Drawing on brand loyalty can help ensure your company’s survival | Opinion

It’s going to be a long winter. Even with a successful vaccine, normalcy may be as far away as next summer.

Middle market companies can learn from a recent CBS news story about the famous Strand bookstore in New York City. The struggling independent bookstore turned to social media to highlight its economic plight, successfully motivating a cavalry of support from loyal and new customers, and even some celebrities. With many businesses facing tough choices right now, finding new ways to tap into customer loyalty and secure new clients, while keeping people comfortable doing business with you, is critical to survival and success.

Here’s what to consider:


Most middle market businesses have already belt-tightened on their expenses, sought capital, and right-sized. Now, it’s once again time to project revenues, expenses, and capital needs for the next six to 12 months and pursue any existing government aid, or new aid that might become available. If you do not see a clear path forward, seek a buyer or a capital partner now. Do not wait. If selling is the only option, position your narrative to explain why your business is a good opportunity. An investment banker can help.

Middle market businesses that do have a path to survival should focus on actively engaging consumers, building client confidence, and tapping into brand loyalty.

Invest in resources that make consumers/clients feel safe doing business with you. Retail outlets and restaurants, for example, can put up plexiglass dividers, secure air purifiers, and/or Far-UVC lighting that may curtail the spread of COVID-19. They should also coach staff on promoting and maintaining social distancing, create or beef up delivery/pickup services, and of course, wear — and even provide — masks and other PPE to employees, guests and customers. Some businesses can set up tents and move merchandise into the open and would do well to invest in outdoor kiosks, awnings and umbrellas, as well as fans or heaters, and move business outside.

You can make other strategic moves, too. Review your product/services line and tailor them to pandemic needs. Seek accommodations with landlords who would rather have some rent than none at all. You can engage real estate consultants to assist in negotiations, while seeking concessions, and also consider collaborations or partnerships that might help.

Most important, do not underestimate the power of drawing on brand loyalty. Like The Strand, use social media and other channels, such as customer lists you may have built, to call for action and help, letting your customers know how much you need and appreciate them. Explain how buying local means revenues stay local, so getting goods and services from you means supporting their community. They will want you around when things get back to normal.


Many businesses secure a disproportionate amount of their business during the weeks before the holidays. Get ready now. Use messaging to let customers know about the range of extra measures taken to keep them safe. And with many retailers and online businesses already offering bargains, run your own deals now too.

This next COVID phase may be the most challenging yet for business owners. While many middle market companies have already implemented or exhausted traditional cost-cutting and capital-raising efforts, more can be done to keep loyal customers returning and maybe even gain some market share as we get to the other side of this crisis.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment- banking firm with headquarters in Miami that works with middle-market companies. jcassel@casselsalpeter.com or via LinkedIn at  https://www.linkedin.com/in/jamesscassel.

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Keralty buys Westchester General Hospital in Miami

By Brian Bandell
October 29, 2020

Westchester General Hospital in Miami-Dade County was sold to Keralty, an international health care firm based in Colombia.

The 125-bed hospital at 2500 S.W. 75th Ave. was sold by the family of ​Gregory Fox​. The deal includes the 78,000-square-foot hospital building and 5.7 acres of parking lots and undeveloped land. Keralty said it would retain the hospital’s 570 employees and appoint ​Juan Carlos Echandia​ as chairman. Echandia was previously the South American region president for Keralty.

The price wasn’t disclosed.

Westchester General was one of the few stand-alone for-profit hospitals remaining in South Florida.

Keralty operates Sanitas Medical Centers in Florida and three others states in partnership with Florida Blue. It also operates hospitals in Latin America and offers insurance products. The company moved its global division headquarters to Miami in 2019.

“On behalf of the nearly 20,000 Keralty employees worldwide, we welcome Westchester to our family of companies,” said ​Sergio Martinez​, CEO of Keralty Global. “This addition provides a new opportunity to expand our presence in the U.S. and to advance our journey to establish a better model of care and support for our patients and health plan partners.”

Keralty said it plans to “re-engineer” Westchester General to expand its behavioral health, advanced palliative care, and complex care for individuals with multi-chronic conditions.

According to the Florida Agency for Health Care Administration, Westchester General had a bed occupancy rate of 53.4% in 2019, which was below the county average. It lost $5.9 million on revenue of $39.3 million in 2019, a year when most South Florida hospital saw earnings growth.

Most South Florida hospitals have suffered financially during the Covid-19 pandemic this year, so having an owner with deep pockets should be beneficial for Westchester General.

“Our vision is to reimagine the services provided by the hospital and to coordinate with Sanitas Medical Centers, other healthcare providers, community organizations, and insurance companies, to establish a patient-centered health program supporting the local community and designed to keep patients healthy, rather than treating someone who is sick,” Echandia said.

Greenberg Traurig was legal advisor to Keralty in the purchase. The sellers worked with law firm McDermott Will & Emery and investment banking firm Cassel Salpeter & Co.

“When Westchester General Hospital and the Fox family who owned it approached us to help them find a buyer for their hospital, they were adamant that they were only looking for a buyer who would continue putting patients first and would provide the same quality of care that had long been the family’s legacy,” said ​James Cassel​, chairman of Cassel Salpeter. “Keralty and their Sanitas Medical Centers checked off all those boxes. We then worked closely with both parties on behalf of the seller to secure this successful outcome.”

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Business succession planning in the time of COVID | Opinion

President Ronald Reagan was in office little more than two months when he was shot by an unhinged gunman. In the confusion that followed, Secretary of State Alexander Haig declared, “I am in control here,” claiming power at the White House, bypassing the Vice President and the leaders of the House and Senate. While there was some good in having someone assume charge, Haig had no real authority and added uncertainty to an already precarious situation. There’s a lesson here. If you lead a middle market company and become suddenly unable to stand at the helm, don’t invite such chaos. Instead, have a plan.

Recent events at the White House show COVID-19 does not discriminate. Even while practicing social distancing and wearing a mask, one slip, and you, or a member of your leadership team, could be its next victim. Incapacitation at the top of your company could invite incalculable disruption to your business. And even if you remain virus-free, accidents happen and other health risks exist. Plan accordingly and have a succession plan to ensure your company is prepared.

Most large companies have a succession plan that’s monitored by their board, but many middle market business owners find such plans a morbid topic and avoid developing them. This is cruelly ironic given that most large companies could better manage a disruption like the death of a CEO, while smaller companies are typically much more reliant on their CEOs/leaders for everything from managing payroll to literally signing checks.

Even those who outrun the grim reaper longer than most will likely see a day when, at the very least, they may be temporarily incapacitated. What then? Remember, the well-being of colleagues, employees, partners, clients, consumers, and family, matter. Should you shed this mortal coil, or become ill, a succession plan is a good business move that ensures your legacy and protects your employees, clients/customers, as well as relatives when a family business is impacted.

Start with weighing the leadership skills, competence, and trustworthiness​ of those around you as you define your hierarchy of succession. Give these leaders opportunities and training, while mitigating competitive tensions that arise as they yearn for the throne. Be honest and make sure you have the right person or people to take over for the short and long-term.

A well-conceived succession plan keeps your company on track to hit growth targets​ even after leadership takes a hit. It establishes protocols for addressing the temporary or permanent incapacity of the person at the top and other company leaders. These protocols ensure key leaders have access to critical company resources from payroll and operating lines of credit, to all the company passwords. They establish who has company signatory authorization and delegate other operational decisions and essentials such as maintaining relationships with customers, lenders and investors. A good plan also helps get the most out of people before they assume the role, making for a stronger company.

The succession plan also contains strategy for hiring and grooming new talent​ to meet projected company needs. It is also periodically updated, keeping it in line with industry developments, creating personnel redundancies that position your company to flourish, no matter what.

In times of uncertainty, internal and external messaging plans help complete the picture, establishing communication protocols for getting the message out internally, and a PR plan for getting word to those outside the company. Together, they help project, promote, and maintain stability.

Too often, small and middle market companies don’t address succession planning. But the President’s recent hospitalization serves as a warning: Major disruption could be just around the corner. Leaders don’t like giving up control, even temporarily. But none of us are invincible and the fate of your company and the clients and consumers who depend on it, affects more than just yourself. If you don’t already have one, put your succession plan in place now. You owe it to your company, your clients, your family, and yourself.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment- banking firm with headquarters in Miami that works with middle-market companies. jcassel@casselsalpeter.com or via LinkedIn at  https://www.linkedin.com/in/jamesscassel.

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How to land an entry-level role at a major investment bank, according to industry veterans and recruiters

October 7, 2020
By Francesca Di Meglio

Matthew Ting followed the traditional path into investment banking.

He attended a finance-focused school, Western University in Canada, which places 20 to 30 graduates into US investment banking jobs annually (out of 600 or so students), and excelled academically, earning his BA in business administration in 2015. He was the president of the largest student-run investment club in Canada and held multiple finance internships before undergoing full-time recruiting during his senior year — as a summer analyst at Auxo Management in Toronto and at SilverLake in Menlo Park, California, and as an analyst at Evercore in New York and associate at Providence Equity Partners.

Today, Ting is the owner of Peak Frameworks, a firm dedicated to helping people get careers in investment banking with locations in New York and Toronto.

While Ting’s career journey is one good way to land yourself a role at a top- notch investment bank, there are alternative routes for those who don’t want to or can’t follow the same route.

An MBA is often the best way to help bridge the gap between past experience and a job in investment banking. But sometimes you can forgo the additional degree if your previous jobs have provided you with a unique skill set.

For example, James Cassel, now the chairman and cofounder of Miami-based Cassel Salpeter & Co., an independent investment banking firm that provides advice to middle-market and emerging growth companies, practiced law and specialized in corporate securities for 17 years before breaking into investment banking.

As a securities lawyer, Cassel always conducted deals, but he noticed his investment banking counterparts were making more money and hoped a switch in careers would mean fewer hours. (He soon realized, he said, that both securities lawyers and investment bankers work many long hours.) But this is what drove him to seize the opportunity presented to him by one of his investment banking clients. The skills he had as a securities lawyer were transferable and made for a quick learning curve, Cassel said.

“My story is totally different than most,” he said.

Here’s how he and other investment bank veterans suggested landing a coveted role at a major company.

Understand what roles are out there and the process for landing them

For starters, you should understand the tradition of earning an entry-level job as an analyst or associate at a top investment bank.

The overwhelming majority of hires come from the very best business schools. Alumni from those schools who now work for the firm recruit students — either undergraduates or MBAs — at their alma mater. There are phone screenings, events, and in-person interviews that allow for vetting.

In the last stage of the process, recruits go through “super day,” where they head to the organization’s headquarters and interview with a number of people to determine once and for all if they’re a good fit.

Next, you should navigate the different roles at investment banks and determine the one you’re most interested in pursuing. Entry-level jobs include associates and analysts, but the categories go even deeper.

Steven Shreve, professor in the master of science in computational finance (MSCF) program at Carnegie Mellon University, said applicants should understand that investment banking is a specific division of banking related to the creation of capital for other companies, governments, and other entities. He added that the part of investment banking that assists firms in mergers, acquisitions, bond issuance, and initial public offerings requires comprehension of different financial instruments.

“Much of that work is relationship-based, although calculation of the value of instruments does play a role,” Shreve said. “However, these calculations require less mathematical knowledge than those required in sales and trading.”

The sales and trading side of investment banks begins on the trading floor, where traders monitor prices and use sophisticated algorithms based on mathematical models and statistical analysis to make trading decisions, he said. Unlike assisting other firms, sales and trading is primarily a quantitative task, although there’s some interaction with customers.

“A person who is interested in mathematics/statistics/computer science can come late to finance and still have a great career in sales and trading,” Shreve said. “In the mergers, acquisitions, etc., the proper preparation is a degree in finance.”

To get more information, Shreve suggested reading Peter Bernstein’s book “Capital Ideas: The Improbable Origins of Modern Wall Street,” which he said provides a good history of how the industry arrived at this “present, highly mathematical state of affairs in finance.”

Another possibility is asset management, which is about managing customers’ money. Traditionally, investment decisions were made based on fundamental research about individual firms, but increasingly they’re made based on statistical analysis of market data, Shreve said. For asset management, the appropriate preparation has shifted in the last 20 years from finance to mathematics and statistics, he added.

Research the companies that interest you by reading up and networking

Applicants should then research each bank they plan to apply to to understand the culture and how they could fit into it. You should read about the bank in the news or on other websites, reach out and talk to alumni or current employees, and attend networking events. You can even ask for an informational interview, which used to take place over coffee but are more likely happening over Zoom nowadays.

“Don’t make the mistake of thinking that every firm is the same,” said Matthew Spencer, a human resources veteran in the investment banking space who’s worked at Houlihan Lokey, where he oversaw global talent management strategies including recruiting, training, professional development performance management, and people analytics.

Spencer entered Houlihan Lokey, a leading global investment bank, as an associate right after graduating from the MBA program at University of Southern California Marshall School of Business in 2007. Before becoming the chief human capital officer at the firm, he rose to senior vice president in investment banking.

His path into investment banking, however, began with on-campus recruiting. Spencer, like most MBA students, got to know the culture of firms through summer internships, which are usually a pipeline for future employment. But you should go further to understand the differences among banks.

“Take the time to prepare for each interview,” Spencer said. “Understand where a firm sits in the broader industry and research each firm to understand the type of work they do. They all have varying specialities, service offerings, and cultures.”

“Networking is also hugely important,” Spencer, who’s also the cofounder and CEO of Suited, an AI-powered recruiting network designed to help candidates from all backgrounds access highly sought-after opportunities in the financial services space, added. “Candidates interested in securing analyst roles should feel encouraged to reach out to upperclassmen who have already secured summer internships. Additionally, cold emails go a long way in this field. Research school alumni who work at investment banks and don’t be afraid to ask them for some of their time. However, don’t use these calls to ask about specific job opportunities, but instead learn from their experiences and ask questions about their job journey.”

Build strong relationships in internships by showing face

The coronavirus crisis has changed recruiting and training. Many in-person activities have gone online. Often, full-time job offers are a result of successful summer internships, Cassel said. Online internships require additional effort on the part of both interns and their supervisors, he added.

“It’s a real challenge to vet someone and develop a relationship online,” Cassel said. “It’s hard to do. We’re learning to adjust because we have no choice.”

He suggested interns request Zoom calls to help develop a rapport with employees and show their interest and determination. You need to stand out to those hiring, Cassel said.

“It’s not enough to put out quality work because that’s expected,” he said.

If you snag an online appointment, be on time, dress appropriately, consider what’s in the background, and ask for help and feedback, Cassel added.

Amid the pandemic, most banks are now conducting all their internships and networking online, and this could change the recruiting process.

“Even if you don’t think you have the right ‘background’ for a role, you should indeed apply anyway,” said Christopher Temme, CFO of crypto exchange bitFlyer USA, who previously worked as an analyst at Goldman Sachs in Tokyo and an associate at Citi NY. “Since banks are now competing against all industries to attract top talent, they’ve cast a wider net to find these candidates.”

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Boeing Job Moves Take Aim At Unions

Zenger News
October 2, 2020

Boeing announced plans to shift its remaining 787 Dreamliner production from Washington State to South Carolina—wounding the nation’s largest aerospace union.

Boeing said it will make the mid-2021 move to “preserve liquidity” and “enhance efficiency and improve performance for the long-term,” in a statement.

Employee representatives say it’s all about cutting union jobs.

“It’s a very anti-union company,” said Bill Dugov, communications director for the Society of Professional Engineering Employees in Aerospace (SPEEA), which represents 11% of Boeing employees. “They’ve spent millions just battling our unions on organizing efforts. Their official stance from what they’ve told us is they’ll work with unions where they have to.”

Approximately 35% of Boeing’s 162,000 employees are union members. The U.S. has 7.5 million private sector union jobs total, according to the Bureau of Labor Statistics. South Carolina is a so-called right-to-work state that doesn’t allow employment to require union membership. Boeing opened that second 787 plant in 2009.

“Boeing can’t stand the idea that those who design and build the aircraft, who are the heart and soul of the manufacturing process, have rights,” said a statement from the International Association of Machinists and Aerospace Workers (IAMAW), which represents 22% of Boeing employees, including production personnel in Washington.

Boeing hasn’t released estimates of potential job losses at its Everett, Washington location, but they could be significant. But Dugovich notes the Everett plant also produces the 747, 777, and 767 aircraft, so some work will remain.

Many have expected the move. “Economic development professionals in Seattle and Everett, when they say their prayers at night, say, ‘Please let us keep Boeing for another year,’” said John Boyd, principal of location consultancy The Boyd Company, which has frequently done work for Boeing. “This has not been that big a surprise for people in the aerospace world.”

“Currently, Boeing has about 7,000 employees at the site,” Boyd added. “We would expect a small number of management and technical workers to relocate, but we don’t expect a large number of other workers to move down there. A good [savings] estimate would be about 20% to 25% in labor costs.”

Boeing has face rough fiscal times, not just from the pandemic’s impact on global travel and airlines, but also self-inflicted ongoing issues with its 737 MAX and the two fatal crashes it was involved in. The company lost $4.3 billion in the first half of 2020 as its most recent financial reports revealed.

“I think, unfortunately, because of the MAX issues, they’ve taken up residence in the bull’s eye,” said Mark Dombroff a partner at law firm Fox Rothschild who concentrates on the aviation and transportation industries. “That causes these kinds of questions to come up.”

Ironically, the South Carolina plant has seen its own quality problems, resulting in the grounding of eight 787s so far. As Boyd notes, relocation has a “hidden cost”: the loss of institutional knowledge and developed skills. That could be an issue for Boeing with the new 787 manufacturing quality problems.

“They’re going to disguise [the move] like production problems in South Carolina and they need to kind of beef it up, but I think it’s just a move away from Everett and more moving into non-union places,” said Joseph Smith, aviation director at mid-market investment banking firm Cassel Salpeter & Co.

“Boeing doesn’t respect that our members have the ability to stand up, voice concerns and attempt course correction of poor management decisions to protect the integrity of the airplanes and the industry,” the IAMAW said in its statement.

One indirect beneficiary could be employees for the Federal Aviation Administration.

“If there’s more production taking place and more airplanes being build, the FAA has to make its own manpower considerations,” Dombroff said.

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How dealmakers at an investment banking firm are winning new business and preserving existing revenue

By Ben Harrison
October 1, 2020

We all know that if there are fewer opportunities in the market, there is greater competition. Every single capital markets firm globally needed to contend with this fact when the Covid-19 pandemic hit. I watched as thousands of deal professionals scrambled to win new business and preserve existing revenue. For Scott Salpeter, president of Miami-based investment banking firm Cassel Salpeter, it meant integrating technology and remote capabilities into his team’s day-to-day workflow. The result? A single source of truth everyone in his firm could rely on for accurate, real-time information to support decision-making.

“Data is more important than ever,” he said. “The pace of change has dramatically accelerated; industries are being transformed. What was true yesterday, might not be true today, and that can be a challenge when we’re advocating for our clients’ best interests.” For many investment bankers and M&A advisors trying to stay informed in an ever-changing economic and geo-political climate, having access to data isn’t enough. They require a full, 360-degree picture of the client they are serving , the factors affecting the industries in which they operate, a historical view of transactions in that market, and so much more.

These needs and challenges are how I got to know Salpeter, his team of bankers, and thousands of other people who serve as trusted advisors to business owners and executive teams just like them all over the world. Without technology that centralizes a firm’s propriety data alongside third-party data, transaction advisory and other deal professionals dedicate time towards tedious and administrative tasks that could be better spent face-to-face (even on Zoom) with their clients.

Specifically for the team at Cassel Salpeter, the implementation of an industry-specific CRM solution (like DealCloud) across its staff of 14 created a central place for all client, deal, pipeline and relationship data. This allowed the entire team to be better informed, more accountable, and more productive on behalf of its clients.

“When the pandemic hit and we were all forced to work from home, I felt confident that our team had access to the data and tools they needed to support our clients,” said Salpeter. “Other firms that had not made investments into internal tools and technologies have to be struggling with communications and processes across their firms.”

With platforms like DealCloud, a project weekly status report that used to take Scott’s team hours to generate, now takes less than 15 minutes. His team no longer relies on spreadsheets and email. Data is no longer siloed across multiple databases. Cassel Salpeter was even able to create notifications and automate workflows, ensuring nothing slipped through the cracks. Now, Cassel Salpeter has an advantage over the competition.

Bankers like Scott are leading the way for their firm by being squarely focused on making Cassel Salpeter better, more efficient, and ultimately, more essential to its clients no matter what the future holds.

If you would like to learn more about how DealCloud can help your firm become essential to your clients, visit www.DealCloud.com.

DealCloud, an Intapp company, provides a single-source deal, relationship, and firm management platform to enable over 900 clients to power their deal-making process. We offer fully configurable solutions purpose-built for the complex relationships and structures of private equity firms, investment banks, private/publicly traded companies, debt capital providers, and other investors.

Ben Harrison is co-founder and chief revenue officer for DealCloud, which he developed after realizing the needs of alternative asset managers were not being met by one-size-fits-all CRM platforms. Harrison has 15 years of experience in capital markets and holds an MBA from the University of North Carolina Kenan–Flagler Business School.

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Fort Lauderdale lawyer accused of raising $100M in 1 Global Capital fraud

By Ashley Portero
September 30th, 2020

A Fort Lauderdale attorney is facing fraud charges for allegedly raising $100 million from investors as the outside counsel for 1 Global Capital, the now-bankrupt company accused of defrauding thousands of investors.

Andrew Dale Ledbetter was charged by federal prosecutors with conspiracy to commit wire and securities fraud Sept. 29 in U.S. District Court for the Southern District of Florida. The U.S. Securities and Exchange Commission charged Ledbetter with fraud the same day.

Erica L. Perdomo, an attorney representing Ledbetter, declined to comment on the charges.

Hallandale Beach-based 1 Global Capital, a commercial lending business, was charged with civil fraud charges in 2018, shortly after it filed for Chapter 11 bankruptcy. The SEC claimed the firm fraudulently raised $322 million from more than 3,400 investors, many of whom were elderly, from 2014 to 2018.

Ledbetter served as outside counsel for the company until his dismissal in August 2018, according to court documents.

Prosecutors allege Ledbetter was personally involved in raising more than $100 million in investor funds that went to 1 Global, nearly a third of the total amount raised during the scheme. Ledbetter and company executives claimed investor money would be used to fund commercial loans in exchange for a share of the principal and interest payments as the loans were repaid, court documents said.

Ledbetter is accused of using false legal opinion letters with misleading information about 1 Global when pitching investors, court documents said. Although he told investors he served as outside counsel for 1 Global, Ledbetter reportedly received $3 million in commissions from the company. He did not disclose those commission payments to investors, court documents said.

If convicted, Ledbetter could face five years in prison.

Former 1 Global COO Steven Allen Schwartz and former CFO Alan Heide previously pleaded guilty to fraud charges tied to the case. Former CEO Carl Ruderman agreed to disgorge $32 million in ill-gotten gains, pay a $15 million civil penalty, turn over $750,000 in cash and give the SEC a 50% interest in his condominium. He was also barred from working in the securities industry.

Last year, a bankruptcy trustee recovered and distributed $112 million to thousands of individuals who lost money investing in 1 Global Capital. Trustee James S. Cassel said investors received an initial repayment of about 40 cents on the dollar.

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Strengthening your network could assure your company’s survival | Opinion

Social distancing has diminished in-person interactions, weakening our connections. With strong relationships essential to the fabric of middle-market success, maintaining and strengthening these bonds should be a priority.

Here’s what to consider:

Reach out and tune in: Networking in the age of COVID means regularly checking in with customers, clients, and partners and showing genuine concern for their wellbeing. Send texts to those you haven’t spoken to in awhile. For associates who you are closer to, use video conferencing. More personal than a phone call, text, or email, it can let you read body language and provide greater insight.

Fortify your links and be comprehensive. Connect with everyone who might benefit from your expertise or services, not just business clients. A targeted email blast reminding people you are available is an option. Consider volunteering your talents or services, which is another great way to meet new people and potential clients, expanding your relationships and network, and an excellent way to do good while demonstrating the value you bring to the table.

Virtual happy hours can be another great way to connect with the top brass at other companies, and with your own team and their networks as well. You can be the organizer or join with another group organizing them. These can be structured to ensure you are spending time with the right people. You can also invite prospects enabling the development of new relationships. And sometimes, having a guest speaker on a relevant topic can be an interesting and educational draw.

For your company, consider virtual team-building exercises. Not only can they boost morale, but they are a great way to pick up on cues from colleagues, helping identify those who may be struggling. Remember that your staff’s network is just as important as yours. Struggling employees may not be in the best mindset to meet new people or maintain old relationships. So, it’s important to check in and make sure they know you are there to support them.

If you can find creative ways to meet individually with key players in a socially distanced setting that you are comfortable with, find the time and safe place, and do it. But be careful not to press them into meeting if they don’t feel OK. If meeting in person is not an option, a one-on-one Zoom call or an email are also effective.

What to listen for and how: As you engage your network, understanding the group’s physical and emotional health is paramount.

Don’t just focus on the bottom line. Be sensitive to different needs. Some may have been working from home alone all this time and could use support from others. Others may be dealing with multi-generational households, or children and homeschooling, and are hoping for less team-building and more time addressing home issues. Strike the right balance.

For some, the challenges may be financial. For others, the impacts can come down to health: physical, psychological, or both.

What to do with what you learn: Follow-through is everything. If you get useful intel and don’t use it, you’ve wasted your efforts and may even have let down those anticipating your support.

Not all help is about business, and not all assistance means making a grand, sweeping effort. Remember, a small gesture at the right time can go a long way, so think outside the box when it comes to how you can help.

As for enduring the challenges of the continuing pandemic, the verdict isn’t in. Making it through seems more a marathon than a sprint.

Some of us are coping better than others. Running a successful middle-market business means knowing how people connected to it are getting by. That means creating opportunities to listen and acting on what we learn.

If your network is healthy, then your company has a much better chance to be as well.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment- banking firm with headquarters in Miami that works with middle-market companies. jcassel@casselsalpeter.com or via LinkedIn at  https://www.linkedin.com/in/jamesscassel.

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What You Should Know About Company Mergers

By Skye Schooley

•     A company merger is when two companies combine to form a new company.

•     Companies merge to expand their market share, diversify products, reduce risk and competition, and increase profits.

•     Common types of company mergers include conglomerates, horizontal mergers, vertical mergers, market extensions and product extensions.

•     This article is for business owners who are considering merging their company with another business.

A company merger can happen for many reasons. Although very few business owners build their business in anticipation of one day merging with another company, the right business mergers can be very beneficial. Learn about the different types of mergers and their benefits.

What is a company merger?

A company merger occurs when two firms come together to form a new company with one combined stock. Although a merger is typically thought of as an equal split in which each side maintains 50% of the new company, that’s not always the case. In some mergers, one of the original entities gets a larger percentage of ownership of the new company. [Read related article: You Bought a Business … Now What? 5 Post-Acquisition Steps]

Key takeaway: A merger is when two companies come together to form one company with new stock.

Why do companies merge?

Mergers are a great way for two companies with unique experience and expertise to come together and form one business that is more profitable than the two entities were on their own.

There are several reasons why two companies might want to merge. Sometimes, it is out of convenience, and other times, it is out of necessity. Regardless of the specifics, the goal of a merger is to take advantage of opportunities in the marketplace that benefit both businesses.

“The companies may be looking to take advantage of financial synergies, opportunities for efficiencies, new market dynamics or a chance at product diversification, to name a few things,” James Cassel, chairman and co-founder of Cassel Salpeter & Co., told Business News Daily. “The companies may see opportunities by merging product lines or by cutting redundancies, like having two CFOs when one will suffice for both companies if they come together.”

Key takeaway: A merger can benefit companies by increasing profits, enhancing expertise, expanding market share, diversifying products and minimizing redundancy.

How does a company merger work?

A company merger occurs when two businesses with similar synergies decide that being one company together will yield more profits than being two separate entities. During a merger, the companies involved are likely to undergo quite a bit of restructuring in terms of corporate leadership and operations.

When a company merger happens, the two equal companies can convert their previous stocks into one new, combined company stock. First, they must decide what each company is worth, and then they split the ownership of the new company accordingly. [Read related article: How to Calculate Your Business Valuation]

“For example, it may be determined that company A is worth $100,000,000 and company B is worth $200,000,000, making the combined value of the new company worth $300,000,000,” said Terry Monroe, founder and president of American Business Brokers & Advisors. “Therefore, the stocks from each of the companies will be surrendered, and new stock will be issued in the name of the new company based on the valuation of $300,000,000. The stock owners from company A would get one share of stock in the new company, and stock owners from company B would get two shares of stock in the new company.”

Although the creation of a brand-new stock with the new entity is ideal in theory, it is not always what happens. In fact, oftentimes, when two companies merge, one company chooses to buy the other company’s common stock from its shareholders in exchange for its own stock.

Key takeaway: When entities merge, both companies can convert their current stock into one new stock and divide it among the new owners based on previous worth.

What is the difference between a merger and an acquisition?

Mergers and acquisitions are often confused as interchangeable terms, but there are a few differences. Although both involve combining two entities, an acquisition is when one company buys and controls the other, whereas a merger is when two companies come together to form a new entity.

“A lot of the time, no money is involved in a merger, whereas an acquisition is when one company pays to purchase another company, either with money or the issuing of stock or assumption of debt or a combination of all of these methods,” Monroe said. “With an acquisition, the acquiring company will remain in business, and the company that was acquired will no longer be in existence.”

Since an acquisition, or a takeover, involves one company consuming the other, the leadership in both companies often stays the same. Mergers, on the other hand, frequently involve the restructuring of corporate leadership, which can cause problems when both companies have headstrong leaders with different ideas on how to run the new organization.

For example, you will likely have to decide which CEO or president of the two merging companies will run the newly merged company. Although some merging companies attempt to have the CEOs of both companies share leadership through a co-CEO structure, this strategy rarely works out well, Monroe said. This is something business leaders should keep in mind when considering mergers versus acquisitions.

Key takeaway: A merger is when two companies combine to form one new company; an acquisition is when one company buys out and controls another company.

What are the different types of company mergers?

 There are five main types of company mergers: conglomerate, horizontal, vertical, market extension and product extension. The merger type is based primarily on the industry and the business relationship between the two merging companies.

Conglomerate merger

 A conglomerate merger is the combination of two companies from different industries and unrelated business activities. The benefits of a conglomerate merger include diversifying business operations, cross-selling products and minimizing risk exposure. A well-known example of a conglomerate merger was when The Walt Disney Company merged with the American Broadcasting Company (ABC).

Horizontal merger

 A horizontal merger is the combination of two companies from the same industry; these companies can include direct and indirect competitors. The benefits of a horizontal merger include greater buying power, more marketing opportunities, less competition and a larger audience reach. Monroe said this type of merger is common in the restaurant industry, where different brands of restaurants merge to reach a wider customer base and gain greater buying power from the same vendors.

“For example, in 2019, Papa Murphy’s, a company in the pizza business, merged with a company called MTY Food Group – which owns restaurants such as TCBY, Cold Stone Creamery and Planet Smoothie – which would allow the new company to have a centralized marketing and advertising department and franchised sales department,” Monroe said.

Vertical merger

A vertical merger is the combination of two companies that operate in different stages of the same supply chain, producing different goods or services for the same finished product (e.g., one company sells something to the other company). The benefits of a vertical merger include a more efficient supply chain, lower costs and increased product control. An example of this type of merger is when The Walt Disney Company merged with Pixar Animation Studios for its innovative animations and talented employees.

Market extension merger

A market extension merger, similar to a horizontal merger, is the combination of two companies from the same industry; however, in this merger, the two companies are from separate markets. The primary benefit of this merger is to expand and increase market share. Monroe said this type of merger is commonly seen with banks.

“With the government implementing more regulation and compliance from banks, it sometimes behooves smaller bankers to merge with other banks of similar size to reduce the cost of operations and regulatory compliance and increase their market share, since they all offer essentially the same product,” Monroe said.

Product extension merger

 A product extension merger, also known as a congeneric merger, is the combination of two companies that sell similar, but not necessarily competing, products. The benefits of a product extension merger are expanding customer reach and increasing profits. Monroe said this type of merger is very common in the software industry, where one company may offer a virus protection software and another company may offer financial protection software for  your personal financial data.

“The idea of these two companies merging would be a good idea, as both of their products would be applicable to the same customer,” Monroe said. “The product merger can continually be extended with add-on services and products once a customer has been acquired.”

Key takeaway: There are five main types of company mergers: conglomerate mergers, horizontal mergers, vertical mergers, market extension mergers and product extension mergers.

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Sadly, for some middle-market businesses, the next chapter will be bankruptcy

Many middle-market companies have tightened their belts, raised capital, and availed themselves of emergency government funding, but it may not be enough, and they might yet be moving toward an economic cliff. If they act fast, they may still have a few options left.

Troubled middle-market businesses are struggling to endure and adjust to the economic squeeze presented by the ongoing pandemic. Despite availing themselves of PPP funding, scaling back product lines and services, laying off or furloughing employees, while increasing efficiencies, retooling marketing strategies, and reinventing themselves, for many the light at the end of the tunnel continues to dim. Even with the possibility of more government funding, the on-again-off-again reopening process, accompanied by new COVID surges, has them headed for a crash.

As survival options dwindle, here’s what to ask:

Knowing time may be the enemy, the overarching question is: Can the business survive long enough to prosper again, and is the struggle worth the effort?

Finding the answer begins with realistically assessing your projected revenues and expenses for the next 12 months. With those numbers in mind, it’s time to ask the following questions:

Is there more government assistance available? And if so, will it be enough, and will you qualify?

Do you have enough capital and resources, or can you somehow obtain it to save your business?

Can you sufficiently further right-size your business, conserving cash to give you the needed time to survive?

Do you have any personal guarantees on loans or other obligations that will affect you if the business fails?

If your answers suggest you won’t secure the needed survival capital, and the risk ahead looks high, here’s what to consider next:

Small businesses can take advantage of the newly created SBRA, or Subchapter V of Chapter 11 of the Bankruptcy Code, which is less expensive and faster than a Chapter 11 bankruptcy. It offers one-step confirmation and allows a debtor to spread their debt over three to five years with administrative costs paid over the life of the plan. While a trustee is appointed to facilitate the development of a consensual plan of reorganization, the debtor retains control of assets and operations.

Also, consider a traditional Chapter 11 bankruptcy. It might give you time to reorganize to save or sell your business, or to liquidate in an orderly fashion.

But if you have to act fast to get the situation out of your hands as quickly and completely as possible, a Chapter 7 liquidation may be best. Here, a trustee takes control of your assets and liquidates, or sells them.

Another option is an Assignment for the Benefit of Creditors (ABC), a state, rather than a federal, alternative. It’s generally less expensive, faster, more discreet, and simpler compared with a traditional bankruptcy. Here, you get to not only choose the assignee to manage the process, but you also have a chance to play a role in that process. This helps ensure that the assignee is an expert in liquidating the assets, and also knows how to operate the business  for a time to get the best return by attaining the going-concern value when possible.

Your final option may simply be shutting your doors and closing the business. It’s important to note that if things are going south and you can’t save the business, you may have to sell in or out of bankruptcy. Selling in bankruptcy affords certain protections from creditors, allowing an acquirer to buy the business free and clear of all, or non-assumed, liabilities.

While none of these options is easy, in this economic climate some business owners must cut their losses and sell. By asking tough questions now and consulting experts at restructuring firms, law firms and investment banking firms, you can find your way to a new beginning, as opposed to getting mired in a reputationally hazardous calamity. Talk to professionals sooner rather than later. You may still have options.

This column was contributed to Business Monday by James S. Cassel, co-founder and chairman of Cassel Salpeter & Co., which is 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.

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