Archive for category: In the News

By: James Cassel
November 17, 2015

Many business owners struggle with one of the most important aspects affecting the success of their companies: hiring, training and empowering the right team members. Based on our experience, here is some practical guidance.

1. Find team members who fit your business culture.

This means much more than hiring financial planners at your wealth-management firm. This involves identifying your company’s key performance indicators and making strategic hiring decisions based on them. For example, if you have identified a correlation between great customer service leading to stronger sales at your company, then you should aim to hire team members with those skills and talents.

2. Consider standard skills and aptitude tests.

When hiring, it can be difficult to get the full picture on a potential candidate from a mere interview. In addition to asking various members of your team to participate in the interview process and share their perspectives of potential hires, you should consider using tools such as skills and aptitude tests. There are many to consider. Publix, which is widely noted for its excellent customer service, requires job applicants to complete aptitude tests that assess how they would react in various customer service scenarios.

3. Evaluate candidates outside the interview room.

Keep in mind that your prospects’ personal lives should be compatible with the professional lives they would have to maintain while working at your company. Consider having dinner with prospects to observe their demeanor outside of professional settings. Curious about how a potential executive might manage your team? Watch how they treat their significant other and the staff members at a restaurant. They probably would not treat your team members too differently. This rule of thumb is followed by so many CEOs that it has become known as the “Waiter Observation.”

4. Create a positive work environment.

It’s important to create a positive work environment with meaningful rewards and incentives that your team members appreciate. Whether it is money or recognition or both, find out what best motivates team members to keep them engaged. Different generations want different things.  Baby boomers and millennials want and need different things.

5. Encourage team members to do things like they like.

Pushing is not the only way to maximize productivity and performance. People are more likely to succeed when they are doing things they enjoy. Understand what knowledge, skills, and talents your team members have, and put them in roles that best suit them. For example, if you have an excellent graphic designer, do not assume that the best way to reward him or her is with a promotion to run the department. That person might not succeed in a director role simply because he or she does not enjoy or is not good at managing people.

6. Invest in Training

Training, coaching, and mentoring are worthwhile investments that can sharpen your team’s skills. Just as important, they show your team members that you care enough to invest in their future. You might bring in an outside speaker, encourage your team members to attend industry conferences, or provide an annual education allowance.

7. Let people go when necessary.

Ensuring you hire the right people is just as important as promptly terminating any mis-hires. When you recognize you have made a mistake, it is prudent to correct the error swiftly. Procrastinating the termination does no favors for your company, your team, or the mis-hire.

Investing the necessary time and resources to more strategically acquire, train and manage one of your biggest assets – your team – is critical to achieving your goals. Show your people what they mean to your company and how they fit into the big picture. They are likely to respond with appreciation and loyalty, and you will lay the foundation for a strong workforce ready to support your continued growth and success.

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

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By: James Cassel
October 18, 2015

News flash: If your team members are accusing you of micromanagement, they are probably right. You are probably doing them, your company, and yourself more harm than good.

Senior-level micromanagement is as common as it is destructive to companies on so many levels. I was accused of micromanagement at one point. While I, of course, like most other culprits, did not believe this accusation at first, I quickly realized that I had to get better at delegating. Thankfully, because I worked with the right people, they embraced responsibility and exceeded my expectations.

Why is micromanagement an unnecessary evil? It hurts company morale and sends a message that you do not believe in your people’s judgment or consider them capable of doing their jobs. It usually is more a reflection of your insecurity and fear than an indication of your team’s capabilities. Micromanagement deflates people, takes away their power and inspiration to grow, motivates them to start looking for more rewarding employment elsewhere, prevents your senior people from focusing on the more strategic higher level work they should be doing, and the list goes on.

As a middle-market business owner, you must escape this common trap. Your role is to be a strong leader who sets policy, provides guidance, inspires and motivates, and creates a framework for growth so that your company can function — with or without you — like a well-oiled machine. You should be able to take a vacation without worrying your company will collapse while you are away.

If you are confident that your people cannot work independently, then they are either the wrong people, in the wrong positions, or probably should not be part of your company and should be replaced. It is a serious mistake to have people in positions where they cannot perform and excel. This is damaging for everyone involved, including your company and your clients or customers.

How do you create a framework for success? This requires building your management team while grooming several people for your senior-level positions. Larger companies do this, and middle-market businesses should more.

You do not want to have a company where your senior people are micromanaging or going around middle managers to your junior people and telling them what to do. While there are situations where this must take place, this practice should be the exception rather than the rule.

Along the way, when your colleagues make decisions or commitments, you have to be careful but you have to support them. Some of the people I work with have made decisions I would not have made, but once they made them, I supported their decisions so as not to undercut their authority. I have learned the vast majority of the time it is not the end of the world when someone makes a decision that differs from what I would have made. There is more than one right way to do things. On more than one occasion, their way has been just as good as or better than mine, and I have learned from my team. This is how it should be.

Clearly, if your people are making decisions that do not have positive outcomes, this issue must be evaluated and rectified. The key is that you must keep an open line of communication and establish different ways to monitor what your people are doing. You can set up a dashboard, but you do not want to be on top of them every minute because they need the space — and self-confidence — to do their jobs. You do not want to drive your people crazy. You would be surprised how often I hear this is going on.

To succeed, people must have well-defined roles and an accurate understanding of the nature of their work and what is expected of them. When they are given tasks, they must have the information they need so they can meet your expectations. They must be trained, mentored and motivated. They must know they can ask questions and get help when they need it. The right people will thrive in this environment.

Trust me, I know it can be difficult for middle-market business owners to let go and delegate. But you cannot be a control freak or you will limit your chances of growth and success. So after you have empowered your team to do their jobs, your job is to empower yourself to let go.

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

 

 

 

By: James Cassel
September 10, 2015

There may not be better time to sell a business in the next few years than now. Values are high and interest rates are low. They may not stay that way for long. If you would like to sell your business now or any time in the foreseeable future, the time to begin planning is now. This can help minimize many of the obstacles that often delay or kill deals and help maximize your value and ensure a successful outcome.

Based on my experience as an investment banker helping clients during the sale, merger, and acquisition process, here are five tips to consider and act upon now:

1. Early in the process, consult key decision-makers and those who will be affected by the deal. Determine who will have a say in the deal and consult with them, even if they are minority owners. If your business is family owned, talk to your family members as soon as possible. Involving your family at the outset can help minimize potential family problems later. This is particularly important if a second or third generation is involved and family members expect to take over or profit from the business. Making sure that family members understand what is going on can help keep harmony in the family.
2. Determine whether and for how long you would like to continue to work after the sale. This can be a tough one. You have to be honest with yourself. It is not a bad idea to discuss this with your significant other. This decision is dictated for many by their age, health, and lifestyle preferences. Older business owners may be more prepared to retire and step away than younger ones who may need or want regular incomes to support their lifestyles or remain active. In general, at a minimum, it is a good idea to be prepared to continue working in some capacity during a transition period. In some cases with financial buyers, you might continue to run the business for years until the next sale.
3. Organize your documents in advance.Well-structured corporate and financial documents and sound record-keeping practices always make good business sense. Getting your books and records in order now will help keep you from scrambling for documents when potential buyers conduct their due diligence. Keep all your financials, vendor contracts, and customer contracts easily accessible. You will derive immediate benefits from this, as you will be in better shape running your business today with good, timely information.
4. Determine whether you want a partial or total exit. Private equity firms and other financial buyers can either buy control or minority positions. In a total exit, you might maximize the consideration you receive, especially if you sell to a strategic buyer (although financial buyers are currently aggressive when it comes to pricing). In a partial exit, there are many social issues to consider that might be just as important as what you receive. If you are going to partner with a private equity firm, the comfortability factor may be more crucial than the dollar amount, since you will not get that until the final exit when you sell your remaining ownership interest.
5. Have realistic expectations of value. Ask your advisors to provide realistic guidance on the value of your business. Too often, I hear stories from frustrated sellers who regret having hired advisors who gave unrealistic valuation numbers just so they would get the job. It is equally important for sellers to be realistic and not merely pick whatever numbers they think they need to sustain their lifestyles. A multiple of earnings or EBITDA (earnings before interest, taxes, depreciation, and amortization) is the way most buyers determine what they are willing to pay for a business. The more you earn, and the higher your future projected growth, the more you can expect buyers to pay for your business. The amount buyers are willing to pay also will vary depending upon factors including your company’s size, stability, industry, and working capital needs. It also is important to have a diverse customer base, as your valuation will be hurt if your revenue is heavily concentrated with one or two clients.

Without a doubt, a little planning now can go a long way to help ensure you obtain the maximum value for your business and achieve your specific goals associated with the sale of your business.

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. www.casselsalpeter.com

 

 

By: Nina Lincoff
September 4, 2015

Florida continued to be a sunny environment for those seeking a loan, as the state’s banks grew loans in the second quarter at a faster rate than banks across the nation.

Total loans held by Florida’s 168 banks in the second quarter rose to $121.1 billion from $118 billion in the first quarter, or a 2.9 percent increase.

That’s a faster rise than the 2.2 percent increase reported by banks across the nation, which collectively grew loans by $185 billion in the second quarter.

The number of banks however, shrunk in the Sunshine State, falling to 168 institutions from 175 in the first quarter. But while the number of banks shrunk, profits didn’t.

Florida’s 168 banks reported a profit of $347 million, up from $236 million in first quarter.

The most profitable Florida banks in the second quarter were:

• Petersburg-basedRaymond James Bank (NYSE: RJF) with a net income of $51 million.
• Miami Lakes-basedBank United (NYSE: BKU), with a net income of $47 million.
• Jacksonville-basedEver Bank (NYSE: EVER), with a net income of $43.4 million.
• Weston-basedFlorida Community Bank (NYSE: FCB), with a net income of $19.9 million.
• Coral Gables-basedCapital Bank (Nasdaq: CBF), with a net income of $14.3 million.

The Florida banks with the deepest second quarter losses were:

• Miami-based Brickell Bank, formerlyEspirito Santo Bank, with a net loss of $2.9 million
• Tampa-basedBay Cities Bank, with a net loss of $1 million.
• Lake Mary-basedIndependent Banker’s Bank of Florida, with a net loss of $806,000.
• Fort Walton Beach-based Beach Community Bank, with a net loss of $740,000.
• Miami-based Banco do Brasil Americas, with a net loss of $717,000.

 

According to the Federal Deposit Insurance Corp., banks earned a collective profit of $43 billion in the second quarter, the highest quarterly income on record.

“Bankers generally reported another quarter of higher earnings, improved asset quality, and increased lending,” FDIC Chairman Martin J. Gruenberg said. “There were fewer problem banks, and only one bank failed during the second quarter.

Despite the lending and profit gains, Florida banks struggled with tight interest margins. Their combined net interest margin – the spread between interest earned on loans and paid out on deposits – declined to 3.40 percent in the second quarter, from 3.58 percent a year ago.

Across the country, the average interest margin rose to 3.06 percent in the second quarter from 3.02 percent in the first, but still remained below the 3.15 percent reported in the second quarter of 2014.

“Revenue growth has been modest and net interest margins continued to decline – even as banks extended asset maturities to mitigate the impact of low rates,” Gruenberg said.

Loan quality declined slightly in Florida, with banks’ collective noncurrent loan ratio rising to 3.44 percent in the second quarter from 3.42 percent in the first, although that is still less than the 4.15 percent reported for the second quarter of last year.

The amount of reposed property at Florida banks fell to $1.1 billion in the second quarter, from $1.2 billion in the first quarter. Deposits, on the other hand, increased to $131.6 billion in the second quarter from $130.6 billion in the first quarter.

The number of banks on the FDIC’s Problem List continued a nearly seven-year fall, from 253 to 228 during the second quarter.

Low interest rates have been hurting banks, and it is expected that Federal Reserve will raise U.S. interest rates before the end of the year, according to media reports.

“Revenue growth has lagged behind asset growth, as exceptionally low interest rates put downward pressure on net interest margins,” Gruenberg said.

While a hike in interest rates will likely help banks boost revenue in the medium- and long-term, some are saying that there will be an inflection point immediately following a rate hike where banks will lose money due to floors set for loans before the increase.

“One interesting comment has been that most asset-based loans have a floor in them,” said investment banker James Cassel, chairman and co-founder of Miami-based Cassel Salpeter & Co.

With a low interest rate, the cost of banks’ money is very low, but there will be a short period of time where, following a rate hike, banks’ money will cost more than money coming in, Cassel said.

That will normalize, of course, but it is something to consider in the lead up to a rate hike.