Tech investments report highlights cluster of IPOs amid stagnant year

By Debora Lima

Miami-based investment banking firm Cassel Salpeter & Co. released this week its quarterly review of technology investment activity, which highlights a recent cluster of initial public offerings amid a mostly stagnant year.

The report covers the period between July 1 and September 30. It finds that a bulk of public offerings occurred during Q3 — five in September (Nutanix, Tabula Rasa Healthcare, The Trade Desk, Everbridge and Apptio) and Impinj in the previous month. The activity overwhelmed that of the preceding eight months’ combined — five IPOs in Q2 and none in Q1.

The average enterprise value of Q3 IPO companies was about $150 million, about half of Q1 IPO companies’ average enterprise value of $300 million.

The underwhelming pace of 2016 can be attributed to the robust private market, said Cassel technology director Ranjini Chandirakanthan, who helped compile the report.

“There is so much money in private equity,” she said. “There is a willingness to pay and value, more than the public markets do today.”

Acquisitions remain the most common — and attractive — exit options for high-growth startups, said Jim Cassel, a founding partner of the firm.

“[Firms are] looking for an exit strategy. They have a life in which they’re supposed to put money out, harvest and liquidate. IPO isn’t that event. Because they have to liquidate stock over time,” he said.

Startups are similarly drawn to M&A. Chandirakanthan estimates that “a vast majority” exit through those vehicles.

But it isn’t uncommon for startups to toy with the prospect of an IPO as a vehicle to private equity. According to Cassel, some companies prepare the necessary materials for a public offering and intentionally let word get out.

“It implies [to private equity] that, ‘If you buy now, you’ll pay less than later,’” once the company goes public, he said. “And that may or may not be true. The public markets are fickle. It’s just conjecture.”

Looking ahead, a number of IPOs are likely in the pipeline for 2017 — but the status quo holds.

“M&A will be the exit for many companies,” Cassel said. “There is a private equity market that is flush with cash that is looking for companies that fit their ethos.”

Cassel Salpeter & Co.’s full 2016 Q3 technology investment activity report is available online.

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How much should you spend to boost your non-core divisions?

By James S. Cassel

James Cassel headshot

Many middle-market business owners struggle to determine whether to continue pouring significant time, money and other resources into non-core business divisions or subsidiaries— that is, those that are not vital, essential or are no longer necessary to a company. For many, finding the right answer is a difficult task that often gets deprioritized while they focus almost exclusively on the immediate needs and daily operations of their businesses. Unfortunately, neglecting to address these questions often ends up hurting their businesses and diminishing their success.

How should you approach a division that is troubled, not growing, no longer fitting your core business or strategic plan, and/or consuming a disproportionate amount of time and capital? Following is some practical guidance based on my experience helping middle-market business owners evaluate the alternatives and navigate these complex issues.

First, an easy answer could be: If the non-core division is losing money and/or dragging down the rest of your business, you might shut it down. However, this quick fix is not always the best course of action. Another party might find value in the division and give you additional capital that you can redeploy for growth. Keep in mind that what is not good for you might be ideal for someone else. If the line of business has this type of potential, you might try to find a buyer capable of maximizing it.

So, how should you begin your analysis?

▪ Start by closely evaluating the financials for the business unit you might be looking to sell or shut down. You should also examine on a pro forma basis the financial situation of the remaining business as a standalone unit, thereby enabling you to examine the financial implications of the potential divestiture and make sure it will not hurt your business financially or otherwise. For example, the division might actually be contributing to help cover a part of your overhead. In this case, a divestiture could have more serious financial implications on your overall bottom line than you had imagined.

▪ Evaluate your company’s current management and employee headcount. If you divest the division, do you need to reduce management, as well as your company’s overall headcount? How would this impact your company? Would losing these employees hurt other areas of your business?

▪ Evaluate your real-estate facilities and determine what you should do with any physical space that will be vacated after the divestiture. Let’s say the division you are looking to sell occupies 30 percent of your warehouse. Would you be better off subleasing that space, moving other core business operations into that space, or leaving it open to accommodate future expansion?

▪ You must also evaluate the potential impact of the sale on your clients or customers. Do they currently choose to do business with you because of your ability to serve as their one-stop shop and offer those products or services, even if those products or services are non-core business areas that are unprofitable or loss leaders? Could the sale potentially cause you to lose customers or diminish their satisfaction? Also, what about your competitors — do they currently provide any of those sought-after products or services? If you were to eliminate that part of your business, would you be in effect giving your competitors a greater advantage by positioning them to serve your customers and steal your market share?

Big companies continuously evaluate the return on equity, performance and viability of their non-core business divisions or subsidiaries. This helps them to ensure that these lines of business are not hurting their growth rates, overall profitability and success by forcing them to devote disproportionate amounts of time and energy to these areas. Many large companies like GE and P&G continuously evaluate their varied lines of business and remain ready to sell any non-core assets. This best practice helps make them stronger and better focused on growth and acceptable levels of profitability.

Some companies may have the in-house expertise to handle these evaluations independently, but others may need assistance from outside consultants. Whatever the case, it is important for middle-market business owners to work with qualified professionals with proven expertise helping companies similar to theirs navigate these issues. While this may require some investment in terms of time, money and other resources, it will pay off in the long run by helping ensure your business is well positioned for continued success.

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. 

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Florida Private Equity Deal Flow Down In 2016

By Nina Lincoff

There were 96 private equity deals closed in Florida in the first half of 2016, which is slightly down from the 103 deals closed the same time last year, according to a new report form Miami-based private equity and investment banking firm Cassel Salpeter & Co.

But before investors run with news and declare a decline in private equity investment in the Sunshine State, there are a couple of factors to consider.

At this time last year, data revealed just 75 private equity deals in Florida – the first half of the year projections were updated later as a few more deals were reported.

“It’s a common thing that happens,” said James Cassel, chairman and co-founder of the firm. “Sometimes, a couple months later, adjusted numbers will come out and it’s not that the original data was wrong, it’s just that was the data available at that point in time.”

Cassel & Salpeter release private equity deal flow reports using data from PitchBook, an industry database and analyst. The reports include all private equity investments related to business growth – buyouts, add-ons, growth, recapitalization – made to companies headquartered in Florida, excluding real estate investments.

As with most businesses, deal flow has a lot to do with timing. Second quarter closures are often preceded by months of work, and when a deal closes, it’s largely circumstantial. Big events like tax changes and possible interest rate spikes can mean that companies prefer to close deals in one year as opposed to another, but largely when a deal closes depends on the players.

“Sometimes deals can slow down because of the due diligence,” Cassel said. “But everybody wants to close sooner rather than later. It’s just better that the deal is done.”

In talking to peer private equity firms, Cassel noted that some said January and February were slower months, which in turn affected second quarter closures.

Despite the slight drop in deals that close in the first half of 2016, the Florida market is still relatively stable.

“There are reasons why it should be a pretty healthy market. There is still plenty of private equity available, there is still plenty of debt available at [largely] historically low prices,” Cassel said.

One factor that could be contributing to a slowdown in private equity investments is simply a depleted supply of quality Florida-based deals. But it’s too early to tell whether or not supply has begun to dry up.

“There are businesses available,” Cassel said. However, private equity firms can cycle through businesses and do secondary buyouts, when one firm sells to another and that could buoy the deal flow pipeline in Florida.

Deal flow is also dependent on the buyer. Classic private equity firms buy on a five-year horizon, which limits possible investments. Strategic buyers can invest for life, or until it’s time to divest. Typically, when a family goes into business, it’s for a long time.

“Every private equity firm is a seller, whereas a strategic buyer is not and a family business may or may not be depending on the time,” he added.

Along with deals being down in the first half of the year, private equity exits are also up, meaning a firm has timed out and sold off the company. The Florida private equity investment-exit multiple hit an all-time low of 2.4x in the first half of the year. And while that’s a record low, it’s not a significant enough drop from 2015’s 3.1x multiple to sound an alarm, Cassel said.

The industries where private equity deals closed in Florida were largely consistent with past years. Business to consumer deals were high, as were business to business deals and healthcare. Financial services and IT were slightly less but consistent proportionally with last year, and energy and manufacturing were small to non-existent.

Florida is not an energy-rich or manufacturing state, so that’s not very surprising.

One challenge facing the business community in general is the difficulty of scaling up. It’s easier to start a small business and grow to five or 10 employees, but it gets exponentially harder to scale up to 50 employees or 100 or 500, Cassel said. As the inventory of small business increase, but middle-market firms remains stagnant or decrease slightly, private equity deal flow could be affected.

Moving forward through 2016, there are a couple variables that make it difficult to predict how deal flow will continue – the November elections, potential interest rate hikes, and in Florida, Zika.

“People are talking about one interest rate hike in December after the election, and there’s also talk about one in September, but who knows,” Cassel said. “If we really knew, my gosh what we could do with futures.”

 

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Use Great Finance Pros To Guide Planning, Strategy

By James S. Cassel

James Cassel headshotIn my experience working with middle-market business owners, I have often observed that many of them underestimate the importance of having access to solid and timely financial information and support from great finance professionals to guide their daily decision-making and strategic planning. Having seen companies and managers suffer the consequences of this risky practice, I have confirmed that it is critical to have the right financial support and infrastructure in place.

Why is this true? For one thing, many of today’s middle-market business owners may have started out with a spouse or other family member managing the company’s books and records on a part-time basis. However, as their companies begin to grow, it is important to determine whether people with different skills, sophistication and qualifications should be hired on a part-time or full-time basis, or whether those functions should be outsourced. Additionally, they must continuously evaluate and modify those roles and the personnel fulfilling the responsibilities as their businesses continue to evolve.

Middle-market companies may utilize different kinds of financial officers, such as certified public accountants, controllers and bookkeepers. Each of these professionals possesses different skill sets and sophistication relevant to providing financial data and information as well as managing relationships with banks, lenders, and suppliers, negotiating financial terms, dealing with customers in terms of reporting systems, providing financial oversight and strategic planning, etc. Depending on your needs, you may need finance professionals with more or less expertise and knowledge.

As you grow, you will need higher-level counsel and access to more information. It may become necessary to upgrade from a bookkeeper to a controller or from a controller to a chief financial officer, or even a CPA. Some individuals can step up to effectively assume the new roles, but other times you may have to bring in more experienced professionals. Outside consultants can also supplement or fill voids.

Many business owners get into trouble or lose potential opportunities because they didn’t have access to the right financial information on a timely basis. Again, the key is to take this seriously, accurately assess the level of expertise you need and hire accordingly. Staying ahead of the curve is always best. While some investment might sometimes be required, it will seem cheap in the long run when you reap the benefits.

Financial reporting should be done on a regular basis — daily, weekly or monthly. Developing appropriate flash reports and a dashboard is important. This will enable you to know — on a real-time basis — how your business is running and position yourself to make any necessary adjustments efficiently. Today, data analytics and business intelligence are crucial. Getting a first-quarter report at the end of the second quarter is not only virtually pointless — it can seriously hurt you because it may be too late for you to act. For some companies, obtaining an audit may be appropriate. While often costlier than a compilation or review, audits are valuable because they may be required by your lenders and can be helpful when you try to sell your business. Audits also bring a certain discipline to companies.

The types of financial management systems you put in place are important, too. Do you go with QuickBooks, QuickBooks Pro, or the more robust and sophisticated Microsoft Dynamics GP (formerly Great Plains), or other software solutions to obtain financial information and manage payroll, inventory, sales and other needs? Depending on your line of business, a fully integrated system that brings together your financial system with your inventory and other key aspects of your business can be important.

Beyond supporting your daily business operations, having the right support from finance professionals and the right financial information in place upfront is important as you prepare for growth or a merger or acquisition. I’ve often seen business owners scrambling to come up with information at the last minute, which has put them at a disadvantage in negotiations. In a sale process, for example, not having the necessary information at the right time can negatively impact what potential buyers may be willing to pay for the business. Outside consultants like South Florida-based SCA Group can be helpful.

While it may be tempting to focus solely on running the day-to-day operations of your business, it is critical to keep in mind that your ultimate success depends on how well you manage the company’s finances. By investing the necessary time and resources from the outset, you can put your business in the best position for continued growth and success.

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 can be reached via email at jcassel@casselsalpeter.com or via LinkedIn at linkedin.com/in/jamesscassel. His website is casselsalpeter.com.

 

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Recession ahead? Prepare your business for risks

By James S. Cassel

James Cassel headshotSeveral timely issues and trends — today’s low interest and low growth rates, and the ultimate impact of Brexit — are making it critical for middle-market business owners to continually evaluate their businesses and implement the right strategies to protect their best interests.

While none of us have a crystal ball to know when the next recession will arrive, there is no doubt that every passing day brings us closer to it. So how do we plan for this and continue to grow our businesses without exposing our businesses to excessive risk when the next recession comes? While we should take risks as business owners, we should not bet the farm.

Following is some insight and guidance based on our experience helping clients navigate these issues throughout all types of economic cycles.

It is important to note that current estimates call for as many as three quarter-point increases in interest rates during the next 18 months. These increases are lower than previous estimates. In fact, some believe there will be fewer than three increases. Regardless, since interest rates will remain historically low, these increases should not be significant enough to warrant any concern.

Nonetheless, we should closely evaluate our balance sheets to make sure that we have taken adequate advantage of any opportunities in the near term and that we are well prepared for the downturn whenever it arrives. This includes determining whether we can extend the terms and fix the rates of any loans for as long as possible in order to take advantage of today’s low interest rates.

Now also is a good time to begin looking for opportunities to expand our businesses. While controlling costs is always important, profitable revenue growth is critical for success. We should consider strategic hires. The right hires with strategic relationships with potential new customers or clients can expedite growth. We should look for people with complementary skills that can offer more to current clients or customers can help deepen those relationships.

As the job market continues to tighten and we run the risk of losing some of our labor forces due to immigration policies, it will be important to evaluate new technologies that can help us increase efficiency and reduce the amount of labor required by our companies.

A good example may be found in the emerging trend of mechanization in the fast-food industry. New technologies that enable customers to place their own orders are making it possible for restaurants to need fewer employees. Restaurants also are increasing efficiency by equipping their servers with mobile devices that enable them to place orders online without having to go to the kitchen to place orders. Some restaurants are taking it a step further. Momentum Machines is attempting to replace human fast-food workers by fully automating the production of burgers — everything from cooking patties to adding all the accoutrements.

Car dealerships are another example. These days, they are giving mobile devices to employees to complete forms and speed up the process rather than giving them printed forms like in the old days. Computers, not only mechanics, are currently being used to do the diagnostics on cars. These all make businesses more efficient.

It also would be wise to explore new partnerships, joint ventures and other strategic relationships as well as potential acquisitions to strengthen and grow our businesses. We should consider investing in new businesses and/or new product lines in order to obtain organic growth. Research and development of new products should also continue.

Clearly, the domestic economy seems much better positioned than the foreign economy. No one knows what will happen in Europe with Brexit and what ultimate impact it will have. Thus, we might want to concentrate the majority of our efforts on domestic business, although not to the exclusion of any attractive opportunities for foreign sales. The uncertainty has strengthened the dollar, which will lower exports and make U.S. products less competitive abroad.

Although most U.S. businesses might not be doing great, they are still doing OK, so taking a longer-term view is important.

While middle-market business owners recognize they should be prepared for any expected obstacles and opportunities, they often fail to plan properly because they get too caught up running their day-to-day business operations and handling immediate issues as they arise. However, considering today’s dynamics, it is critical to work with trusted advisers who can provide the necessary guidance and help protect their best interests. Those who do can gain a significant competitive advantage and position their businesses for continued success.

 

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. 

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Working with family requires the right approach

By James S. Cassel

James Cassel headshotWorking with family can be a blessing or a curse — for the family and for the business — depending on how you handle it. Here is some practical guidance for keeping your business and family life healthy.

The ugly truth is that some family members can have an entitlement mentality that can be a big problem for both the business and the family. They assume they deserve everything and should automatically come in at the top, and they can get offended if they think they are not getting what they believe they deserve. Based on what I have seen in my years of experience working with family-owned businesses of all sizes, I often discuss with clients the need for not only an investment banker and a lawyer, but also for a psychologist and a business coach to help them manage these touchy situations.

As an example of a family that did things “right,” recently I met with the owners of a manufacturing business where the son began working at the business at the entry level while he was in high school. He got to know everyone and every facet of the business, from the bottom up. Along the way, he developed strong relationships and earned the team’s respect. Eventually, he became the president and an equal co-owner of the business along with his brother and father. He expanded the business far beyond what his father had done and contributed so much more than his sibling that eventually his father restructured the equity so he would be better rewarded for his accomplishments. Today, the son continues to successfully run the company as the majority holder while working with his father and brother, and everyone is happy.

That family is one of the lucky ones. Others encounter major challenges while trying to incorporate or distance themselves from family members wanting to join the business. Years ago, I met with an 80-year-old patriarch who wanted to sell the successful family business. When I asked why he did not want to keep the business in the family, he pointed at his 50-year-old son sitting next to him who had been working at the company for many years and shouted: “What, am I going to leave my business to him? That would be the end of the business.” The son sank in his chair. This was demoralizing for his son, and there is no telling how this has affected the family relationship.

Fact is, family members often have to say “no” to those who may not be a good fit, despite their blood ties. The key is to deliver the message in the right way, or you can destroy the family and/or the business. While you need to be clear and direct, it is important to consider your unique family dynamics and err on the side of politeness and tact.

There is no doubt that families and businesses can be devastated by issues that arise, such as jealousies between siblings who are competing for the same positions or when an under-qualified or disruptive spouse wants to enter the business. Years ago, I became acquainted with a family business that the father had founded, and his two sons took control of. One brother was phenomenal, but the other was not as talented. Eventually, the phenomenal one had the presence of mind to suggest to his brother that he would increase his salary as long as he was no longer actively involved in the business. He did this in a nonoffensive way, and the brother accepted the arrangement. The family and the business thrived.

It can be easy for business owners to overestimate or underestimate the experience and capabilities of their family members and thereby place them in the wrong positions with too much or too little responsibility. In my experience, I have seen companies derive great value from giving people tests to ensure that they are in the right positions. There are all sorts of psychological and business aptitude tests to choose from that can help you make more informed business decisions. I have also seen companies benefit from relying on external boards or bringing in outside business consultants to help navigate these decisions and conversations. Having the family members trained by non-family members can also help.

Working with family can be very rewarding and a tremendous opportunity, but like most things in life, it must be managed right. The bottom line: It is important to apply sound business practices and be honest with your family, while at the same time using good psychology and managing things with tact.

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. 

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Thinking of selling your business? Avoid these costly mistakes

By James S. Cassel

James Cassel headshotFor middle-market business owners thinking of selling their businesses, it can be easy to make a common — and costly — mistake: having the wrong valuation expectation. Influenced by hearsay and news reports of high valuations related to larger businesses and mega mergers and acquisitions, they develop overinflated expectations for the value of their own companies. As a result, they put themselves in a position of becoming disappointed, wasting time and resources, and missing opportunities.

Business decisions must be made using facts rather than emotions or
unfounded assumptions. Based on my experience working with middle-market business owners, here are some of the common factors that can negatively impact or shade their judgment. All of these are easily avoidable.

It happens all the time: Business owners hear that people they know or companies in their industries received high values for companies. Sometimes the reports are true; other times, they are fiction. In either case, business owners draw inaccurate comparisons and conclusions about what they can expect to get for their own companies. When anyone tells you they sold for a high value, do not assume this is any indication of what will happen when you sell your business.

First, you should confirm whether those sellers really received those values. Sometimes it is impossible to obtain this information. People often embellish.

If they really received those values, you must determine whether your business
is positioned to get a similar value, and you should identify the considerations and preparations necessary to secure the highest possible value.

Did those people you know sell early to consolidators who paid a premium, and now that those consolidators have completed those acquisitions, do the consolidators no longer need to acquire your company at a premium? Did you make a mistake by not selling first?

You must know how to accurately compare your business to those other businesses. Are your revenues the same? Do you have the same profitability and margins? Can your potential buyers find synergies by eliminating costs, consolidating parts of your business, or implementing new measures to achieve greater efficiencies? What have your key growth drivers been? Good advisors can help you navigate these questions.

Every company and industry is different, and while it is important to compare yourself to others, you must recognize the differences between your company and similar ones so you can properly assess your own situation. Additionally, timing can impact the valuation you can achieve.

For example, while Burger King and McDonald’s both franchise restaurants that sell hamburgers, they have different business models. McDonald’s owns or secures long-term leases for its franchise locations and Burger King does not. This affects restaurant performance levels, thereby affecting value.

Moreover, companies in different industries have different valuations. Tech companies can receive higher multiples than distribution companies because they have higher margins, profitability and, in many cases, greater growth.

Some business owners also get too emotional, their perceptions become clouded, and they fail to understand true valuation. Some think they should set the sales price of their companies based on the amount of money they need to maintain their current lifestyles. This is not a realistic approach.

Like it or not, here are the facts: A business is worth whatever a ready, willing and able buyer is willing to pay for it. Buyers want to pay what your business is worth today and not what it will be worth in the future. Buyers also generally do not want to pay for synergies: They want synergies to be among the advantages they gain in the acquisition.

Sellers also make inaccurate assumptions when they neglect to consider expense factors that may affect the companies’ profits after the sale.

Buyers will consider these factors when determining how much they are willing to pay, so you should consider this upfront and plan accordingly. For example, if you get business because your company is minority and/or woman-owned, what will happen if you sell and these advantages are lost?

For middle-market business owners thinking of selling their businesses, it is important to work with trusted professionals who can provide sound guidance as to value and process. Do not blame the messengers if they do not say what you want to hear. Everyone on the seller’s side wants to sell for the highest price, but to maximize values it is important to be realistic and use sound decision-making. Otherwise, you run the risk of missing valuable opportunities to sell your business at a realistic price to legitimate buyers.

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.

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5 Ways to Drive Business Growth

By James S. Cassel

James Cassel headshot

A common mistake for middle-market business owners is getting too caught up running day-to-day business operations and not allocating enough time to consider strategies to reposition and reinvent their companies when needed.

In my experience working with middlemarket companies, I have learned five general areas where companies seeking continued growth should focus their efforts. Whether companies are seeking exponential or incremental growth, they should keep in mind the following five growth drivers.

Have the right team: Like it or not, your company is only as strong as your weakest link. Many times, the weaker links can be strengthened by reevaluating their positions to ensure that the right employees are in the right places. Otherwise, if you find there is no place where the weaker links can contribute at the level they should, you should consider replacing them.

Play to people’s strengths, and put them in positions that best allow them to thrive, applying their knowledge, skills and talents. Do not assume a good salesperson will make a good manager, as that salesperson might have a great sales personality but might not enjoy or succeed in a management role.

Recently, a friend confided that she lamented her promotion because she had to give up the position she loved. Although she now has more responsibilities and higher pay, she is not doing what she most enjoys and therefore is looking to leave the company.

Continuously evaluate your senior management team. Do you have the right senior management in the right roles? Have they helped get you to where you are? Can they take you to the next level? Different organizations need different management structures at different times — there are no cookie-cutter solutions, and the key is to find what works right for your organization.

Have the right branding and marketing: In today’s competitive market, it is important to have strong brand presence and keep your brand top of mind. Fish bite when they are hungry, so always keep your bait in the water.

Before launching any public relations or marketing campaigns, make sure you have strong brand assets (logo, website, tagline, etc.). For example, it does not make sense to drive people to a subpar website that does not put your business in the best possible light.

Also, make sure you have the right marketing team. Many business owners do not understand the difference between public relations, advertising, and branding, or the importance of having a strategic marketing plan that is designed to support their business plan. Some do not recognize that a good advertising agency that creates award-winning television commercials might not be a strong public relations agency that can secure top-tier media coverage, or that a creative web design firm that can launch attractive websites might not be good at developing search-engine optimization programs to ensure that those sites rank high on search-engine results pages.

Have the right suppliers: While it can be comfortable for business owners to continue to work with the same folks they have worked with for years, it is important to routinely evaluate these relationships to ensure that you have the right suppliers with the right capacity to grow with you. Are they supplying the right products or do you need to expand that? Do they give you the right quality, pricing and support?

Have the right research: Knowledge is power, and you should continually conduct product and market research to determine where your products and services are needed. Can you identify new markets? How are you perceived by your customers or clients and the public? Some business owners conduct this research internally while others outsource these functions to specialists. Whatever approach you choose, all of this insight can assist your strategic business planning.

Have the right geography: Are you a single or multi-location business? Do you have the right locations? Can you provide quality service to your clients from where you are currently based? When it comes to expansion, you can take advantage of innovative solutions like shared workspaces or virtual offices to give the perception of a broader presence.

While a multitude of other factors affect business growth, there is significant value in keeping these five factors in top of mind. A common mistake for middle-market business owners is getting too caught up running day-to-day business operations and not allocating enough time to consider strategies to reposition and reinvent their companies when needed.

To help you through this process, you may choose to apply internal resources or to rely on external partners with greater experience and specialization. Whatever the case, make sure these factors are evaluated routinely. By doing all these things right, you can help ensure maximum and sustained growth for your company.

 

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.

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James Cassel on why Miami is a great city to build a career

By Nina Lincoff

Where were you born? In Miami Beach at the old Mount Sinai. I may have been the youngest employee at Mount Sinai actually. At 14, I worked in the records department. It was an opportunity for a summer and I was paid, maybe $76 a week. I joke that I had more disposable income then than today because I had no expenses.

What did you use the money for? To buy my first car at 16, an Oldsmobile Cutlass from my mother for under $2,000. What’s worse was that when I was 17, I bought a brand new Buick Century. The problem was, when my future wife saw me in that car, she asked me if it was my father’s. I explained to her it wasn’t, it was the car I wanted, and she said it was better for a 40-year-old, not a 20-year-old.

How has Miami Beach changed? Miami Beach in the late 60s and early 70s …it was the James Bond era when “Goldfinger” was filmed at the Fontainebleau. It was a very small city and very much had a seasonality to it. In the summers a lot of stuff was closed and it was quiet. Today, of course, it’s very different. It’s a year-round community and the summers are as vibrant as the winters.

How did your family get to Miami? My family has been here since 1908. My grandmother had a house on 17th Street and Biscayne Boulevard and in the living room there were two grand pianos and an organ on a stage. She would have concerts there. My family has really grown up in Miami. I go to New York a lot, but Miami is different. It’s a great community and we have some very goods schools and there are great opportunities here. I never seriously thought about moving. As long as they can keep control of the rising sea, we’ll be in Miami.

Was the records department gig your first job? No, I worked as a delivery boy for the Miami Beach Sun, and then I worked for a gentleman by the name of Robert Hurwitz… on and off running political campaigns. We ran everything from a senate race to local races. Law school was a natural follow after that, because I had political aspirations at the time.

What happened to your political aspirations? Fortunately sanity prevailed. I was given advice that I didn’t want to seem like a politician who was in politics because they couldn’t do something else. The natural way to stay involved with politics was to get into law. I started as a real estate lawyer, working with my father. This was back in the 80s and I determined that I would be better in corporate law. In hindsight, it probably didn’t matter, but I started doing corporate law and I built my practice.

But you transitioned out of law? Yes, March 1, 1996 was my first day of not practicing law. I went into investment banking. In 1998, I started a boutique investment banking firm that I built with my partner Scott Salpeter and Gary Stein. We were ultimately acquired by Ladenburg Thalmann, in 2006. I ran private banking and had the opportunity to work with Phil Frost and he is more amazing than most people know. The depth and breadth of his knowledge is breathtaking.

And now you’re here, at Cassel Salpeter? At the end of ’09, which was a tough year, I left. From a technical standpoint, ’09 really sucked. In 2010 we founded Cassel Salpeter. We’ve been blessed, one of my children has joined up as has one of Scott’s kids. We’ve got a great team and we’re building a nice boutique South Florida firm.

What is the private equity environment like now? It changes in cycles. The industry is changing because of technology. If we had to do financial modeling 20 years ago it was very labor intensive, today tech gives you the ability to gather information much more easily. You still have to do a lot of work, don’t get me wrong, but technology has definitely made a different competitive environment.

What do you like to write about? To a certain extent I try to give back to the community. I try to write about things that are helpful to middle market businesses. Maybe they don’t get 50 points out of one article, but if they get one point, it has value. It’s also a way to stay in touch with people, because after all, we are a referral business.

James Cassel
Current position: Chairman and co-founder of Cassel Salpeter & Co.

Past position(s): Vice Chairman and head of investment banking at Ladenburg Thalmann, President, CEO and Chairman of Capitalink, Managing partner of the Miami office of Broad and Cassel; Chairman of the Retreat Psychiatric Hospital

Age: 60
Born: Miami Beach
Residence: Coconut Grove
Past boards: Equity One
Education: American University, University of Miami School of Law

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The 7 secrets of attracting and keeping top talent

By James S. Cassel

james-cassel-headshot-150x150While it is great that unemployment is trending toward full employment, it is not so great that finding new and qualified employees will become even more challenging. In markets like South Florida where access to talent is already limited, this will only make a difficult situation worse.

As the presidential candidates continue to talk about creating millions of new jobs, a glaring unanswered question remains: from where will the qualified talent come to fill these jobs?

The latest data from the U.S. Bureau of Labor Statistics show the U.S. unemployment rate at 4.9 percent in February, unchanged from the January rate and steadily remaining at its lowest level since April 2008. By definition, full employment is when unemployment is at 3 percent for persons 20 years of age and older and 4 percent for persons 16 years of age and older.

Creating new jobs with higher income opportunities will motivate people to move from one job to another, leaving vacant job positions in their wake and a void of skilled talent to fill them. As it is, under the current administration, companies are having a difficult time finding qualified talent for current vacancies. How do you find the right people to fill open positions?

While there is no purple pill, the key is to keep an open mind and embrace innovative tactics. Following is some general guidance based on our experience working with middle-market businesses through all types of economic and employment cycles:

1. Hire and train young people. One of the main concerns with hiring young folks is they will leave after you have trained them. To avoid this, provide the necessary growth opportunity along with compensation, benefits and work environment that will help motivate them to stay loyal and help you build your organization. Make them feel like part of the family. This may require moving beyond your comfort zone to accommodate employees’ preferences. Depending on your industry, this may include letting employees have flexible schedules, wear casual attire, or even throw darts or play video games in the office. Develop a pipeline and a bench.

2. Strategically recruit employees from competitors or other companies. Use various online sites (Indeed, CareerBuilder, LinkedIn, etc.) to post positions and search for candidates. Post them on your own website, too, as part of a robust “Careers” page that positions your company as an employer of choice interested in quality talent. Stay abreast of the latest and growing number of sites used for specific industries such as tech and healthcare. You might also consider traditional employment or search firms such as Steven Douglas Associates or CAREERXCHANGE, both of which are local and specialize in certain job types and levels.

3. Lure back people who have left the workforce. Consider people who are underemployed, working part-time, and who would prefer to work full-time. Also, consider folks older than 50 who have strong experience and may have many years of work left in them.

4. Offer flexible solutions to attract people and enable them to work for you. For example, there are companies dedicated to finding part-time or home- based employment for stay-at-home caregivers with excellent educational backgrounds and experience who could be strong assets to organizations.

5. Rely on referrals. Reach out to your base of employees and offer a bounty for those who refer new hires. Consult with key clients and industry partners, as well.

6. Use marketing and social media to promote your company as a good place to work. Pursue “best place to work” awards. This visibility is very positive and a great way to attract potential hires and retain great talent.

7. Consider nontraditional arrangements like job-splitting, which can be successful if done right. Here is how it works: Two people get together and split a job, and rather than getting 50 plus 50, you may get 60 plus 60 because both people end up having to overlap to communicate.

Whatever steps you decide to take, it will be important to implement a solid plan so that you can operate from an offensive rather than a defensive position. Consult experts who can help you identify the right strategies and tactics to meet your unique needs. It is sad to have your company’s growth limited by a lack of available talent. Developing the right plan now can help ensure that you take the right steps and position your business for maximum success.

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 or via LinkedIn at https://www.linkedin.com/in/jamesscassel. His website is:www.casselsalpeter.com.

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