Deportations, lack of visas will hurt our economy. Find ways to protect your business.

By James S. Cassel

No matter where you stand on political issues, it is important to recognize that the current administration’s actions and proposed deportation of millions of undocumented immigrants and reduction of available visas will have serious, unintended negative consequences for our economy and possibly your business. Middle-market business owners should understand the potential impacts on their businesses and take necessary steps to prepare.

While much of the concern has been centered on the impacts on such industries as construction and hospitality, a broad spectrum of other industries will be harmed. The technology, fashion, farming, horse racing, meatpacking, and trucking industries, to name a few, are substantially driven by the labor, knowledge and spending power of visa holders and undocumented immigrants. We are hearing of labor shortages with April’s unemployment at a 4.4 percent rate.

Deportation

Undocumented immigrants currently represent a material number of our workforce and our underground economy, and removing them from our country will hurt all sectors, including the middle market. Recent data from the National Bureau of Economic Research show undocumented immigrants currently represent 5 percent of the U.S. workforce and contribute about 3 percent of the annual gross domestic product — amounting to approximately $5 trillion every 10 years.

Deportation of all 11 million unauthorized immigrants currently living in the U.S., although highly unlikely, is projected to cause the GDP to drop over $400 billion, or approximately 2.6 percent, every year, according to research from the nonpartisan Center for American Progress.

Deportation will mean rent, mortgages and other debts will go unpaid. Fear of deportation will cause people to spend less, hurting our GDP and local businesses.

Deporting people — many of whom were educated in our schools and also pay various taxes — will strengthen our competitors in other countries by giving away what business experts consider a company’s greatest asset: its people with expertise.

Limited access to visas

While abuses of the visas program may occur from time to time, it is definitely not the norm. For the most part, this program has become integral to many U.S. businesses and our economy.

Proposed changes to the visas program — including requiring some people to leave the country and reducing the number of available visas — will worsen the existing shortage of labor and make it even harder for employers to fill vacancies and/or retain their skilled employees who have helped build their businesses.

So, what steps should you take now?

▪ Keep abreast of the news, write to your government leaders and voice any comments or concerns.

▪ If you expect to lose employees, you should begin evaluating training programs, apprentice programs and/or automation.

▪ Consider hiring part-timers and offering alternative work schedules to enable you to hire mothers and other qualified employees who might need flexible hours and other unique arrangements.

▪ You might have to find a way to streamline your business operations and have fewer people working for you. Consider automation.

▪ Examine your employees’ visas to find all categories that would permit them to stay.

▪ Depending on your industry, you might need to consider opening an office offshore.

▪ As an option of last resort, you might need to shrink your business. Eliminate the least profitable business lines, and use this as an opportunity to grow your stronger product lines.

It is important to bear in mind that approximately 40 percent of Fortune 500 companies were founded by immigrants or their sons and daughters, an increasingly common trend. A recent study from the nonpartisan National Foundation for American Policy shows immigrants started 51 percent of all billion-dollar startups and make up 70 percent of key management roles in these companies.

Unfortunately, since we still do not fully understand exactly what changes will be implemented, it is not yet possible to develop a clear path forward. Keeping a close pulse on these issues and collaborating with experts can help you protect your business interests.

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When things go wrong in your business, be ready to act fast

By James S. Cassel

It can happen to any business owner at any time: something goes wrong. Very wrong. How do you survive and move on?

The steps you take to address problems can create new dynamics that leave you in a better or worse position. Time is never your friend, so prompt, decisive action is a must. Following is some guidance based on our experience helping middle-market business owners successfully navigate these issues.

First, identify and acknowledge the root of the problem. What specific factors and series of events led to the situation? How and why did this occur? Do you need outside assistance? There are plenty of small, medium and large consulting firms that can meet your needs and help you answer these questions.

The sooner you start addressing the issue, the better. In our experience, we have found many business blowups are caused by a few key factors:

People: If you determine the problem was caused by your people, take swift action to address it — including providing training to your team, getting help from professionals with expertise in key areas such as finance and marketing, and terminating any problem employees. Failure to hire and fire at the right time is one of the most common and costly mistakes.

Financial problems: Quality, timely financial information is a must. When you see financial problems on the horizon, address them early. Trying to deny or hide is futile. Eventually, you will have to deal with it — and at that time, you will likely be at a greater disadvantage. For example, if you are having trouble meeting the terms of your loan, you are better off working with your lenders early and proactively, rather than waiting until you have defaulted, such as violating a covenant. If you lose customers, you might have to downsize quickly. If your business is in major trouble, you should consider your options, including everything from finding a merger partner while still possible to filing Chapter 11. Consult attorneys and other professionals early — you can generally garner greater value with more time. Evaluate the situation quickly and be ready to renegotiate terms, trim expenses and/or reduce head count.

Crisis: A crisis can occur at any time — a product recall, an executive termination or loss, bad publicity that hurts your reputation — and you must be ready to address it head-on with the right strategy, customized to reassure and meet the needs of your key stakeholders (employees, investors, customers, etc.). Crisis communications specialists can be tremendous assets in helping companies emerge successfully from crises.

Supply problem: A key supplier goes out of business or quality is lacking. You need to work with experts to understand how to change your products or services to meet the market’s needs. Conducting customer surveys and monitoring feedback from your salespeople or your client services team is a great way to keep a close pulse on any supply issues and mitigate them before they become a major problem that hurts your business.

Market problem: Your market starts to deteriorate, as is currently happening to retailers in large shopping malls. If you are having a market problem, work with experts to determine whether you need to modify or reinvent yourself. Should you switch to more online sales, or move to a smaller location with less overhead?

While all situations are different and customized approaches are critical, most situations share a common thread: there is tremendous value in getting ahead of the problem to minimize the impact. Indeed, problems can affect any business at any time, but smart business owners know how to address them, overcome them, and even turn them into opportunities.

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Is Home Bancshares pressing luck in Florida with deal No. 13?

By John Reosti

Home Bancshares Chairman John W. Allison left no doubt he wanted Stonegate Bank … badly.

Not only did he call it “my dream deal,” but Allison said that for months if not years he feared a rival might snag the Florida bank. “If Stonegate decided to sell to somebody else, I would have been extremely disappointed the rest of my life,” he said.

His long pursuit ended this week when Home agreed to pay $778 million in cash and stock for Pompano Beach-based Stonegate.

Such obsessive talk naturally raises questions about the wisdom of any business transaction — especially in a state like Florida whose economy fell hard during the crisis years, hurting many banks that had expanded there, yet has blossomed again in recent years. Several bank deals have occurred there lately, including Iberiabank’s $1 billion agreement a nearly a month ago to buy Sabadell United Bank.

During a conference call about the deal, at least one analyst raised concerns that there are already signs that the Florida market’s comeback may be petering out. Similar questions surfaced after the Iberiabank deal.

Allison and Stonegate CEO Dave Seleski said worries about a new bubble were overblown.

“Some are concerned we’re overheating here” in South Florida, Raymond James analyst David Feaster said on the call.

“We’re still having a massive amount of people moving into South Florida, so I don’t think that’s necessarily a problem,” Seleski replied. “Is Florida starting to slow down a little? Yes, but that’s just how it is. We’re not seeing any asset- quality issues in our portfolio. We’re not seeing any more past-dues. In talking to my peers, we don’t see it.”

At Dec. 31, Stonegate’s nonaccrual loans totaled $8.6 million, or 0.38% of its $2.3 billion loan portfolio.

Allison said that he is “constantly looking” for signs flippers or speculators are affecting the market but that he has yet to see any.

“Can I be fooled? I don’t think so. I don’t think Dave can be fooled,” Allison said. “We live this. I’m constantly digging for information down there. I’m looking for crazy deals being done. … If there’s a bubble, it’s happening and we don’t see it.”

The deal was unquestionably bold. It is the largest in Home’s 20-year history, and the Conway, Ark., company announced plans Tuesday to offer $150 million in subordinated debt to help finance the transaction.

The $3.1 billion-asset Stonegate’s status as the sole American bank authorized to do business in Cuba added an intriguing twist to the deal that was strong enough to attract the attention of Arkansas Gov. Asa Hutchinson.

“I want to mention one thing,” Hutchinson said Monday during a brief ceremony Home organized to announce the deal. “[Seleski] and I talked about this. Stonegate has a presence in Cuba. This is something I hope we can capitalize on. I know this will be good for our agricultural community. I think it’s a great opportunity for the future. I’m delighted to have that Arkansas banking connection now.”

Allison said the Cuba link was not a significant factor in Home’s decision to purchase Stonegate, but he was quick to add that he sees “some pretty good opportunities coming down the road.”

“Dave likes [Cuba],” Allison said. “It’s an understanding process for our people to learn what he’s learned. The more he talks about it the more excited I get about it.”

Allison added that he and Seleski plan to visit Cuba “in the next couple of weeks.”

For his part, commenting on the conference call, Seleski described Cuba as a “kind of a sideshow compared to what we’re trying to put together in Florida.”

According to Home, the corporate parent of the $9.8 billion-asset Centennial Bank, the merged company will hold $5.1 billion of deposits in Florida, making it the state’s third-largest community bank. It will rank No. 1 among community banks in affluent Broward County, which includes Pompano Beach, as well as Sarasota County.

On its most recent call report, Stonegate reported noninterest expenses totaling $56 million for 2016. Noting the significant overlap in the two companies’ branch footprints, Home is calculating a 34% cost save, but Allison said it should be able to exceed that mark with little difficulty.

“This is really an in-market consolidation, so there will be substantial savings in this organization,” Allison said.

Home operates 68 branches in Florida, along the Gulf Coast and in the central and southern regions of the state. Stonegate operates 25 branches in South Florida.

The deal is expected to close in the fourth quarter. As soon as it does, Seleski will serve as a regional president, probably running Home’s entire Florida operation, Allison said.

Home has been an active buyer in Florida, acquiring 12 banks there since 2010. Stonegate, which reported net income of $28.9 million last year, is both the largest and the most profitable, Allison said.

“We’ve been known in the past for buying what they call dent-and-scratch banks where you have to fix them up a little bit,” he said. “Today, we’ve moved on to a great financial institution … [Stonegate] is truly the cream of the crop in Florida.”

Home and Stonegate have eyed each other for some time, according to Allison.

“We’ve been kind of dancing around Dave for two or three years and he has been dancing around us,” Allison said, adding that negotiations began in earnest in January.

In a conference call that month, Allison told analysts Home was working on some “nice transactions.”

Miami investment banker James Cassel, chairman of Cassel Salpeter & Co. Investment Banking, said one of Stonegate’s biggest selling points was its scarcity.

“There haven’t been a lot of new charters down here since 2007,” Cassel said Tuesday. “There’s only so many of these banks remaining. It’s not like there’s a huge crop that can come up and be sold.”

Cassel agreed with the deal’s architects that the South Florida economy is basically sound.

“South Florida is a pretty good market,” he said. “The economy is growing down here, and Stonegate has built a good bank.”

For now, closing its deal for Stonegate and ensuring a smooth integration process would be Home’s top priority, but Allison pointedly refused to rule out doing additional deals in the meantime.

“M&A is never off the table at this company,” he said.

 

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8 Winners and Losers in a Rising Interest Rate Environment

By Lou Carlozo

Timing a Fed rate hike is tricky, but forecasting the fate of various investments is another story.

If the shocking defeat of Obamacare repeal and reform proved anything, it’s this: Sometimes, a Magic 8-Ball works better at predicting major outcomes in the nation’s capital than, say, a pragmatic pundit. And so it goes with interest rate hikes and the Federal Reserve: Will they? Won’t they?

Is Fed chair Janet Yellen making the call with a Magic 8-Ball?

No matter the chances of correctly calling an interest rate increase – and an overwhelming number of observers see more of those coming in 2017 – certain industries and sectors stand to benefit, while others will suffer. Here is a look at eight sectors and investments that could win or lose as rates rise.

Winner: Domestic Banks

Higher interest rates mean more money made on loans and credit cards, but there are other reasons banks should do well no matter what the Fed does.

“Unlike most of the other companies in the S&P 500, they have little or no revenue from outside the U.S.,” says Ellen Hazen, senior vice president and portfolio manager at F.L.Putnam Investment Management Co. in Wellesley,

Massachusetts. “They benefit from the higher interest rates that are ultimately driving the stronger U.S. dollar without suffering from lower income.”

Loser: Debt-Intensive Industries

This rule of thumb applies as rates creep up: “Lenders and savers are winners and borrowers are losers in the broadest sense,” says Will Kenton, senior news and markets editor at Investopedia.

One investment tactic is to look at the companies that take on a lot of debt to finance their growing and operations.

Says Kenton: “Capital and debt-intensive industries such as telecoms, manufacturing, shipping and construction will suffer.”

Winner: Energy

As co-author of “The Association Between Federal Reserve Policy and Sector Returns,” Bob Johnson notes that energy is among the best performers when interest rates move up – finishing ahead of other winners such as consumer goods, utilities and food.

They all have this in common, though.

“People need to eat, brush their teeth and heat their homes whether the economy is strong or weak,” says Johnson, president and CEO of the American College of Financial Services in Bryn Mawr, Pennsylvania.

Loser: Home Construction

The higher mortgage rates that follow the Fed’s actions put a damper on real estate activity, says James Cassel, chairman and co-founder of the investment banking firm Cassel Salpeter in Miami.

If that happens, losers might include “construction-related businesses, like homebuilders,” he says.

But with mortgage rates still at historic lows, “I do believe there’s still some ways to go with additional rate increases before we see a material effect,” Cassel adds.

Winner: Home Improvement

When interest hikes compel would-be homebuyers to hunker down, they take on home improvement as a consolation prize – a good thing for Lowe’s Cos. (ticker: L) and Home Depot (HD).

“Remodelers and home-improvement suppliers benefit from a rising-rate scenario,” says Sesha Dhanyamraju, CEO of Digital Risk, a provider of outsourced mortgage processing services.

“Homeowners with a low mortgage rate are far more likely to stay in their homes and spend to improve them than pursue a new house … with a higher mortgage rate” Dhanyamraju says.

Winner: Technology

No matter how much some consumers may grumble, rising interest rates mean good news on at least one front.

“The technology sector should benefit as rising interest rates usually correlates with an economy that is getting stronger and is expected to grow at a faster pace,” says Ronen Schwartzman, founder and chief investment officer of Ten Capital Advisors in New York City.

And a strong economy could bolster the bottom lines
of smartphone manufacturers such as Apple (AAPL) and Samsung.

Loser: Government Bonds

If rates rise again soon, there could be some vulnerability for investors overexposed to certain types of bonds.

“A slight increase in rates would erase the coupon return for intermediate and long-term government bonds,” says Daniel Kern, chief investment officer of TFC Financial Management in Boston. “Investors concerned about potential rate hikes may want to emphasize shorter-term government bonds until rates stabilize.”

Meanwhile, “Dividend-paying stocks offer the appeal of income and growth,” Kern says.

Tie: Telecoms

Eric Ervin, CEO of Reality Shares, a research firm and exchange-traded-
fund provider focused on dividend-growth investing, believes that telecoms, because of their high yields, “will most likely suffer the most when with rising rates.”

Yet while this sector is sensitive to interest rate hikes, it isn’t necessarily vulnerable. In large part, any potential hurt depends on how much rates rise.

So far, so good: Over the last year, AT&T (T) is up nearly 7 percent – and 13 percent since Election Day, trading at about $24 per share.

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Insiders continue to take advantage of post-election surge in bank stocks

By Jackie Stewart

Executives and directors continue to capitalize on the post-election surge in bank stocks.

Insiders have been steadily selling shares over the last four months. For instance, insiders at 243 banks covered by Keefe, Bruyette & Woods have reduced their holdings by 103 million shares, valued at nearly $24 billion, since early November.

More than 9 million shares have been sold since Feb. 21, according to KBW data.

Many of the sales have involved insiders at smaller banks. About 80% of the stock sales since November, accounting for 56% of the proceeds, were tied to individuals and groups at banks with market capitalizations below $5 billion. KBW’s data includes transactions by private equity firms that have large bank stakes.

The moves make sense since bank stocks have jumped more than 20% since the Nov. 8 election even with the recent market pullback. While the numbers seem large, bank insiders still own a considerable amount of stock in their companies, industry experts said.

“Keep in mind they aren’t liquidating their entire portfolios,” said Christopher McGratty, a KBW analyst. “It’s only a fraction of what some of them own.”

There are several reasons insiders are cashing out a portion of their holdings. First, a surge in prices has provided a convenient window to make the most of shares that many bankers and directors may have been holding onto for years.

Also, some individuals may need to exercise stock warrants or options before they expire. They may also sell some stock to cover associated taxes, said James Cassel, chairman and co-founder at the investment bank Cassel Salpeter.

Bank insiders, like other investors, could see the increase in prices as a chance to diversify their personal portfolios. Many bankers learned that lesson the hard way during the financial crisis.

Executives with the $7.8 billion-asset Boston Private often sell stock based on personal circumstances, such as tax planning or charitable giving, regardless of market conditions, a spokesman said, adding that CEO Clayton Deutsch’s sale of 25,000 shares on Jan. 25 is consistent with his activity in recent years.

A spokesman for the $214 billion-asset BB&T said it is common for stockholders to realize gains when shares increase in value. KBW noted that King still holds about 290,000 shares of BB&T stock, which hit an all-time high earlier this year.

Ted Peters, chairman and CEO of Bluestone Financial Institutions Group, said his investment firm is generally discouraged when insiders sell. Still, Peters, a former CEO of Bryn Mawr Bank, said he realized there were many good reasons for selling.

The key for Peters is conducting more research into a seller’s motives.

“You have to look behind the scenes to see why the executive sold,” he said. “If an executive won’t stand behind their own stock, why should we?”

Insiders need to take precautions when they sell to remove any suspicion from other investors and to remove any claims of underhanded dealings. Though rare, there have been instances where individuals used material nonpublic information to trade shares.

James Cope, a former director at Pinnacle Financial Partners in Nashville, Tenn., agreed to pay a $200,000 fine and two years of probation after pleading guilty to insider trading. Cope bought shares in Avenue Financial Holdings after learning during a meeting that Pinnacle was interested in buying Avenue.

Chip MacDonald, a lawyer at Jones Day, encourages a conservative approach to insider stock sales. “When in doubt, don’t trade,” he said.

There are laws and company policies that dictate when and how insiders can divest their stock. Internal discussions over strategic decisions like negotiating a merger or planning a stock offering would usually mean an insider could not sell stock for a period to avoid using nonpublic knowledge to their benefit.

Insiders often set up plans under the Securities and Exchange Commission’s Rule 10b5-1 where a broker is designated to make buying or selling decisions based on predetermined times or prices.

“I wouldn’t read too much into [a sale] unless an entire board or management team sold their entire portfolio at one time,” MacDonald said. “If they’re maintaining a meaningful amount of stock, you can assume it’s a diversification effort as opposed to a concern about their institution or the industry.”

 

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Position your business to attract interest from private equity firms

By James S. Cassel

There comes a time in almost every middle-market business owner’s life when attracting interest from a private equity firm or strategic buyer becomes important. Private equity firms look for certain criteria when evaluating candidates for acquisitions or recapitalizations, so it is important to plan ahead and take the right steps now to put your business in the best position.

The business decisions you make today can position your company for future growth, recapitalization or sale. Following are some of the key characteristics that private equity firms most commonly look for in companies. While all private equity firms are somewhat unique and may have their own sets of criteria and preferences, the criteria listed below are a good starting point to keep in mind.

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. . .

▪ Good people. Having a good senior management team is important. The team should be properly trained, incentivized and moving in the same direction.

▪ Recurring revenue and margins. For some businesses, long-term contracts are a great way to guarantee future revenue streams. Other equally beneficial options might include service contracts, subscription services, membership clubs or adding lines of consumables to what you already sell. Many private equity firms look for businesses with margins of 10 percent or better.

▪ Large market potential. Market size is one of the top criteria that private equity firms look for when buying companies. A $25 million player in a $100 million market will not be as attractive to a private equity firm as a $25 million player in a $1 billion-plus market. Just as important, you should be in a market where the leaders do not control a large proportion of the industry. In some cases, niche businesses that are ancillary to other businesses can be attractive.

▪ Solid growth potential. Having a defensible market and strong growth characteristics is vital. The better your growth rate, the higher your valuation. Beyond your previous growth, your realistic projected future growth is important.

▪ Appropriate financial documentation. Proper accounting systems and financial reporting is critical. It is important to show a history of keeping all necessary documents in appropriate order. Sound and accurate record keeping will help protect your valuation when financial due diligence is being performed.

▪ Strong product and service offerings. Keeping a close pulse on changing market trends and conducting strong research and development is important. This can help you maintain a strong pipeline of new products and ensure your products or services meet the needs of your customers and prepare you for the future. Private equity firms like businesses with a low risk profile in the short term to avoid technical obsolescence.

▪ Fragmented industry. Being in an industry with M&A opportunities is always good. In addition to organic growth, growth by acquisition can be very beneficial to expanding your business.

▪ Good customers. Private equity firms look for companies that have a strong customer base with adequate distribution of customers and lack of customer concentration. If a majority of your revenues come from one or two customers, private equity firms will be concerned about what may happen to your business if those customers depart. Generally, a single customer should be responsible for no more than 10 percent of your revenues. Being the market leader, or at least among the top three in your market, is helpful.

If your business does not meet all the above criteria, do not assume that private equity firms will not be interested. Some private equity firms are open to enhancing businesses by addressing any areas that might be deficient. In today’s market, the better and bigger companies might sell for multiples in excess of 10 times EBITDA (earnings before interest, taxes, depreciation and amortization), while those with less attractive business models or industries might sell for values of five times EBITDA or less.

Achieving the goals listed above requires time and effort and may not be done overnight. By taking the right steps now, you can help position your firm to attract interest from private equity firms or strategic buyers willing to pay top dollar in the future.

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Will C&I clients make South Florida worth the risk for Iberia?

By John Reosti

Daryl Byrd knows that South Florida is one of the country’s most fickle markets. He knows that it is prone to wild swings — one year cranes are everywhere and the next it’s vacant condos as far as the eye can see.

Yet his company, Iberiabank, is making the biggest deal in its history there, betting that the attractive demographics and potential commercial clients will be worth the risk.

The $1 billion purchase of Sabadell United Bank would add nearly $6 billion in assets to Iberia, of Lafayette, La. It would more than double the size of Iberiabank’s Florida operations and meaningfully increase its exposure to the Miami area, where most of Sabadell United’s branches are located.

Banks in South Florida were hit hard by the financial crisis, especially lenders that focused on condo lending. Unemployment stayed at double digits for several years, and seven area banks failed between 2008 and 2013.

The market has bounced back strongly, with its population, employment and the overall economy growing at a rapid pace.

Those ups and downs have some industry observers conflicted about the deal.

While calling the acquisition a “very bold strategic stroke,” Joseph Fenech, an analyst at Hovde Group, also expressed “mixed emotions” about the transaction. “The deal has some intriguing aspects to it, though it’s not without its share of risk.”

Banks that conduct business around Miami should also expect added regulatory scrutiny when it comes to anti-money-laundering measures and the Bank Secrecy Act, said Ken Achenbach, a lawyer at Bryan Cave in Atlanta

who was not involved with the deal. Regulators, for instance, will want to know if Iberiabank’s compliance systems are up to snuff.

“It’s not just the balance sheet and capital adequacy that gets looked at” by regulators reviewing the merger application, Achenbach said. “Thinking about risks beyond credit … has become much more sophisticated as banking has grown in complexity.”

Iberiabank has almost certainly factored regulators’ attitudes into its preparations, Achenbach said.

Sabadell United’s foreign ownership is another wild card for regulatory review. Spain’s Banco Sabadell entered South Florida in 2007 when it acquired the $580 million-asset TransAtlantic Bank in Miami. Over the next decade it built the franchise through organic growth and acquisitions.

The deal’s pricing — valuing Sabadell United at nearly 200% of its tangible book value — was also a subject of debate. Iberiabank will also sell $500 million of common stock, on top of a $280 million offering in December, to help pay for the acquisition.

“The financial attractiveness of the deal strikes us as less compelling than the strategic aspects,” Fenech said. Iberiabank “is paying a fairly full price for economics that seem neutral — at least over the intermediate term — to the pro forma earnings profile.”

While the price is far from a bargain, Chris Marinac, an analyst at FIG Partners, said it is in line with typical transactions in Florida. He also expressed optimism for the financial modeling, which he viewed as very conservative.

Iberiabank is largely counting on cost-cutting to make its numbers work, vowing to reduce Sabadell United’s annual expenses by 27% in order to achieve 6% earning accretion next year.

The company, however, was excited about the market’s growth prospects.

“With a population of over 6 million people, the greater Miami area is a dynamic market with a strong concentration of commercial-and-industrial clients that are particularly attractive to us,” Byrd, Iberiabank’s president and CEO, said in a press release announcing the deal.

Efforts to reach Byrd for additional comment were unsuccessful.

There is upside if Iberiabank can boost revenue without disrupting Sabadell United’s culture, industry observers said.

“This gives them a real presence in an area with a growing population,” said James Cassel, chairman of the Miami investment bank Cassel Salpeter & Co., which was not involved in the deal. Iberiabank “never had much of a footprint” in South Florida, he said.

Banco Sabadell “always kept that local feel,” Cassel added. “They ran it as a community bank.”

Marinac noted that Sabadell United’s net interest margin is roughly 3%, adding that Iberiabank could make the deal “even more accretive” by simply boosting that metric by 25 basis points.

“The key is execution,” Marinac said. Iberiabank has “to retain key people and deepen the relationships it’s buying.”

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Strategic Planning is Critical for Business Success

By James S. Cassel

Strategic planning is one of the most popular but least frequently implemented New Year’s resolutions for middle-market business owners. While most business owners agree that strategic planning can provide a roadmap to drive their business growth, long-term survival and profitability, many fail to devote the necessary time, energy and resources to do it right, if at all.

When they do get around to developing strategic plans, they often do it haphazardly and without proper process, strategy or buy-in from key stakeholders. Plans often sit on shelves garnering more attention from dust and mites than from company executives.

To be clear: Strategic plans, which provide practical roadmaps for implementing and managing an existing company’s strategic direction, differ from business plans, which are used for starting businesses, obtaining funding or directing operations.

The following is some practical guidance based on our experience counseling middle-market business owners in all stages of a company’s business cycle.

First, identify the right management team members to participate in developing your plan. Their support and execution will be critical, so engage them upfront. Broader participation enables you to draw from a wider pool of experience, views and opinions. Moreover, team members who have worked for other companies bring valuable insight regarding what might work and what might not.

Consider where you want your business to be in the next 12 months, 24 months and five years. Envision revenues, growth, employees, locations, products and services offered, etc. A good strategic plan should cover five years and be continuously reviewed and modified.

Key elements considered should include:

▪ Vision: a bold, inspirational, aspirational statement setting the direction for your company’s future, describing your identity and raison d’être

▪ Mission: While your vision statement is forward-looking, your mission statement describes what you do today, for whom, and how

▪ Values: a description of your beliefs that will enable you to achieve your vision and mission. As an example, look at the core values of private equity firm Roark Capital Group: roarkcapital.com/CoreValues

▪ SWOT: an evaluation of your company’s strengths, weaknesses, opportunities and threats, which helps you identify priority focus areas for your strategic plan. You must be honest with yourself

▪ Goals: approximately five statements explaining how you will make your vision reality

▪ Objectives: Each of your goals should be supported by approximately five “SMART” (specific, measurable, achievable, realistic and time-based) objectives to help advance them

▪ Action plans with key performance indicators: Each objective should have an action plan showing how it will be achieved, along with KPIs to enable evaluation and adjustment to ensure success

Based on these considerations, develop a strategic plan outline and focus on the top five to seven key areas that can help drive your business goals. Build into your plan a time line for routine evaluation to ensure you meet your goals. Remember, success is about execution. A good book to read is: “Execution: The Discipline of Getting Things Done” by Larry Bossidy and Ram Charan.

Failure to keep a close pulse on emerging industry developments and to remain nimble to adapt contributed to the demise of companies like Polaroid and Blockbuster Video. Stay apprised of how you are perceived, who you are, what you have done and what you need to do to succeed. Work with experts to evaluate and update everything from your branding to your product offerings. Determine what external forces might hurt your business. Consult your board of directors and/or strategic advisers to provide counsel and tactical support. Asking for help or advice is never dumb; not asking is.

Another important point: Be proactive. Evaluate your people, business lines and customers. Eliminate the wrong ones and invest in the right ones.

Creating a strategic plan is only the first part of the battle. The real challenge is implementing it and keeping it updated. However, my experience has confirmed that companies that do this right gain greater control of their destinies and position themselves for survival and success.

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U.S. Adds 227,000 Jobs in January While Trump Pushes for Even More

U.S. employers added 227,000 positions last month, the largest increase since June, the Labor Department reported Friday as recently inaugurated President Donald Trump met with top business executives to discuss his economic strategy.

The number, which included gains in retail, construction and finance, beat economists’ estimates of 195,000 and compared with a revised increase of 157,000 in December.

Even though January’s job report may be slightly inflated — the month offered better weather conditions for construction than December and there were fewer post-Christmas layoffs at retailers because of lower seasonal hiring — employment growth remains very strong, said Ryan Sweet, director of real time economics for Moody’s Analytics.

“It gets us on the path towards achieving full employment,” Sweet said in a phone interview. The Trump administration is “inheriting a very strong economy. The one concern is that their stance on trade may be more disruptive to growth this year, but other than that, the economy’s fundamentals are rock solid.”

The unemployment rate ticked up slightly, moving from 4.7% in December to 4.8% in January, as labor force participation increased 0.2% to 62.9%, according to the report.

“Ironically, it’s encouraging that the unemployment rate ticked up because it rose for the right reason,” Sweet said. “The increase in the labor force participation rate, which nudged the unemployment rate higher, is good news. An increase in the labor supply is important because business are already grumbling about their difficulty finding qualified workers.”

One area of concern, however, is that average hourly earnings increased only 3 cents to $26, despite the minimum wage rising in 19 states, Sweet added.

“The last few months’ average hourly earnings have come in on the weak side,” he said. “The general takeaway from wages is that the economy is not at full employment yet. We are getting there, but we still have a little bit more slack to absorb before we start to see a noticeable acceleration in wages.”

Still, pay jumped 2.5% over the past year, which is a positive for workers though it may tighten profit margins for employers.

“The big challenge,” said James Cassel, an investment banker and co-founder of Cassel Salpeter, “is going to be whether the wage growth causes margin compression for businesses, or whether they can do one of two things: either get some pricing power, in terms of raising their prices to accommodate for that, or alternatively they can get increased productivity.”

That’s an issue on which President Trump may turn to his economic advisory council, which met Friday morning and includes CEOs from Tesla , Wal- Mart , Blackstone Group , Disney , JPMorgan Chase , and IBM .

Known as the president’s Strategic and Policy Forum, the group’s mission includes helping the president buoy job growth.

The overall strength of the U.S. labor market, which has shown marked improvement since unemployment peaked at 10% in 2009, was a factor in the Federal Reserve’s decision to raise short-term interest rates by 25 basis points in December.

The hike, only the second since rates were cut to nearly zero during the 2008 financial crisis, may be followed by as many as three this year, the central bank projected. During the Fed’s latest meeting, the committee members decided to leave interest rates unchanged.

“From the Fed’s perspective, this is as good as it gets,” Sweet said. “The unemployment rate is falling well below their estimate of full employment, and wage growth isn’t strong enough where it suggests that they need to create any sense of urgency in raising rates.”

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U.S. Adds 227,000 Jobs in January While Trump Pushes for Even More

By Valerie Young

The U.S. added 227,000 jobs during the month of January, while the unemployment rate ticked up slightly to 4.8%.

U.S. employers added 227,000 positions last month, the largest increase since June, the Labor Department reported Friday as recently inaugurated President Donald Trump met with top business executives to discuss his economic strategy.

The number, which included gains in retail, construction and finance, beat economists’ estimates of 195,000 and compared with a revised increase of 157,000 in December.

Even though January’s job report may be slightly inflated — the month offered better weather conditions for construction than December and there were fewer post-Christmas layoffs at retailers because of lower seasonal hiring — employment growth remains very strong, said Ryan Sweet, director of real time economics for Moody’s Analytics.

“It gets us on the path towards achieving full employment,” Sweet said in a phone interview. The Trump administration is “inheriting a very strong economy. The one concern is that their stance on trade may be more disruptive to growth this year, but other than that, the economy’s fundamentals are rock solid.”

The unemployment rate ticked up slightly, moving from 4.7% in December to 4.8% in January, as labor force participation increased 0.2% to 62.9%, according to the report.

“Ironically, it’s encouraging that the unemployment rate ticked up because it rose for the right reason,” Sweet said. “The increase in the labor force participation rate, which nudged the unemployment rate higher, is good news. An increase in the labor supply is important because business are already grumbling about their difficulty finding qualified workers.”

One area of concern, however, is that average hourly earnings increased only 3 cents to $26, despite the minimum wage rising in 19 states, Sweet added.

“The last few months’ average hourly earnings have come in on the weak side,” he said. “The general takeaway from wages is that the economy is not at full employment yet. We are getting there, but we still have a little bit more slack to absorb before we start to see a noticeable acceleration in wages.”

Still, pay jumped 2.5% over the past year, which is a positive for workers though it may tighten profit margins for employers.

“The big challenge,” said James Cassel, an investment banker and co-founder of Cassel Salpeter, “is going to be whether the wage growth causes margin compression for businesses, or whether they can do one of two things: either get some pricing power, in terms of raising their prices to accommodate for that, or alternatively they can get increased productivity.”

That’s an issue on which President Trump may turn to his economic advisory council, which met Friday morning and includes CEOs from Tesla (TSLA), Wal- Mart (WMT), Blackstone Group (BX), Disney (DIS), JPMorgan Chase (JPM), and IBM (IBM).

Known as the president’s Strategic and Policy Forum, the group’s mission includes helping the president buoy job growth.

The overall strength of the U.S. labor market, which has shown marked improvement since unemployment peaked at 10% in 2009, was a factor in the

Federal Reserve’s decision to raise short-term interest rates by 25 basis points in December.

The hike, only the second since rates were cut to nearly zero during the 2008 financial crisis, may be followed by as many as three this year, the central bank projected. During the Fed’s latest meeting, the committee members decided to leave interest rates unchanged.

“From the Fed’s perspective, this is as good as it gets,” Sweet said. “The unemployment rate is falling well below their estimate of full employment, and wage growth isn’t strong enough where it suggests that they need to create any sense of urgency in raising rates.”

Click here to view original article.