Selling your business? Consider taking a gap year

By James S. Cassel

So, you’ve sold your business. What should you do next? Take a gap year! While most people associate gap years (also known as “bridge years”) as a break between high school and college or between graduating college and entering the “real world,” gap years should not be reserved exclusively for young adults. As George Bernard Shaw famously said, “Youth is wasted on the young.” A gap year is a chance to get a piece of it.

The American Gap Association provides extensive information on its website about the growing popularity of gap years in the United States and benefits for young graduates. As the nonprofit accreditation and standards-setting organization for gap years recognized by the U.S. Department of Justice and the Federal Trade Commission, its focus is “increasing the awareness of Gap Years and their many proven benefits within according to its website. The site mentions successful programs gaining notoriety, such as the Bridge Year Program at Princeton University: “The knowledge, understanding, and skills gained through the Bridge Year serve not only to enhance a student’s undergraduate experience at Princeton, but also contribute to the overall strength of the University’s educational community,” the site reads.

These benefits are not limited to college students. I have witnessed highly successful individuals take gap years after selling their businesses, when they are not yet willing to retire but want to take some time off. They have used the time very wisely to attain even greater professional and/or personal success and fulfillment. Here is the secret:

First, make sure your financial house is in order. Consult your financial advisors and develop a financial plan.

Discuss your plans openly with your spouse, partner or significant other. This can help ensure you both enjoy the time and are on the same page.

It is generally best to enter a gap year with a “vision” for what you want to focus on doing, and preliminary ideas circling your head about what you might want to do next. Let these ideas simmer, without pressuring yourself, until you confirm your next career steps. As an example, I recently met a woman who moved to Miami to take a “gap period.” She is volunteering at various places, including the Pérez Art Museum, immersing herself in the Miami business community as part of her goal of understanding the local business environment and determining where she might best find the right situation or business to start.

During your gap year, you should focus on doing the things you always dreamed of doing, but never had the time, money or guts to do — travel the world, learn yoga, go back to school, learn a language or write a book. Or just hang out.

However, do not fall completely out of the game. Stay in touch with your contacts and keep your finances in check so you can be ready for your next move.

Your gap year does not have to be a full year. It may be a few months, or it may have no end.

I regret not having taken a gap year earlier in life. I missed a perfect chance in 2010 after leaving the firm to which I sold my business and before I started a new company. While I am not planning on taking one anytime soon, I keep this on my bucket list. For me, it will take the place of retirement. Maybe I will call it a “sabbatical.”

Why is this time important? Quite simply, there is no time like the present. That “perfect moment” may never come. We must prioritize ourselves and find a way to make the time. In addition to enhancing our quality of life (after all, the reason most of us work, besides enjoyment, is to secure better lives), it gives us more clarity to do the necessary soul-searching to not only figure out our next move, but also make sure that our next move is the right one.

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. jcassel@casselsalpeter.com or via LinkedIn at https://www.linkedin.com/in/jamesscassel.www.casselsalpeter.com

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Cassel Salpeter & Co. Represents Boxycharm in Recapitalization

MIAMI – February 10, 2016 – Cassel Salpeter & Co., a middle-market investment banking firm providing capital raising services as well as merger, acquisition, divestiture and corporate finance services, served as exclusive financial advisor and facilitated a capital raise to recapitalize Boxycharm, a monthly beauty box subscription service providing high-end beauty and cosmetic products. The amount of the deal, which closed on February 3, is undisclosed.

The team at Cassel Salpeter, led by Director Joseph “Joey” Smith and Vice President Philip Cassel, identified and approached KarpReilly, the private equity firm that provided the capital. Cassel Salpeter assisted Boxycharm through the closing of the transaction. The capital will help grow the business, expand the management team, and fund innovative marketing initiatives to support its mission to continue to provide high-quality beauty products.

“We recognized that Boxycharm is a high-growth company with a strong management team, and we were eager to get involved with a company of this caliber and support its next phase of growth,” Philip Cassel said. “We enjoyed working with KarpReilly and look forward to working with the team on future deals.”

The deal was completed on a tight timeline, with the Cassel Salpeter team going to market in early November 2015 and closing the deal in early February.

“We greatly appreciate Cassel Salpeter’s ability to understand our needs and move quickly to address them by finding the type of strategic partner we wanted: one that would offer more than just capital,” said Joe Martin, Founder & CEO of Boxycharm. “From our first conversation, KarpReilly understood the passion and vision for the future of the company and we knew that was the start of what will surely be a long and successful relationship.”

Added KarpReilly Co-founder Allan Karp: “KarpReilly is excited to partner with Joe and the Boxycharm team. We are very impressed with what they have been able to accomplish by focusing on delivering a best-in-class experience to their subscribers and look forward to supporting them in their continued growth.”

Berger Singerman attorneys Daniel Lampert, David Black and Mitchell Goldberg represented Boxycharm. Ropes & Gray attorneys Daniel Evans, Darlyn Heckman and Michael Ross represented KarpReilly.

About Cassel Salpeter & Co.

Cassel Salpeter & Co., LLC is an independent investment banking firm that provides advice to middle market and emerging growth companies in the U.S. and worldwide. Together, the firm’s professionals have more than 100 years of experience providing private and public companies with a broad spectrum of investment banking and financial advisory services, including: mergers and acquisitions; equity and debt capital raises; fairness and solvency opinions; valuations; and restructurings, such as 363 sales and plans of reorganization. Co-founded by James Cassel and Scott Salpeter, the firm provides objective, unbiased, results-focused services that clients need to achieve their goals. Personally involved at every stage of all engagements, the firm’s senior partners have forged relationships and completed hundreds of transactions and assignments nationwide. The firm’s headquarters are in Miami. Member FINRA and SIPC. More information is available at www.CasselSalpeter.com

About Boxycharm

Boxy Charm Inc. is the premier monthly beauty box subscription service, delivering 4-5 full-size and luxury travel-size products of well-known, popular, chic, and up-and-coming cosmetic brands for only $21 per month. For more information, please visit www.boxycharm.com

About KarpReilly

KarpReilly, LLC, is a private investment firm, founded by Allan Karp and Chris Reilly, whose primary mission is to partner with premier small- to mid-size growth companies and help them achieve their long-term vision. KarpReilly currently manages funds and affiliates with capital commitments in excess of $500 million. Over the past 15 years, the principals of KarpReilly have invested in, sat on the boards of and nurtured over 25 growth companies. For more information, please visit www.karpreilly.com

Cassel Salpeter & Co. Announces Three Promotions

MIAMI – January 26, 2016 – Cassel Salpeter & Co., a middle-market investment banking firm providing merger, acquisition, divestiture and corporate finance services, today announced three promotions: Philip Cassel and Chris Mansueto have been named vice president, and Laura Salpeter has been named associate.

“We are pleased to promote Phil, Chris and Laura as part of our commitment to cultivating the industry’s top talent and continuing to meet a growing client demand for our services,” said James S. Cassel, chairman and co-founder.

Cassel, with experience in consulting and private equity, provides assistance across all areas of the firm, from financial analysis to advisory services. Primarily, he guides clients through M&A and capital raise efforts and supports the firm’s fairness opinion advisory work.

Prior to joining Cassel Salpeter, Cassel worked for Rialto Capital, a real estate private equity fund. He also worked in the Turnaround and Restructuring Group at Alvarez & Marsal. Cassel earned a bachelor’s degree in mathematics from the Massachusetts Institute of Technology, in Cambridge, MA.

Mansueto has extensive experience in the valuation of companies, securities and intangible assets for financial reporting, tax planning, and internal planning
purposes. He has completed purchase price allocations, impairment testing valuations, derivative securities valuations, and equity valuations under complex capital structures.

He has earned the right to use the Chartered Financial Analyst designation offered by the CFA Institute as well as the Accredited Senior Appraiser designation in the area of business valuation offered by the American Society of Appraisers. Mansueto earned a master’s in business administration from Rice University, in Houston, and a bachelor’s degree from George Mason University, in Fairfax, VA.

Salpeter draws on her experience to provide thorough, efficient analysis of complex financial transactions. In this role, she contributes to the firm’s merger and acquisitions, fairness and solvency opinions, restructuring, and financial advisory services.

Salpeter is a member of both The Florida Bar and the District of Columbia Bar. Prior to joining Cassel Salpeter, she worked at Conrad & Scherer and Ephraim Roy Hess. She also clerked at the 17th Judicial Circuit Court of Florida in Broward County for the Honorable Judge Paul Backman. Salpeter received her master’s and bachelor’s degrees from the University of Central Florida, in Orlando, FL, and her Juris Doctor from Nova Southeastern University, in Fort Lauderdale, FL.

About Cassel Salpeter & Co.

Cassel Salpeter & Co. is an independent investment banking firm that provides advice to middle market and emerging growth companies in the U.S. and worldwide. Together, the firm’s professionals have more than 50 years of experience providing private and public companies with a broad spectrum of investment banking and financial advisory services, including: mergers and acquisitions; equity and debt capital raises; fairness and solvency opinions; valuations; and restructurings, such as 363 sales and plans of reorganization. Co-founded by James Cassel and Scott Salpeter, the firm provides objective, unbiased, results-focused services that clients need to achieve their goals. Personally involved at every stage of all engagements, the firm’s senior partners have forged relationships and completed hundreds of transactions and assignments nationwide. The firm’s headquarters are in Miami. Member FINRA and SIPC. More information is available at www.CasselSalpeter.com

2015 Technology Year In Review

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Greater Miami Chamber summit: Economic outlook positive, cautious

 January 13, 2016
By Nancy Dahlberg

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At the Greater Miami Chamber of Commerce’s South Florida Economic Summit on Wednesday, the outlook for 2016 was optimistic with healthy undercurrents of caution.

In the Jungle Island ballrooms, the summit brought together economic development leaders and top industry experts in entrepreneurship, new media, capital investment and the retail sector to share their insights about the region’s economic drivers and the year ahead.

To kick off the half-day summit attended by several hundred people, Tom Hudson, vice president of news for WLRN and master of ceremonies for the event, presented a snapshot of the economy today versus six years ago when the Chamber began holding these annual events. In that six-year period, a million people have moved to the state, a third of them to South Florida, he said. Employment has risen from 2.5 million to 2.9 million, and the unemployment rate has fallen from 10 percent to about half that. Still, median wages have remained flat, he said.

Looking ahead, Ken Thomas, an economist and banking industry expert, believes the economic outlook for 2016 is very good and foresees a maximum of two Fed interest rate increases this year. But he puts up the caution flag for 2017 and beyond: “All bets are off. We will not get out of this decade without a recession.”

On that note, the three chiefs of economic development organizations discussed the need for a powerful war chest at the state and metro levels to attract and retain companies in order to strengthen the economic engine to ride out inevitable downturns.

New companies that the region can recruit grab the headlines, but company retention is just as important, the executives said. Larry Williams, president and CEO of Miami-Dade County’s Beacon Council, offered the example of successfully retaining TUUCI, an outdoor umbrella manufacturer, which was heavily recruited by North Carolina: “Its brand is made in Miami. We need to keep companies who can lean in.”

Bob Swindell, president and CEO of Greater Fort Lauderdale Alliance, and his team recently went to Austin, Texas, to research the tech-innovation culture there and learn how the city has successfully built a brand. He believes part of South Florida’s brand could be tied to the marine industry and the strong university research programs in the marine sciences: “We really don’t tell that story effectively.”

Regional challenges include filling the talent gap in the workforce, the executives said. Williams cited the work of the Academic Leaders Council and the Talent Development Network to combat brain drain and better connect university students with opportunities. Swindell said the Alliance and its partners are working to quantify the talent gap and want to have the funds to fix the problems they find.

Much of the discussion in the summit breakout session focused on the need to build on the economic momentum the region has been experiencing, while heeding the lessons of the last recession and preparing for the next downturn. For many at the summit, that means working to accelerate the tech and entrepreneurship sectors.

Diverse, young, bootstrapped, under the radar, creative and global by nature are some of the descriptions of South Florida entrepreneurship offered up in a panel that included CEOs Brian Brackeen, founder of Kairos, a human emotions analytics startup; Will Fleming, co-founder of MotionPoint, a website translation company; and Michael Simkins, a real estate developer working to develop the Miami Innovation District. To build upon the work of the nonprofit Knight Foundation, which has committed about $20 million in funding to about 165 entrepreneurship projects and organizations, help from the for-profit sector is also needed, said Simkins, who said he has sponsored events and offered free space to entrepreneurs.

Global exposure, big exits (successful sales of companies), and a larger base of mid-sized tech companies can help propel the innovation economy here, the panelists said. Both Fleming and Brackeen acknowledged that investors over the years have tried to lure their companies to California. “Our headquarters has been, is now and always will remain in South Florida,” said Fleming, who in 2000 co-founded the fast-growing Coconut Creek-based company that manages more than 1,500 websites.

Attracting growth capital continues to be a challenge for young entrepreneurs in South Florida, but it’s getting easier at the earliest “seed” stages. “There are almost three times as many angel investors in Florida as in California,” Brackeen said.

While that may be true, angel investors in California made their money in tech “and they bring a lot to the table we are not getting down here yet,” said James Cassel, chairman of Cassel Salpeter & Co., during a panel about capital availability. But Cassel said private equity firms and family offices are increasing in Florida and so are the number of deals: “The good news is there is plenty of money available for middle-market companies. Finding the right opportunities is the challenge.”

It’s important not to automatically link the innovation economy solely with tech, said Richard Florida, founder of Creative Class Group and an urban affairs expert. “The technology component is only a part of it, and it downplays our strengths,” he said. “Miami exemplifies the creative economy,” which incorporates not only science and technology, finance and law, but also arts, culture, media, fashion, entertainment and the entrepreneurs that are leading the creative innovation. Still, only about 25 percent South Florida’s current workforce is part of the creative economy: “We have to do more.”

In a study of 360 metro areas, Florida has found that the Miami metro area ranks relatively high in technology (40th), falls in about the middle of the pack in talent (138th) — “that’s the brain-drain problem we have to turn around” — but the area ranks 11th for tolerance, he said “These are places that are open to people from all over the world. Open-minded communities win.”

Viacom is betting big on Miami’s creative economy. Juan “JC” Acosta, executive vice president and chief operating officer of Viacom International Media Networks Americas, showed the crowd a presentation on the new Viacom International Studios, which produces shows for Nickelodeon, MTV and Comedy Central worldwide and is located in the Omni area of downtown Miami. It’s an 88,000-square-foot facility with two high-tech 15,000-square-foot sound stages, along with ample office space and post-production, dressing, wardrobe and conference rooms.

“We planted our production flag in Miami,” Acosta said, noting that Viacom International Media Networks has had a headquarters here since 1993. Today, the company produces 21 series in Miami representing more than 750 hours in content, and the company has hired for more than 6,000 jobs, from full-time employees to extras, he said. “We are optimistic our studios will show the value of generating new business in the local Miami community and bring other global players to the market. . . . We hope to create a best of class here in Miami.”

This world-class production hub is exactly the type of anchor institution that a thriving creative economy needs, Florida said. “This is an important foundation stone, along with our universities and colleges, in building a broad creative economy.”

Swings in China stock market: For middle market, impact is more about perception than reality

By: James Cassel
September 21, 2015

For South Florida’s middle-market businesses, the greatest threat from China’s recent stock market swings and economic slowdown is the negative perceptions — more so than any possible bottom-line impacts. Although the recent news of China’s unstable market and slowing economy has given rise to institutional panic, the continued direct volume of business between U.S. middle-market companies and Chinese companies — in China, as well as the current state of Sino-American trade relations — confirm that the situation is not as grim as some folks would have us believe.

One of the key complications of America’s economic relationship with China is a lack of transparency. It is difficult to say with any certainty whether the data is authentic or manufactured by the Chinese government. Either way, the impact of China’s stock market fluctuations is more about perception than reality. If people begin blaming any U.S. stock market drops on China’s stock market or the slowing Chinese economy, they will begin to clam up and buy fewer luxury products and focus more on necessities. Indeed, we have to be careful that perception does not become reality. If your middle-market business sells to Chinese companies or consumers, you may have a problem. Most Chinese consumers are not wealthy, but members of the middle class and even the wealthy who love Western luxury products are significantly cutting back on their purchases. We have seen this evidenced by major brands like Burberry, Chanel and Cartier, whose sales in China have taken a major nosedive. For Burberry in particular, China drives approximately 25 percent of total sales, which is indicative of how much luxury retailers have leaned on China for growth in recent years. It also has an effect on U.S. multinational corporations that rely on China for their growth.

Furthermore, the recent devaluation of the Chinese currency, the Renminbi, may also adversely affect middle-market businesses with ties to Greater China, as Chinese products are likely to become less expensive and thus more competitive on a global market.

In addition, the currency devaluation also may affect the number of middle-market companies that have been reaping the rewards of on-shoring: lower labor costs due to mechanizing and robotics, faster release to market, and reduced shipping costs. Despite China’s increasing labor costs, its lower currency value and production costs today may be beneficial in making it more attractive again to manufacture products in China, or at least stay in China. As China’s economy slows, it will be important to consider that its expected use of fewer natural resources may have a global ripple effect in terms of lowering the costs of natural resources as well as shipping and transportation, which may also negate some of the fiscal benefits of on-shoring.

Beyond this, there are some opportunities for middle-market businesses to reap benefits. Consider: Chinese companies have made a lot of money in recent years, posting an average 9.5 percent year-over-year growth since the 1990s. Wealthy Chinese nationals, eager for an exit strategy, are trying to get as many assets as they can out of the country, so there is a strong opportunity to sell to companies or partner with Chinese nationals who come to the U.S.

Another benefit: Since many U.S. manufacturers buy from Chinese manufacturers, lower prices will give those businesses greater margins, assuming that their sales numbers don’t otherwise dip. Lower costs of natural resources will also help increase margins.

So, what are the likely bottom-line impacts to South Florida’s middle-market businesses? Unless you have direct sales ties to China or have material customers who sell or supply a great deal to Chinese companies, it is not clear whether there will be any impacts. Since the economic fundamentals in the U.S. remain generally solid, the greatest threats will not come from the Chinese market swings but rather from any negative perceptions and concerns about possible impacts. So let us all relax, take a deep breath and keep our perceptions in check — it is in our best interest.

Ripples from China’s woes swaying Miami

By: Carla Vianna
August 25, 2015

Although Greece’s debt crisis and China’s volatile stock market are phenomena occurring thousands of miles away, Miami’s increasingly global business and financial communities feel the ripple effects of issues toying with the global economy.

While the contagion effect by Greece may be minimal, China’s ups and downs are felt worldwide.

“It’s not what happens in Greece, it’s what happens after,” said Tom Balcom, founder of 1650 Wealth Management, a private wealth management firm. “Are other countries going to leave also? Who absorbs the loss, and how will that affect the markets?”

Mr. Balcom spoke of fears surrounding a Grexit, or a Greek withdrawal from the eurozone. However, since Greece is such a tiny part of the currency union, direct impact would be minimal, local economists postulated.

The Greece economy is actually as big as that of the Miami metropolitan area. The European country’s gross domestic product was about $282 billion in 2013, while the Miami metro area had a GDP of $281 billion, fact-checking site Politifact reported.

“The effect is psychological,” said James Cassel, chairman and co-founder of Cassel Salpeter & Co., an investment banking firm. “The Greece economy doesn’t have a direct relationship with South Florida.”

China on the other hand is the world’s second-largest economy, and its increasingly volatile stock market coupled with the recent devaluation of the Chinese yuan has shocked markets across the globe. Fears that China’s economy is slowing have sparked heavy selling in all markets, the Wall Street Journal reported. It’s been a tumultuous week for the US stock market, which plunged Monday and felt a spot of relief Tuesday.

“Some of these currencies have an effect on the real estate market,” Mr. Cassel continued. “The weak Euro might mean less Europeans buying in South Florida.”

There’s a push from developers in Miami hoping to attract Chinese investors, perhaps to cushion an expected European and South American slowdown. Miami – often referred to as a safe haven for international money – may attract flight capital from those in China uncomfortable with the long-term prospect of the economy and Chinese government’s reactions to it, Mr. Cassel said.

As the Chinese currency is adjusted or manipulated, he said, it will affect both the purchasing power in the US and its export potential. When the dollar is strong against the yuan, the US can buy more Chinese products but it also stunts US exports, he explained.

On the flip side, he said, the US economy is strengthening, so more product will be absorbed domestically.

“To be overly concerned about a market that was up 150% and is now down 50%, to me, is a little bit naive,” said senior investment strategist Jonathan Hill with Gibraltar Bank about the Chinese market.

“The recent turmoil is unwelcome, but we have been consistent in anticipating this hike in volatility,” read an email Mr. Hill sent to his investors and clients last week. The email calls the situation a “short-term disruption” and points out that traditionally light summer-trading volumes can leave markets vulnerable to “outsized swings,” which is common in July and August.

Ultimately, the Chinese slowdown can affect the growth of international trade and investments with South Florida’s three major partners: Central America, South America and Europe, said Miami economist Manuel Lasaga. Repercussions will further spill over to the local economy if China’s instability affects global growth, he said.

Mr. Lasaga points to the lack of transparency in how the Chinese economy is faring in the midst of its apparent slowdown as a reason for increased volatility in the market.

“I do think China should continue to grow 6% to 7% this year,” he said. “It’s still going to add momentum to the global economy,” but the momentum will be slower than anticipated.

Succession plans are key to protecting your business when the unthinkable happens

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By James S. Cassel
August 17, 2015

Cassel picture

Although there are probably many things you would rather discuss with your CEO than how to proceed if he or she unexpectedly dies or falls victim to some other tragedy, the fact is that you must. Companies without crisis-succession plans are at significant risk.

History has proved that the way companies handle these crisis situations can make or break them. A 2014 survey by the National Association of Corporate Directors reveals that two-thirds of publicly and privately held companies in America had no succession plan. This is for planned or unplanned succession.

Public companies are more likely and may be required to have succession plans in place, but very few private companies do, particularly those that are family-owned.

Losing a CEO to an unforeseen circumstance such as a tragedy, termination or resignation can create more turmoil than losing a leader to a situation you can see coming, such as a terminal illness or an orderly, planned change. Sudden losses can leave employees and other key stakeholders devastated and bewildered. Without a designated leader or clear path to the future, the business can suffer. This can be particularly disastrous for smaller companies.

While it is not uncommon for people to think their company could never survive the death of the CEO, the fact is that more often than not, it could survive with proper planning. Well strategized, efficiently executed succession plans bring benefits on multiple levels. In addition to providing a roadmap to help your company deal with the crisis, they put investors and shareholders at ease.

Of course, the core of your succession plan should be more than processes — you also must identify who will assume your CEO’s responsibilities. You should build a bench of candidates. In some family businesses, a family member with little history with the company might step in, so it is critical to have a succession plan to ensure the successor has adequate background and knowledge.

You also will have to address training: What kind of knowledge will the ascending CEO or interim leader need? Was there sufficient knowledge transfer prior to the need for it? Appointed successors, like an understudy in a Broadway production, must be well informed and ready to hit the ground running. This preparatory training should be an ongoing process.

Some businesses may need outside help on an interim basis, and there are companies that provide interim leadership assistance.

Succession planning should not only apply to your CEO; it should also include other senior positions such as President, CFO, CTO and CMO. Passwords, systems and processes should all be documented so your business can continue operating as usual.

A sound succession plan will contemplate how you will communicate with clients, customers, vendors, employees, investors and partners. Your key audiences should not learn about the death of your CEO from the news media, so you will need a public-relations and crisis-communications strategy that outlines how to best notify all your key internal and external audiences. It is interesting to observe the upfront, open manner in which Warren Buffett of Berkshire Hathaway (NYSE:BRK.A) is dealing with his succession. Buffet’s approach is much more well received than the way former U. S. Secretary of State Alexander Haig announced that he would be in charge after former President Ronald Reagan was shot (especially given the fact that the transition plan in the Constitution calls for the vice president to assume the leadership role).

If your business is family-run or family-owned with one family member playing a key role such as CEO, part of the succession plan should include not only a replacement CEO, but should also ensure there is an appropriate family member designated to maintain communication between the business and the family.

Consider “key person” insurance policies that can be owned by the company. The liquidity of these policies can offer the company the breathing room to survive a crisis. Some bank loans provide for calling the loan due if a certain person passes away, and that can be strategically insured around with a key person policy.

Another key consideration: bereavement services for grieving employees. In Miami, the Children’s Bereavement Center, which provides assistance to people of all ages, offers varied support groups and other services for bereaved adults, and resources for professional organizations and businesses dealing with trauma or crises. They are available on short notice.

Although the days and weeks following a tragic loss will certainly not feel like business as usual, they should be guided by a sound succession plan to keep the company on track with as few disruptions as possible. Investing a little time now to put the necessary plans and infrastructure in place can make all the difference when the unthinkable happens.

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. His website is www.casselsalpeter.com

Attracting and retaining top talent: a growing obstacle for South Florida businesses

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By James S. Cassel
July 12, 2015

Cassel pictureMaintaining a strong workforce is becoming an increasingly significant barrier to growth for South Florida’s middle-market businesses. Finding, attracting, and retaining quality talent is a tricky proposition in a region with a limited labor pool and low unemployment rates.

Deloitte’s newly published “Mid-Market Perspectives: 2015 Report on America’s Economic Engine” identifies employee turnover as a major concern for middle-market companies.

Clearly, there is more value in cultivating existing talent than having a revolving door of employees. So, how can you build a strong, loyal team in South Florida?

First, have the right perspective. Do not feel overwhelmed and assume that sweeping corporate changes will be required. Often, we can achieve a great deal by making a series of small adjustments, and continuing to make other adjustments as we build on our success. Develop a practical plan and identify realistic, attainable goals and objectives.

At all times, keep a close pulse on your employees. It can be easy for business owners to get so consumed by day-to-day operations that they lose touch with their teams, a costly mistake. Are your employees engaged, motivated and happy? How can you maximize engagement? If you have good employees who are unhappy in their current positions, can you find other opportunities within the company so you can keep them around? If not, outplacement may be best for all parties.

Your compensation packages, including cash and benefits, should be competitive. While many companies in recent years have tended to avoid raises, increased competition and poaching of employees is making it critical for employers to become more generous. Competitive compensation packages can reduce your exposure to turnover too. Even Walmart is having to address the need for wage increases.

Usually, employees will reject job offers for lateral moves unless they perceive significant disparities in working conditions and compensation. Keep your eyes and ears open so you know what other businesses in your industry are doing. Websites like PayScale and Glassdoor can help you assess average compensation data about different industries and job roles.

Working conditions, benefits and flexibility also are important. While it is important to offer 401(k) programs (ideally with matching contributions), these benefits will not support retention if your employees do not use them. This is often the case with younger employees who opt not to contribute to their 401(k) plans (although they should). Ensure that your employees are educated on the importance of contributing, no matter how entry-level their salaries.

It also helps if your office has a “cool factor.” Every generation of employees has different needs and wants. Trendy-looking, modern offices in desirable neighborhoods and touches such as free gourmet coffee and snacks in break rooms appeal to millennials and Gen X-ers.

When recruiting and hiring, conduct as much due diligence as possible. Personality tests can help, as well as meticulously following up with references. Your current employees can be great resources for recruiting. Leverage them when appropriate, as they probably know your company better than outsiders and would be more engaged to stay at companies where they are surrounded by colleagues they helped recruit.

Routine evaluations can also boost employee loyalty and performance. Embrace the opportunity to let your team members know how they are performing, praise their strengths and achievements, and provide guidance on how to reach their career objectives. At the same time, use the opportunity to solicit their thoughts and feedback, take good notes, and follow through on their comments.

Encourage employees to interact in structured social environments, such as barbeques, movie nights or whatever tickles their fancy. While many companies have stopped providing annual company picnics, it may be time to resurrect them. The more your employees enjoy each other’s company, the more apt they are to work well together. Consider employee recognition initiatives too, and perhaps pair them with these social activities. Corporate community involvement projects can help increase job satisfaction and engagement. Identify organizations your employees would be most inclined to support.

Career development is critical. Employees who feel challenged and believe they are learning are more likely to stick around. A current issue with the millennial generation, for example, is that most recent college grads will have four or five jobs in their first decade of employment. Bearing that in mind, many companies are offering less training and investing fewer resources to advance employees out of fear of wasting time and money. This can be a mistake: Bored employees are more likely to begin looking elsewhere for stimulation.

Attracting and retaining quality employees is no easy task. By taking the right steps to build a strong team, you can gain a competitive edge and position your business for maximum growth and success.

Middle-market businesses should help growth industries

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By James S. Cassel
June 14, 2015

Cassel pictureWhile the technology and healthcare/biotech industries in South Florida continue to gain strength and momentum, the region’s middle-market businesses are not properly positioning themselves to serve these industries and benefit from their growth.

There can be significant revenue opportunities for those that make the financial and other commitments necessary to position themselves to fulfill the needs of these growth businesses for highly qualified suppliers, subcontractors, and service providers. Too often, these growth businesses feel a need to look beyond South Florida for support because they do not believe their needs can be handled locally — a void that must be addressed. Right or wrong, this is the perception in the marketplace.

Based on our experience advising middle-market businesses seeking growth opportunities, the following is practical guidance for businesses that cater or want to begin catering to these growth industries:

Create a business-development strategy. Identify the key businesses you want to serve and pinpoint the ones you are best-suited to begin serving in the near or long term. Develop a plan for getting in front of these businesses to assess their needs and offer your services.

Identify the areas of your business, including products or services that you provide, which you may need to trim or expand in order to serve growth industries. Some of this may require partnering with or outsourcing work to other companies, locally, or in other parts of the United States, or internationally.

Consider investing in your team by providing educational or training opportunities and/or by adding head count. Hiring the best talent can be an expensive commitment, especially for business owners who are not sure if they will ultimately have enough business to support the additional head count. Thus, it may be wise to consider hiring temporary personnel or independent contractors who can eventually become permanent team members after you have gotten to know them and confirmed that they are a good fit, and when you are sure you have enough business to justify their compensation.

Consider acquiring or merging with competitors in the market. This is a great way to acquire quality talent. It is not uncommon in some industries, such as technology, for companies needing talent to buy younger, smaller companies to gain a competitive advantage.

Evaluate your client roster and eliminate the bottom 10 percent of your clients that may be too problematic, unprofitable or a disproportionate drain on your resources. One of the main obstacles for South Florida’s middle-market businesses is that many of them are running at or near capacity and lack the necessary talent and infrastructure to effectively handle the higher level of work required by companies in these growth industries. While parting with paying clients can often be a difficult decision, it is critical for long-term success. Part of the trouble with keeping clients that are cumbersome or not profitable is that they can drain your business in terms of time, energy and other resources. They can diminish your ability to provide quality service to other customers. Just as important, they can hurt your company’s employee morale and job satisfaction. For these reasons, bottom-tier clients might not be sustainable over the long term. Simply put, these clients are not good business and should be let go in order to make room for clients that will better support your growth.

Consider increasing your capacity by incorporating advanced solutions. Manufacturers, for example, may consider using robotics to reduce costs and increase capacity and productivity. 3D printing is another great way to increase efficiency. For example, manufacturers can use 3D printing to put together product prototypes that are quicker, less expensive, and easier to produce, and are thereby speeding up the manufacturing process and using technology to enhance their productivity and competiveness.

Develop a marketing-communications strategy. In order to hire you, companies need to know you exist and that you are able to serve them. When you have completed your business plan and implemented the necessary changes within your company to execute on those goals, you should work with experienced marketers to determine how to best position yourself to your target audiences, differentiate yourself from competitors, elevate visibility of your company among these audiences, and motivate them to want to hire you or buy your products. Your marketing strategy also should include a plan for building direct relationships with key decision-makers by attending key events, providing seminars and workshops, distributing e-newsletters, etc.

Without a doubt, South Florida’s middle market is missing opportunities to serve local companies in industries that are growing right in our own backyards. Serving these growth industries is not only important to our local middle-market businesses — it will also bring significant benefits to our local economy by creating more local jobs, financial opportunities and economic growth.

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