instance, have local communities that are dependent on tourism, while community banks in Texas could be suffering due to links to the energy industry, said Roberts.

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What Is Cash Basis Accounting?

By Mark Henricks
April 08, 2020

Learning about cash basis accounting, one of the most common business accounting methods around, can help your company’s cash flow.

The two most common methods of business accounting are cash basis accounting and accrual accounting.

While each has different characteristics and advantages, the basic difference between them comes down to timing.

Cash Basis Accounting: Examples

“Cash basis accounting captures transactions when there is cash involved,” explains Lisa Koonce, an accounting professor at the University of Texas at Austin. “For example, when buying office supplies, the company typically pays cash for them. Under cash basis accounting, the company then has a business expense and a reduction in their cash balance.”

For an example of how cash basis accounting would work with revenues, consider a small business that sells to other businesses. Its customers pay its invoices in 30 days. The business would record revenues from sales when the payment actually arrives, 30 days or so after the invoice is sent.

With expenses such as payroll, a similar small business would record the expense of paying workers on payday. In other words, cash basis accounting calls for recording payments to workers when paychecks are actually distributed, rather than when the workers earned the pay.

Cash basis accounting adequately reflects many small firms’ financial situations, says James Cassel, chairman and co-founder of Miami investment banking firm Cassel Salpeter. Restaurants, for instance, are often well-suited to cash accounting because there’s little difference in the timing of when they receive money and pay bills.

“With most restaurants if they’re paying bills on time, everything is within 30 days. They’re getting paid when the customer comes in with cash or a credit card, then receiving the credit card payments in a couple of days,” Cassel says. “It doesn’t make a lot of difference in how they manage the business whether they use cash or accrual.”

Accrual Basis Accounting: Examples

“In contrast, accrual basis accounting captures transactions when an economic event occurs, which may or may not involve cash,” Koonce elaborates. “So, for example, when a company uses electricity, they would under accrual accounting recognize electricity expense at that time. They would do so even if the payment for that month’s electricity bill occurs later on, like the next month once the bill arrives.”

Payroll provides another important example of how accrual basis accounting treats expenses. A business using accrual basis accounting would record the costs of paying its workers as they do the work, rather than when the paychecks are distributed.

Revenue works similarly. A business using accrual basis accounting records income when the company has earned the revenue. So a consultant would record revenue as billable hours are completed. A building contractor would record revenue when a remodeling job is finished. A manufacturer would record revenue when product has shipped.

In these cases, actual payment may not arrive for weeks or even months, but the revenue is recorded when it is earned.

Which to Use? Cash vs. Accrual Basis Accounting

Since cash basis accounting is focused on cash transactions, it highlights other differences between the two accounting methods. For instance, cash accounting doesn’t recognize accounts payable or accounts receivable, which are important parts of accrual accounting.

The cash accounting method is more popular among smaller businesses. Sole proprietors, especially those who don’t have inventory, are particularly likely to use cash basis accounting rather than accrual accounting.

“Cash basis accounting is much simpler than accrual basis accounting, so for small businesses it is a more cost effective way in which to keep track of transactions affecting the company,” Koonce says.

Although it’s simpler, cash basis accounting does have some limitations.

“The biggest disadvantage of cash basis accounting is that it doesn’t capture economic transactions in the right time period,” Koonce notes. (For instance, a business incurs expense for electricity when the business uses the electricity, not when it pays the bill the following month.)

Looking at cash flow seems more straightforward and less complicated for a business that uses cash basis accounting, Cassel notes.

“If you have more money in the bank at the end of the month than in the beginning of the month, and you have paid all your bills, it’s a good month,” he observes.

But accrual basis accounting can give a more accurate financial picture of business’ financial status, especially if there’s a time gap between having to make and receive payments. Accrual accounting is often more useful for long- term planning, Cassel says. This is part of the reason why larger companies are more likely to use accrual accounting.

Another key reason for using accrual accounting is when it is required by a third party. If a business is looking for a bank loan or preparing for sale, the lender or buyer might require accrual based accounting, Cassel says. In addition, public companies always use accrual based accounting.

Lenders, investors and private equity buyers often want a business to have audited books, he explains. And an audit performed under Generally Accepted Accounting Principles (GAAP) requires accrual accounting.

The Internal Revenue Service also has rules about using cash basis accounting. The IRS will accept either approach, including a hybrid of the two, with some exceptions. One is if a company that is not an S corporation has more than $25 million in annual sales. In that case, the IRS requires accrual accounting.

If accrual accounting is not required by some third party, companies are free to use either method. Some use a combination of the two, employing accrual method for sales and purchases of inventory and cash for other income and expenses. Companies may also use one method for managing the business and the other when it comes to filing taxes, Koonce says.

Companies can switch from cash basis accounting to accrual accounting for tax purposes by filing Form 3115 with the IRS. Switching often occurs as a company gets larger and long-range cash flow planning and dealing with investors and lenders becomes important, Cassel says.

But switching accounting methods isn’t common, and it usually means going from cash to accrual.

“From the IRS standpoint you can pick a method, but once you pick it you have to stick with it. You really can’t go back and forth,” Cassel says. “And generally, you see people change from cash to accrual. It’s rare you see someone go from accrual to cash.”

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Are we headed for a depression? Economists weigh in

April 4, 2020
By Erik Sherman

Another day, another surprise for the economic forecasters: a record 6.6 million people filed for unemployment last week. Oxford Economics in an email called it an “incomprehensible jump” that may be “the new normal.” Joe Brusuelas, chief economist for middle market audit and advisory firm RSM, wrote that such “tectonic shifts” imply a “real-time unemployment rate of 10.1% at a minimum.”

There is so much uncertainty in the world right now that economic forecasters are downgrading their predictions almost as fast as they can make them. Within a few weeks, Goldman Sachs downgraded its second quarter GDP estimates from –2% to –24% to –32%.

Fortune discussed the issue with 10 economists and financial market experts. Most at this point consider a recession essentially a given. And a depression? That’s where opinions start to diverge wildly.

After all, out of the 22 recessions since 1900, according to the National Bureau of Economic Research, only one was dire enough to warrant such a title: the Great Depression. There had been four in the preceding 19th century.

Right now there appear to be two camps. Those in the first say economic fundamentals have been essentially sound and that a depression is almost unthinkable. The other group says that a depression is very much a possibility.

What is a depression?

Unlike a recession—two consecutive quarters of negative GDP growth—there is no compact universal definition of a depression.

Absent an official definition, economists have a variety of working ones. According to some, “in a depression, you have to have a decline in GDP of two or more years,” said Shahid Hamid, professor of finance and chair of the finance department at Florida International University. “Another is if the GDP decline is greater than 10% [for two years]. A third is if unemployment is more than 10%,” again for two years.

Then there are economists who take a more relative approach. “Some people say it has to be a year [of severe economic contraction],” said Derek Horstmeyer, an associate professor of finance at the George Mason University School of Business. “Some people push it further.”

There is even a question as to whether it must be obvious to everyone at the same time. “It is possible for one sector of a society to be trapped in an economic trough—a depression—while another sector is feeding from the trough and living the high life,” said Michael Merrill, an economist, professor of professional practice, and director of the Labor Education Action Research Network in the Rutgers School of Management and Labor Relations. “Traditional Middle America has known exactly such a situation since the mid-1970s, and African-Americans have known it for even longer. The effects are evident in every health, economic, and social welfare statistic one might want to consult.”

Or, as goes the old saying that James Cassel, co-founder, and chairman of investment banking firm Cassel Salpeter & Co., mentioned: “When your friend’s out of a job, it’s a recession. When you’re out of a job, it’s a depression.”

As with recessions, depressions are typically diagnosed in retrospect, after the data is in. But that typically comes after events have happened and not as they are occurring, unlike in many other aspects of American life.

“We actually have data for minute-by-minute listeners to major radio shows,” said Usha Haley, W. Frank Barton distinguished chair in international business, professor of management, and director of the Center for International Business Advancement of Wichita State University. “We know who’s going to buy products and what’s going to happen. Here, for the first time, we don’t have [the economic data we need to forecast].” The changes are so swift and large that forecasters can’t build projections from patterns in the recent past.

“This [pandemic] scenario is very new, and economists don’t have a good model to predict how the recovery would be,” Hamid said.

There is also an inherent issue in how economists measure GDP. They usually look at change between quarters and then project that out into an annual growth rate. When a forecast projects that GDP will be –32% in the second quarter, it’s really saying that if the change between the first and second quarter kept up all year, it would be like losing 32% of GDP over that year.

That can get confusing for a lay audience when trying to understand the state of things. “The way the quarter-over-quarter math works, if it goes down a lot in quarter one and it stays at that low level of activity in quarter two, [the rate is] zero,” said Steven Blitz, chief U.S. economist of TS Lombard. Suddenly the rate economists and the media mention is 0%, which sounds far better than –32%, but it means things are still as bad.

Between all these factors, trying to pinpoint whether we’re heading for a depression is extremely difficult.

The optimists

The optimists, if you can call them that, cite a basically strong economy, the noneconomic nature of the pandemic, and the presumption of pent-up demand once things are back to normal as evidence that as quickly as we fell into this hole, we can pull out of it.

Florida International University’s Hamid is among those who think a depression is “very, very unlikely” given the economy’s performance coming into the crisis. Haley at Wichita State University agreed. “We’re in the center of it all,” she said. “We’re on the battlefield. Once that is over, we will recoup.”

In an email to Fortune, Kundan Kishor, a professor of economics at the University of Wisconsin–Milwaukee, saw a depression as only a “one out of 100 chance.” He sees two potential likely scenarios. One is a large drop in the economy and rapid recovery in the third and fourth quarters. The other is a “double-dip recession” if the pandemic reemerges in the fall.

If an economic fall happens and continues for months, the situation becomes more grave, thinks Sevin Yeltekin, a professor of economics at Carnegie Mellon University’s Tepper School of Business. “But if we can restart, even a staggering restart, we’re not really destroying capital,” she said. “We’re not destroying labor. The ramping up should happen quite quickly,” putting danger at a distance.

“When you recognize that the contraction of economic activity was imposed [as a response to the pandemic] and therefore can be lifted, that makes this very different from your plain-vanilla ordinary recession in which policy missteps turned into a depression,” explained TS Lombard’s Blitz.

The pessimists

And then there is the other view. “Most economic models now point to a 25% to 30% unemployment rate in Q2,” said George Mason’s Horstmeyer, who focuses more on the degree of contraction and not the length. “The numbers we’re seeing trickling in are very bad. This projection is worse than anything we saw in the Great Depression. So we can certainly call this a depression even if it only lasts for a quarter or two.”

Alessandro Rebucci, an associate professor of finance at the Johns Hopkins Carey Business School, also stressed the depth of the collapse that his research shows using current indirect measures of activity, like energy use and traffic patterns. “This [recession] poses formidable challenges and could be more prolonged and more severe, possibly worse than the Great Recession of 2008 to ’09, which lasted six quarters and saw the unemployment rate reaching 10% of the labor force,” he said. “Current estimates put it at two to four times as severe, making it more profound than the Great Depression.”

Rebucci also points to cascading effects that will stretch through the economy. “People will start to lose jobs, which means they will lose houses,” he said. “We’re used to thinking of recession driven by shocks that are short-lived. This is not only a shock that will last a while but will have long-term effects. What is shocking is that institutions continue to forecast moderate output declines, which has to do with the fact that they don’t want to sound the alarm.”

“The odds of a depression are quite high,” says Merrill of Rutgers—in fact he thinks we might already be in one. While the stimulus packages will “slow the decline somewhat,” changing the direction of the economy means addressing the pandemic and bringing it under control, and then restoring confidence afterward. “As long as people remain afraid of getting deathly ill and maybe dying every time they go to a mall, grocery store, or barber shop, the economy will not recover,” he said.

Avoiding the danger

For the U.S. to avoid a depression, says Blitz, three things must occur.

  • First, the Federal Reserve must do everything in its power to ensure that “credit contagion doesn’t cascade through the system.” The Fed has taken many extraordinary steps not seen since the 2008 collapse, which hopefully will keep the global financial systems If there are additional liquidity problems, however, the Fed may have reached the end of its options.
  • Second, the federal government needs a large enough fiscal response of the right type. The $2 trillion aid package is enormous, but Blitz thinks it may not offer the best approach. “The problem with giving people money to spend [is that] you have to be balancing that against the fact that you have social distancing rules preventing people from spending money,” Blitz said. “I’d rather them front-load a trillion dollars of spending by all the various nondefense government “
  • The biggest question is Blitz’s third point—that the shutdown of activity needs to end quickly. “You need to stop the imposition of social distancing sooner [rather] than later, and government has to realize that the lifting of this can’t be a six- to 12-month process,” he “Then they have to encourage people to go out and live their lives. Once government takes this power to shut things down, they’re very reluctant to give it up.”

Although Donald Trump has said that he’d like to end isolation by the end of April at the earliest, the mathematical models the administration is using suggest that social distancing may have to continue through at least May. And that aggravates the problem.

Because while scientists are working to make strides on treatments and vaccines for coronavirus, economists are still searching for their magic bullet: a way to bring an economy out of a depression.

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3 Expert Strategies for Curbing Coronavirus-Related Business Losses

Business experts offer their best tips for businesses who are struggling during the COVID-19 pandemic.

By: Erik J. Martin, Contributor

The worldwide coronavirus outbreak threatens to disrupt operations for companies large and small for the foreseeable future. In fact, 82% of business leaders recently surveyed by the Young President’s Organization anticipate revenue declines over the next six months. To help stem losses, 95% of chief executives polled are taking action, including canceling major events (64%), nixing business travel (53%), cutting costs (39%), and allowing employees to telecommute (28%).

There’s much you can’t control during uncertain times like these, but you can take steps to protect your enterprise from being financially crippled by COVID-19. While we recognize that there is no one-size-fits-all solution, following are three expert-recommended strategies to consider in helping your business survive the pandemic.

“Create a 13-week cash flow forecast, which should be stress-tested to explore likely scenarios, including worst-case scenarios.” James Cassel, co-founder and chairman, Cassel Salpeter & Co.

Forecast cash flow and boost liquidity

James Cassel, co-founder and chairman of investment banking firm Cassel Salpeter & Co., said your company’s survival depends on addressing financial/liquidity issues during this crisis.

“Create a 13-week cash flow forecast, which should be stress-tested to explore likely scenarios, including worst-case scenarios,” he said. “Here, you must consider your cash needs looking ahead after thoroughly reviewing fixed and variable expenses.”

Concurrently, seize every opportunity to maximize cash inflow by offering cash reductions to customers and clients who pay more quickly.

“You also want to make what you have last longer. To help, reschedule where you can toward a longer payment period for outstanding expenses. And head to the negotiation table with your vendors, keeping in mind that many of them are facing the same issues you are,” added Cassel.

Lastly, amplify liquidity via extended credit, a second mortgage or a business loan. Small business owners impacted by COVID-19 in many states are now eligible to apply for a U.S. Small Business Administration (SBA) low-interest loan.

Coronavirus Guide for Small Businesses

CO— is working to bring you the best resources and information to help you navigate this challenging time. Read on for our complete coronavirus coverage. Coronavirus Small Business Guide

Log your liabilities

Risk management consultant Frank Russo, founder/principal of Procor Solutions, preaches the significance of proper documentation in the weeks and months ahead.

“As costs begin to pile up and losses are evaluated, small businesses must act now to document all impacts and losses related to the coronavirus in a clear and comprehensible manner,” he says.

Effective record-keeping can, for example, improve your chances of getting reimbursed punctually for business insurance claims and receiving assistance from the federal government or your local small business administration.

Russo specifically advises two key steps. First, establish a separate account number or charge code in your cost accounting system under which all COVID-19-associated costs/losses will be captured; this will be the tracking mechanism used to evaluate all such costs across your business. Second, calculate your company’s operating “baseline”—which means conducting a two- to three-year review to compare your business’ performance before and during the pandemic.

“Sound financial supporting documentation and memorializing and updating the story of your interruption is key,” said Russo. For help with these tasks and expert guidance, “it’s also important to reach out to experts who deal with business interruption events, including attorneys, insurance brokers, risk management professionals and CPAs.”


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In the grip of COVID-19: Survival tips for your business

By James Cassel

Shrouded in uncertainty and panic, COVID-19 is an ominous “gray rhino event” which, while not unanticipated, was ignored, and has significant social and economic impacts. With industries in crisis, markets plunging, and doomsayers predicting an economic catastrophe of apocalyptic proportions, what can a middle-market business do to survive?

Start by putting developments into perspective: We’ve survived other difficult situations and although we will not emerge unscathed, and it’s hard to estimate how long the turmoil will last, this too shall pass. Gather your key advisors and begin assessing the situation. Strategic planning, and developing solutions before matters get worse, is essential to weathering this challenge.

Get moving now. It’s not too late, but time is not your friend.

Take a look at your financial situation, including your liquidity, cash availability, and accounts receivable. Stress test your financial model. Prepare a 13-week cash flow, forecasting anticipated cash income, your needs going forward and reviewing fixed and variable expenses, while looking at ways to bring in cash and stretch it out. For example, if you pay outstanding invoices within 10 days, you may want to pay after 30 or 45 days.

Consider extending discounts to customers who pay more quickly and negotiate better terms with vendors. Look at ways that you can access capital, such as expanding your existing credit, taking out a new business loan, or even a second mortgage on your house. The White House announced a new emergency SBA government loan program—see if you qualify as information becomes available.

If you have a loan with a commercial bank, talk to them about ways they might be able to help, like allowing a temporary moratorium on your principle, paying interest only, and possibly extending you additional credit. If you have one, reach out to your financial sponsor for monetary assistance, or to shareholders who also have an interest in seeing your business pull through.

Try to hold on to good customers who may also be having temporary liquidity issues. Give them better terms for payment or allow them to defer orders if possible. Together, develop creative solutions to help them overcome the challenges. This will not only ensure you keep valuable customers, but it will forge loyalty to you and your company.

Reduce overhead costs. It may be a matter of survival. You may have to furlough some workers, or initiate layoffs. Factor into the equation severance pay to determine whether laying off staff is really cost effective. You can also ask your higher paid employees to take a temporary reduction in compensation. To avoid issues, seek the advice of an employment attorney and an HR consultant.

Communicate with your employees. Be straightforward, yet positive and focused on solutions. If they get sick, consider helping them with medical deductibles, and require them to stay home. This will encourage them to seek treatment and also help avoid decimating your workforce through contagion.

As schools close, if your employees are continuing to work at your premises, arrange for on-site daycare. Efficiency may suffer, but at least team members with children will show up and keep your company going.

If employees start working from home, do you have the laptops and technology your staff will need? If so, test them to ensure they’re in good operating condition, and that your team is properly trained on them.

Keep close tabs on the measures policymakers may be putting into place to help businesses. These can range from reimbursing workers who need to take sick leave to potential tax cuts and credits.

If things deteriorate for your business, reach out to attorneys, a restructuring professional, and an investment banker who works with distressed companies for assistance.

Things will probably get worse before they get better, but we are a resilient nation and we’ll come out of this stronger. To stay afloat, prepare for the worst. And who knows, if a vaccine is developed in the next 12 months or so, that dreaded gray rhino could soon be turning tail.

James S. 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 or via LinkedIn at

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Coronavirus squeezes South Florida businesses

By David Lyons And Ron Hurtibise
Mar 17, 2020

The plea to Washington couldn’t have been more direct: Silver Airways, the Fort Lauderdale-based regional airline that serves Florida and the Caribbean, needs financial aid to survive.

In a statement, CEO Steve Rossum asked local, state and federal governments Monday “to provide critical and immediate financial aid required in order for the airline to survive the most direct crisis the industry has ever faced.”

The company, which employs 1,000 people and maintains a significant presence at Fort Lauderdale-Hollywood International Airport, did not say whether it is about to furlough people or eliminate jobs. But the implication was clear: Time is of the essence or drastic measures may be next.

“We are in dire need of any assistance you can provide that will allow us to continue flying and providing the safe, reliable air transportation that is critical to the Southeastern U.S., Bahamas and the Caribbean,” Rossum said in a letter addressed to several high ranking officials including the secretaries of Treasury and Transportation, and members of Florida’s congressional delegation. “We hope and trust you can be in a position to support this need.

The plea was probably among the most profound from a transportation industry that says it is unable to cope with the effects of the fast-moving coronavirus. As Silver publicized its letter, pilots unions were cutting modified labor deals with American Airlines and Delta Air Lines after both announced severe service cutbacks.

The moves are symptomatic of the cracks that are appearing elsewhere in South Florida’s consumer service-heavy economy, where billions of dollars change hands annually among tourists, full- and part-time residents, business operators and investors.

Companies seeking help

Within the last week, companies large and small have resorted to self-help, meaning some have laid off employees, temporarily suspended service or borrowed more money. But many seemed to be stopping short of sizable layoffs to preserve their businesses. On Monday, Florida reported record low unemployment for January at 2.8 percent, a reminder that the labor supply in many industries such as lodging, construction and technology remains tight. As much as owners want to save money, many want to retain top talent.

Still, dark clouds continued to gather over South Florida’s most important industries Monday as Silver released its call for help and Carnival Corp. announced it expects to lose money this year and intends to borrow $3 billion over the next six months to meet general spending needs. The move came after Royal Caribbean said last week it would cut several hundred contract employees and borrow another $550 million.

Lesser known businesses are following similar strategies, though the companies with access to millions to borrow are few and far between. Among small businesses, the defensive measures are not confined to bars, restaurants and entertainment venues.

Basic Fun, a toy maker based in Boca Raton, recently laid off 18 people, or 10 percent of its work force, due to reduced demand and disruption of supplies from China, where the coronavirus exploded, said its CEO, Jay Foreman.

“We’re going to need support for small and medium-sized businesses by the government,” Foreman told CNBC. “They’re going to have to backstop the banks so the banks can backstop small business.”

Warby Parker, the national eyeglass retailer, temporarily shut the doors of all of its stores around the country through March 27, including those on Las Olas Boulevard in Fort Lauderdale and at the Boca Town Center.

“COVID-19 is impacting all of us — as individuals and as communities — in unprecedented ways,” the company said on its website. “Given the rapidly changing environment, we have decided to temporarily close all of our stores… for the safety of our customers, our employees, and the general public.”

Management said its retail employees will still be paid “as if they were working in stores during this time.”

Long-term damage

Not everyone was hedging their payroll bets. Humana said it is looking for 100 new workers to staff a call center in Miramar.

But South Florida financial experts who help companies fix their financial problems are doubtful the adverse economic impact of the virus will be short- lived.

Bankruptcy lawyer Paul Singerman of Berger Singerman worries about the staying power of vendors and other companies that support the hospitality, cruise line and aviation industries.

“These are going to be the front line of casualties,” he said. “As you know, it’s small business that employs the majority of employees in this country.”

He recalled the financial damage suffered by raw material suppliers and skilled workers in the construction industry after the housing collapse of 2007. “The ripple effect in the cruise, hospitality and aviation are bigger and that concerns me,” Singerman said.

Investment banker James Cassel of the Miami firm Cassel Salpeter sees the potential for a spike in jobless rates if the virus problem is prolonged.

“This is not going to be something that is over within two weeks, this is going to go on,” he said. “We’re going to see a huge increase in unemployment.”

And those unemployed workers are going to need financial help. Federal and state lawmakers, along with community-level nonprofits, are working on assistance packages meant to keep businesses and their employees afloat through the crisis.

Federal assistance

Help for employees who experience layoffs or severe pay cuts passed the U.S. House over the weekend but must still be approved by the Senate, which is under pressure to pass it as soon as possible. It’s part of a comprehensive package of economic stimulus measures projected to be worth as much as$800 billion.

As House and Senate leaders began negotiations Monday, disagreements remained over the scope of the assistance and which workers would be eligible.

For example, the House bill provides two weeks’ paid sick leave and up to three months of paid family and medical leave equal to at least two-thirds of their pay. But those benefits would be available only to employees of companies that employ fewer than 500 people, and only if they get sick, quarantined, must care for a family member or are affected by school closings.

Employees of large companies would not be eligible, under the House proposal. One senator, Tom Cotton, R-Arkansas, said on Fox & Friends Monday that the bill “doesn’t go far enough and it doesn’t go fast enough.”

The multibillion-dollar bill would provide $1 billion for food aid, to be distributed through food banks, school lunch programs and the federal Supplemental Nutrition Assistance Program, or SNAP. It would also suspend work and work training requirements for SNAP recipients.

In Florida, Gov. DeSantis has asked all businesses to complete a Business Damage Assessment survey, managed by the Florida Department of Economic Opportunity, to help the state figure out how to most efficiently distribute the coming federal assistance, including economic injury disaster loans to made available through the federal Small Business Administration.

United Way chapters in Broward and Palm Beach counties are soliciting donations through their websites to help residents experiencing hardships because of the coronavirus.

Kathleen Cannon, president and CEO of the United Way of Broward County, said on a conference call of Broward business leaders Monday that the donations will help displaced workers make rent, mortgage and utility payments. “We want to prevent people from falling into poverty,” Cannon said.

Donations can be made at and Miami-Dade County’s United Way chapter plans to roll out its own program soon, the chapter’s executive director said Monday.

While federal relief programs remain under negotiation, workers who have already been laid off or had their hours cut are encouraged to begin applying for assistance through existing programs, such as Florida’s unemployment insurance benefits, as most new aid will be distributed through those channels.

Where to find help

Links to information about many types of federal and state benefits are compiled at the site

Unemployment assistance: Available for workers who lost their jobs  through no fault of their own. In Florida, a maximum of $275 a week is currently available for a maximum of 26 weeks, though the federal assistance package will likely extend that eligibility. All claims must be completed online at

Food assistance: The Florida Food Assistance Program administers the Supplemental Nutrition Assistance Program, known as SNAP. To apply, go to and click the link “Apply for Benefits.”

Feeding South Florida, a regional food bank serving about 300 nonprofit agencies, is distributing ready-to-eat food. To determine eligibility for food and other benefits, go to or call 954-518-1857.

Homelessness prevention assistance, including the Emergency Solutions Grant Program:

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Loans You Can Get with Bad Credit

By Adam Uzialko
Feb 28, 2020

If you have a bad credit score and need a business loan, these financing options could help you secure the funding you need.

  • Borrowers with good credit can usually access bank loans with favorable terms and low interest rates.
  • Less creditworthy businesses might have to turn to alternative lenders that offer more expensive financing options.
  • Using financing to stabilize your business and repair damaged credit scores is possible but risky.

Every business needs funding, and many turn to loans. Unfortunately, not every business has the sterling credit required to receive a loan from a bank with favorable terms and low interest rates. If your business doesn’t qualify for a bank loan, where else can you turn?

There is an entire industry of alternative lenders that aim to fill the gaps where banks are unwilling or unable to lend. However, accepting money from alternative lenders requires business owners to be savvy, lest they dig themselves deeper into debt.

What do lenders look for when considering a business loan?

When many businesses require funding, their first stop is the bank or some other conventional lender, like a credit union. These financial institutions offer a variety of financial products, including term loans and SBA 7(a) loans.

What does it take to qualify for a loan from a conventional lender? Typically, these financial institutions look for several things, including:

  • Credit score: For a business, there are two types of credit scores that matter: your business credit report and your FICO credit
  • A business credit score is tied to your Employer Identification Number (EIN), which can be registered with Equifax, Experian or Dun & Bradstreet. Each organization has its own method of calculating business credit scores; for example, Experian considers factors like credit utilization, size of the business, length of time in business, public records and the  owner’s  personal credit score to calculate a score ranging from one to 100.
  • A FICO credit score is your personal credit score, which ranges from 300 to 850. The FICO credit score is tied to your Social Security number and is calculated by three credit reporting bureaus: Equifax, Experian and A FICO credit score is calculated using several factors, including debt repayment history, outstanding debts, length of credit history and whether you have any new lines of credit open.
  • Debt-to-income ratio: Your debt-to-income ratio is a percentage that expresses how significant your required debt service payments will be in comparison to the money you bring For example, if you owe $30 and your income is $100, your debt-to-income ratio is 30%. Generally, lenders will look for a debt-to-income ratio in the mid to low 30s, though sometimes businesses with a debt-to-income ratio up to 43% can be approved for a loan.
  • Cash reserves: At a bare minimum, lenders want to see businesses maintain several months’ worth of expenses in cash reserves. Depending on the lender you are working with, they might expect three months of cash reserves to be kept on hand, while others prefer six months or more. Cash reserves assure the lender that even if unexpected expenses arise or a slowdown in sales occurs, your business can still cover loan repayments.
  • Collateral: Lenders will also consider the assets your business holds as collateral to back the loan in the event you don’t have money available to make your payments. Common assets used as collateral include equipment or machinery, land and other real estate.

As part of your loan application, you will likely have to provide several months’ worth of bank statements so lenders can understand your business’s cash flow. However, few elements are as important to a conventional lender as a business’s credit score and the personal credit score of the owner.

What is the credit spectrum?

Lenders look out upon the vast sea of potential borrowers and see a credit spectrum that ranges from very bad to very good. Depending on a business’s position in the credit spectrum, certain types of funding might be unavailable to them. Businesses with great credit can usually obtain long-term loans at low interest rates, but less creditworthy businesses might have to pursue more expensive and risky funding options.

“On the one hand of the credit spectrum is someone who can walk into a major bank and borrow money on the business’s credit, not a personal guarantee,” said James Cassel, co-founder and chairman of Cassel Salpeter & Co.

Those borrowers can expect low interest rates ranging from 2% to 5% on a term loan. Of course, Cassel added, that’s only true for “stellar businesses with great history.”

“On the other side of the rainbow are businesses that can’t get money from any kind of institutional lender,” Cassel said.

And just as there is a broad spectrum of credit scores for potential borrowers, there is a spectrum of financial products. Some, like bank loans or SBA 7(a) loans, are available to creditworthy borrowers, while businesses with decent credit might require a guaranteed loan.

What types of business loans can you get with bad credit?

What can businesses with bad credit do when they need funding? If their credit history isn’t good enough to obtain a loan from a conventional lender, businesses often turn to other types of financing, often provided by alternative lenders or private lenders. While the flexibility and speed with which these loans can be approved are useful to borrowers with bad credit, the terms can also be restrictive and the loans expensive.

“The further down you are in the credit funnel, the worse the rates are,” Cassel said. “With great credit, it could be 5%; with bad credit … it could bethe equivalent of 40%.”

Some of the most common loans available to businesses with mediocre or bad credit scores include:

  • Short-term loans: Short-term loans include both term loans that are repaid in three years or less, as well as lines of credit repaid within one year. Businesses with good credit will also leverage short-term loans because of their low cost and easy approval process. For businesses with credit issues, short-term loans can be useful because lenders often prioritize cash flow over credit score. So long as you have enough revenue and reserves to support a short-term loan, a lender will likely approve your application.
  • Hard money loans: Hard money loans include several different types of loans that are backed by a collateral asset rather than a credit score. Most often, the assets used as collateral are real estate, such as a building or plot of land. A bridge loan, for example, is a type of hard money loan that is often used when redeveloping a The loan is secured by the value of the real estate upon completion of the project, allowing the lender to foreclose on the property if the borrower defaults on the loan.
  • Invoice financing: Factoring,” or invoice financing, isn’t truly a Rather, a business owner essentially sells their accounts receivable to a factor at a reduced rate (typically ranging from 70% to 90% of the total value.) Once the outstanding invoices have been sold, a factor typically begins collecting the payments owed directly from your customers. Invoice factoring can be useful for seasonal businesses or when you need growth capital. However, using this option to cover operational expenses is a risky maneuver.
  • Merchant cash advance: A merchant cash advance is also not technically a Instead, it is a form of financing that is backed by credit card sales (or sometimes just revenue in general.) Based on your sales volume, a lender will offer a lump sum payment in exchange for a portion of every credit card sale until the loan (plus fees) is repaid. Merchant cash advances can be very expensive and are considered a financing option of last resort.

Before accepting any type of funding, do your homework. Research the lender thoroughly to ensure they are a reputable brand and not a predatory lender. Closely review any agreements before signing; have your attorney and accountant review them as well, if possible. Only accept money that you can realistically pay back in the specified time. Otherwise, financing could expedite the demise of a financially troubled business.

How to qualify for a short-term loan with bad credit

Short-term loans are a type of small business loan that closely resembles a conventional term loan in many ways. Short-term loans carry an interest rate and require repayment of both principal and interest within a certain period, just like a bank loan. However, because the term is less than a year, short-term lenders are more concerned with a business’s cash flow than its credit score.

“Banks ask for all types of collateral, and personal credit is very important to the bank,” said Michael Baynes, co-founder and CEO of Clarify Capital and a community member. “What’s important to us is cash flow [demonstrated] through six months of bank statements. If we feel [a business’s] bank balance can support our funding over the next four to 12 months, we’re comfortable lending to them regardless of personal credit score.”

Generally, Baynes said, alternative loans require a one-page application along with a minimum of three months of bank statements. That’s all an alternative lender needs to approve or deny a potential borrower’s loan application. But what exactly are alternative lenders looking for in a loan applicant?

“The most common reason we reject an application is due to a business being overleveraged,” Baynes said. “If they already have existing debt … and we feel additional payment would overleverage them, we would turn the business down.

“The other reason an application would be declined would be low revenue and low daily bank balances,” he added. “We need to see $10,000 to $15,000 per month in revenue or deposits. If they struggle with overdrafts or negative days in their bank account, we’re not confident they can make the payments.”

The approval process for these types of alternative loans tends to be much faster than conventional banks, which generally take weeks or months to approve or reject a loan application. If approved, funding for alternative loans can often be delivered within a few days at most.

To expedite approval, it’s important to maintain good financial documentation. According to Cassel, keeping detailed, accurate books is one of the most important things a business can do.

“Make sure your financial house is in order,” he said. “Every business needs to have monthly financials. They need to be available no later than 10 to 15 days after the end of month. Some businesses don’t get them until 90 days after the month. Then you’re 90 days further in the hole, and it’s too late to correct it.”

Good books not only help you avoid financial trouble, but they give lenders the insight they need to make a decision as to whether or not to extend financing to your business.

How can you begin repairing bad credit?

There are advantages to repairing a damaged credit score even if you do qualify for funding. According to Baynes, an improved credit score can avail your business to better terms and rates. While rebuilding credit can be a long and arduous process, you should do so if your financial situation has stabilized.

“Obviously, first and foremost is staying current on your personal credit payments,” Baynes said. “These are things like auto loans and credit cards. Maxed out credit cards drive down your credit score. Missing payments or just making minimum payments brings down your credit score tremendously.”

According to Cassel, business credit rehabilitation can be extremely difficult and requires a detailed plan. While maintaining your personal credit score, you also need to keep an eye on your business’s debt service.

“When businesses get into trouble, they should put together a 13-week cash flow [projection] of expected funds in and expected funds out,” he said. “This helps them manage cash and decide what to pay for.”

There are some ways a business can seek relief to help stabilize their financial situation as well, such as raising prices. Many small business owners are reluctant to raise prices, Cassel said, because they are afraid of losing customers. In many cases though, there is more room to hike rates than entrepreneurs realize.

Businesses can also ask suppliers to extend payment schedules. If you are a good customer who has remained current in the past, a vendor is likely to work with you; after all, they don’t want to lose you as a customer.

If you’ve partnered with a lender before, they might be willing to lend a bit more to your business if they see you are legitimately on the road to financial rehabilitation. This is known as an “airball,” Cassel said. If things become truly dire, a business can usually call in a restructuring firm to reorganize how the business operates.

“Sometimes it is a vicious cycle that is impossible to get out of,” Cassel added. “As things get worse, the cost of borrowing goes up, so you have to figure out how to stabilize the business. Once you stabilize, you can focus on repair.”

Unfortunately, when financial troubles become pervasive enough, there are times where business owners have to reckon with a hard truth many entrepreneurs find difficult to face. The best option, Cassel said, is sometimes to cut your losses and stop the bleeding.

“You’ve got to look at the viability of the business,” he said. “Business owners have to be honest with themselves about long-term viability.”

Ultimately, securing financing should be a way to get your business to a better place in the credit spectrum. That way, the next time you need funding, you can successfully pursue a financial product with better rates and more favorable terms. If financing doesn’t support that type of forward progress, then it could just be digging your business into a deeper hole. For struggling businesses, Cassel had this advice:

“Be honest, try to get a loan and, ultimately, get back to a better lender,” he said. “Some businesses never do, and owners start to feel like they’re working for the bank.”

Financing can be a great tool in an entrepreneur’s toolbox, but taken irresponsibly or out of desperation, expensive loans can be the death knell for a cash-strapped business. Always have a plan for any money you borrow and keep an open line of communication with your lenders. If you do, you could be well on the road to repairing your credit.

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Broward wealth advisory company forms private equity division

By Ashley Portero
Feb 21, 2020

BlueKey Wealth Advisors now has a private equity division.

The Hollywood-based firm this week formed BlueKey Equity Partners, which will focus on private lending, real estate and business investments in small and mid-capital growth companies.

“We assist in providing capital, innovative solutions and strategic expertise to our portfolio throughout the investment cycle,” Amaury Cifuentes, one of the firm’s founders, said in a statement. “The extensive experience of our professional team allows us to implement a rigorous process to identify ‘best in class’ opportunities in our focus areas.”

In addition to Cifuentes, the firm’s partners include Kenneth C. Brown, formerly managing director and partner at One Equity Partners, the private equity division of JPMorgan Chase; Henry Buzgon, VP of Eastern Quality Foods; Felix E. DeHerrera, co-founder of the Southwest Alliance of Asset Managers and Alterra Home Loans; Manny Fadraga, previously VP at Charles Schwab; and Michael H. Muehlenfeld, former president of United Mile Fleet, a vehicle supplier for rental car companies.

Cifuentes is also managing partner of BlueKey Wealth Advisors.

South Florida leads the Sunshine State in private equity firms and private equity-backed deals, according to a June analysis from Cassel Salpeter & Co.

The region accounted for 39.7% of the state’s private equity deals in the first half of 2019.

Click here to read the PDF.

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What’s Your 2020 Business Resolution?

By Julie Bawden-Davis
February 18, 2020

These 19 entrepreneurs share their business resolutions and goals for the coming year.

Now that 2020 has just gotten started, you’ve most likely set some business resolutions for the coming year.

“Business owners are often pulled in a lot of directions, but that doesn’t mean we have to lose sight of our goals,” says Mac Fadra, CEO of MAXiM Hair Restoration. “While not contractual or binding, business resolutions are a great way to set goals for your company.”

When you’re making plans for your company, it can help to hear about the plans other business owners are making. I asked 18 people to share what their top business resolutions for 2020 are, and here’s what they had to say.

Focus on Giving Back

“My business has grown from just me to 10 full-time employees and 20 instructors. This year, among my business resolutions is to significantly increasing philanthropic contributions, community outreach and financial rewards to employees. I think that business owners sometimes forget how impactful we are to the lives of our customers, employees and their families, and the community.”

Shaan Patel, founder, Prep Expert

“As an agency, we have always taken great pride in supporting causes that benefit our greater community. From 10 pro-bono events we produce each year, to the days allotted to employees for out-of-office community service, we will continue to support giving back to causes in 2020 by allotting dedicated staff hours to social good.”

Build Brand Awareness

“I intend to focus on building brand awareness for my business resolutions. This will ultimately help boost sales and make my products grow in popularity with consumers. To make my resolutions a reality, we will continue to create opportunities to educate consumers on the benefits of our product, compared to others on the market.”

Nakia Hall, founder and inventor, BouncyBoo

I plan to focus on satisfying repeat patients who see us regularly and refer us to their family and friends. While I’m always happy to treat new patients, I do value and tend to make a priority the longevity of recurring patients.

Ziad Jalbout, founder, Making You Smile Cosmetic Dental Studio

“In terms of business resolutions, I plan to raise brand awareness and increase the number of people who know about us, try our products and trust us to supply their needs.”

Vinay Amin, health expert and CEO, Eu Natural

Boost Digital IQ and Exposure

“We recognize that most consumers these days will leverage technology in multiple ways to find businesses online. Boosting our digital IQ in 2020 will help us further our potential in generating new customers through our digital marketing efforts. This will include refining our understanding of our website’s content management system so we can make updates for SEO value and create and share videos.”

Bryan and Patty Sibbach, owners, Precision Training Concepts

“I plan to take advantage of the growth in streaming, as well an increasingly connected world, by continuing to expand our presence internationally in the streaming media intelligence category.”

Bill Demas, CEO, Conviva

Increase and Enhance Productivity

“In terms of business resolutions, I want 2020 to be a year where I am more productive and not just busy. This means keeping an eye on trends and events that may affect my future business. This also means developing win-win relationships with other companies and individuals, which is important to sustain our company and build a pipeline for the future.”

James Cassel, chairman and co-founder, Cassel Salpeter & Co.

“We aim to ensure greater coordination between our team members and accordingly use new processes and tools to increase productivity. This is important, because when used properly, these tools help keep the entire team in the loop, enforce deadlines and ensure smooth delivery.”

Avinash Chandra, founder and CEO, BrandLoom

Consult With Employees on Business Resolutions

“In business, a resolution made by company leaders will rarely guarantee performance. I plan on involving employees, who are the ones that make the goals happen. Involving as many people as possible in setting goals ensures we’re headed toward the same goals. It’s easy to stop one guy…pretty hard to stop a hundred.”

Steve Baker, vice-president, The Great Game of Business

“I plan to have lunch once a week with different members of my team. There are few better ways to bond with employees and learn more about them than over a meal. I can learn a great deal from everyone’s unique experiences and perspectives.”

Abhi Lokesh, CEO and co-founder, Fracture

Invest in Culture

“In a short time, we’ve more than doubled our employees, moving from a close-knit team of mavericks to a much bigger team. It’s been an interesting education in observing how fragile culture is and how it develops as companies grow. My business resolutions for 2020 are to delegate some of the cultural nurturing to members in the team with an interest in safeguarding what we’ve built, as well as developing new channels for input, feedback and collaboration, as we continue to expand.”

Nana Wereko-Brobby, head of communications, HomeHero

“We plan on keeping our work culture involved and fun. For 2020, this will include weekly team roundtables to discuss client accounts and team outings.

We’ll also be implementing team volunteer days to contribute to our team’s sense of social impact.”

Alicia Piazza, president, The Spark Social

Prioritize Customer Service

“I plan to focus on satisfying repeat patients who see us regularly and refer us to their family and friends. While I’m always happy to treat new patients, I do value and tend to make a priority the longevity of recurring patients.”

Ziad Jalbout, founder, Making You Smile Cosmetic Dental Studio

“My New Year’s business resolutions will focus on spending more time with our clients. Like most CEOs, at the start of the journey, I took personal responsibility for revenue generation and getting new clients. Over time, as other responsibilities grew, I became less client facing. Getting out and seeing clients is invaluable and really sparks ideas and innovation. It’ll be a challenge to balance the time I spend in the office with my team and out meeting clients, but I’m excited about the prospect.”

Mark Allwood, CEO, GlobalX

“I plan to engage more with my clients. In 2020, we want to continue our workshop demos on Saturdays so people can continue to learn the process of jewelry making. By doing so, clients can understand exactly where the prices we are charging them are coming from and genuinely feel that what they’re buying is curated just for them.”

Samuel Tang, designer and owner, Joy Creations

Focus on Strategic Thinking

“Improving initiatives through better strategic thinking allows us to challenge everything we do and how and why we do it. We plan to ask, is this really making our company better and using resources, such as time, wisely?”

Steve Willis, managing director, milliCare Floor & Textile Care

“In the past, I have started programs and pulled them too quickly. Moving forward, I’m making business resolutions to plan more of the long game. Everything doesn’t need to be done today. With more of a long game focus, there can be greater success.”

Kristin George, digital PR manager, Ignite Visibility

“For 2020, my business resolutions are all based around innovation and being disruptive, so we always have new ideas. We’ll schedule more brainstorming sessions, and ideas will be rewarded with incentives. This way, we can offer our customers exciting new features and keep at least two steps ahead of the competition.”

Andrea Loubier, CEO, Mailbird

Click here to read the PDF.

Is doing well doing good?

By James S. Cassel

Last summer, the Business Roundtable (BRT), a nonprofit association of major U.S CEOs, redefined the meaning of a company’s The new gold standard, or maybe better stated, the new golden rule, now includes corporations working to not just increase monetary value and make more profits for its shareholders, but also to benefit the environment, the community, their employees, customers, and suppliers.

Increasingly, companies are not only focusing on profit-making (essential and nothing to apologize for) but also on doing what’s good for stakeholders and society at large. In doing so, they are providing the answer to an important question: Can doing well also mean doing good?

A lot of businesses these days believe that they go hand-in-hand, or at least they should, because a better future for all is tied to asking the question. Those who don’t bother to redefine doing well as also doing good may be left behind or suffer injury to their brand.

A recent Bloomberg article showed how hedge funds and mutual funds face increasing pressure from investors to address Environmental, Social, and Governance (ESG) criteria that weigh the sustainability and societal impact of investments. These demands make funds push companies they invest in, to either do good for the community and the environment or suffer investor capital flight. For example, BlackRock Inc., the world’s largest asset manager, recently prioritized climate concerns in its investment strategy, putting the competition on notice, as well as the companies in which it invests.

Consumers are also increasingly rewarding companies that do good while punishing those they think do bad. Little surprise that companies like McDonald’s and Starbucks have become more energy-efficient reducing their negative environmental impacts, while companies like Dell have implemented recycling programs to reuse and dispose of electronic products more safely.

These businesses are wise to publicize their efforts, often letting consumers know they care about the communities using their products and services, while making doing good part of their brand, a business lesson all should embrace.

So, here are some things your middle-market company can do to do good and not just well:

  • Identify changes that won’t break the bank but help the environment. Plastic straws may not be illegal yet, but why not change to paper or sugar straws now if those are used at your business? While you’re at it, create a company recycling program if you don’t already have Some cruise lines, for example, have moved from plastic to other products, reducing waste and making recycling easier. Your business can also change to LED lighting and cut heat and energy usage, while opting for sustainable materials for any office renovations.
  • Consider hiring individuals in the community who come from economically distressed areas or might have criminal records. Giving people new opportunities for success, or second chances can help you do well and do good. Take for example Nehemiah Manufacturing of Cincinnati, which effectively hires workers with criminal records, a great way to give a break and get great and loyal employees, while also addressing a tightening labor market.
  • Source products locally whenever possible. Supporting local entrepreneurs can actually mean fresher food products, a smaller carbon footprint since you’re using less trucking or air shipping, and a reinvestment into your own You can also favor suppliers who do good, not just well, and build a support network of do-gooders like yourself.

When middle-market businesses do good, they help employees feel better about their work, boosting productivity and creating loyalty to your business. Creating pro-environment, pro-community efficiencies and supporting a culture of responsibility are powerful motivators that ripple across not only your business, but across the very community you live in, and it is good for the bottom line, too. Allow your company a social conscience and do good and see how quickly your business starts doing very well, too. Our nation’s and world’s sustainability might depend on it.

James S. 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 or via LinkedIn at

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