From GoPro to Lenovo, Trump tariffs would have raised prices on tech from Mexico

By Ed Oswald

President Donald Trump’s now-scrapped plan to impose a 5% tariff on Mexico starting Monday could have made a major impact on the cars and tech Americans love.

The impacts may seem less obvious than the tariffs the Trump administration imposed on China in early 2018. Americans depend on Chinese manufacturing for products like iPhones, computers, and TVs, as well as the components inside. But Mexico is a major producer of cars sold in the U.S., along with computers and electronic parts.

Mexico is second to only China in the number of computers it exports: GoPro will manufacture U.S.-bound devices in Guadalajara later this year. Foxconn, which manufactures a ton of brand-name tech products, has multiple factories in the country, and Universal Electronics will soon move remote control manufacturing from Mexico to China.

Tech manufacturers are likely happy that the tariffs aren’t going to happen (for now). Trump tweeted Friday that the U.S. had reached an agreement with Mexico in order to stop the tariffs, though he did not give specifics on the deal.

Trump initially said he’d increase the tariff by 5% a month, to a maximum of 25% by October 1. Such punitive measures would have had far-reaching effects and American consumers would likely foot the bill on a variety of tech products.

That said, deals like this are fickle and tariffs could still come in the future. Here’s how an escalating U.S.-Mexico trade war would impact tech:


Mexico’s largest export to the U.S. is in automobiles and auto parts. At $116 billion annually, a third of its exports are U.S. bound, according to Census Bureau statistics. Cars are where American businesses and consumers could feel the most pain. Thanks to free trade, automobile manufacturing often spans North America.

Take the modern Volkswagen Passat. Manufactured in Chattanooga, Tennessee, the engine is built at the automaker’s Silao, Mexico plant, but contains parts manufactured by partners across all three North American countries, as well as China and elsewhere. It’s incredibly difficult to find a car in the U.S. that’s completely manufactured here.

It’s important to mention that the level of exposure varies manufacturer to manufacturer. Volkswagen stands to lose the most because it imports nearly half of its automobiles sold in the U.S. from Mexico, executive editor Joe Wiesenfelder told Digital Trends. But U.S.-based automakers have plenty to worry about too: Ford, GM, and Fiat Chrysler also import significant numbers of fully-manufactured cars back into the U.S.

This may be the biggest threat of Mexican tariffs. “Though the Chinese tariffs are a full 25%, they affect only two major models, SUVs from Buick and Volvo,” Wiesenfelder explained. “If the proposed Mexico tariffs happen, they’ll start at 5% but will encompass both many assembled vehicles and countless auto parts.”

Wiesenfelder noted that all automakers with plants in the U.S. source parts from Mexican factories, so the effects could be much further reaching than some might expect.

If a deal falls through and tariffs eventually do take effect, the end result might be higher prices for new cars, but it’s hard to say if prices could rise in time for the 2020 model year. “If it turns into a standoff, however, I think it’s likely we’d see prices increase. Because so many brands are affected, it’s more likely the automakers will pass on some of the cost rather than absorb it indefinitely,” Wiesenfelder said.

Not good news for an industry with an already difficult market thanks to higher interest rates for many borrowers.


It’s not just automakers that are concerned. Illinois-based component and accessory manufacturer OWC says it has focused on bringing its manufacturing back to North America, but the threat of new tariffs poses a real threat to its business.

OWC manufacturers around 3,000 different products, ranging from hard drives to solid state drives, PC docks, memory kits, and even smartphone cases. With annual sales of $125 million, the company has done well by pairing its offices in Austin and Brownsville, Texas with its manufacturing facilities in Matamoros. But tariffs would threaten the future of this strategy, and he says both sides of the border will be affected — and people could lose their jobs.

While CEO Larry O’Connor told DigitalTrends that OWC could weather a short term 5% percent tariff on Mexican imports without an effect on its workforce or prices to the end consumer, the threat of higher tariffs is unacceptable.

“A longer-term 25% tariff on Mexican imports could be devastating to our business, our customers, and the hundreds of team members in Mexico,” he said. O’Connor lamented the uncertainty caused by the Trump Administration’s trade strategy, arguing businesses need ” a level of consistency and predictability to operate successfully,” and that a long-term tariff battle could spell trouble for his company’s plans.

“If the proposed tariff situation regarding Mexican imports is not resolved quickly, OWC will have no choice but to reconsider our overall North American manufacturing strategy,” he warned.
But it’s not just OWC that will be affected. Much larger companies stand to lose as well. Dell and HP manufacture their computers and other peripherals in Mexico: Cisco uses a Mexico-based partner for components. Apple uses at least three component suppliers with ties to Mexico, while Lenovo has multiple production lines in the country.


Trump’s insistence on tariffs as a method of trade negotiation will have a compounding effect, say economic experts. James Cassel, co-founder and investment banker with Cassel Salpeter & Co says that some tech companies may find themselves dealing with new costs they hadn’t planned for, in multiple aspects of their business.

“With tech companies using an international supply chain, it is possible for them to get hit twice,” Cassel said. It’s common for components to be sourced from multiple regions — so your tech gadget might have a circuit board or other parts from China, but assembled in Mexico. It’s the nature of the globalized economy we live in. And it’s not like these companies can make major shifts overnight.

“I do not believe that companies, whether manufacturing tech gadgets or anything else, have had sufficient time to shift production to Mexico from China, if they did not already have production in Mexico prior to the tariffs,” he argued. In the short term, those costs are going to be eaten by these companies, and more likely passed along in the form of higher prices for a wide variety of products in the longer term as the trade war ravages on.

Like O’Connor, Cassel also took the Trump Administration to task over its seemingly haphazard trade policies, and the unpredictability it brings.

“What is really of concern is that we are being forced to play whack-a-mole where companies that produce tech components need to be ready to respond at any moment to another challenge that pops up,” Cassel said

That’s the issue that many tech manufacturers seem to not have an solution for, and has many of them scrambling to contain the damage.

Re-skilling employees for the jobs of tomorrow

By James S. Cassel

In a rapidly shifting world where business models are being reinvented, digital is king, and automation is the endgame, companies must be forward- thinking to survive — particularly given the tight labor market.

Adapting to seismic change requires having employees with the right skill sets, which may be best achieved by retraining your staff. You have an obligation to help reskill employees for the jobs of tomorrow, but the process has challenges, including pinpointing weaknesses and securing employee buy- in. To succeed, a clear road map must be developed and executed.

First, identify your company’s objectives. What are your immediate, medium, and long-term goals and needs? For example, if you own warehouses, your immediate objective may be to implement enhanced commercial two-way radios, laptops, or scanners.

Your medium-term goal might be to introduce a conveyor system that partially automates unloading trucks—technology that Walmart is currently incorporating into its stores. Long-term, you might want smart robots that handle all warehousing needs, following the example of Amazon and, China’s largest retailer.

As you identify company goals, determine what employee skill sets will be needed to transition into the future. Automated warehousing necessitates a staff to train, maintain, and repair the robots. Reskilling now will ready workers for those tasks, while having an understanding up front of what robots cannot do, will help management fill in the gaps.

Next, develop a plan, timeline, and budget detailing your business objectives and breaking them into manageable steps. Refine the plan as your reskilling strategy develops.

A sound strategy begins with taking inventory of your employees’ current skills, as well as their strengths and weaknesses. Enlist the help of supervisors to identify both skills in place and those that are lacking.

In assessing your staff, prioritize employees who have proven their mettle, loyalty and cultural fit; their continued employment and livelihood should be protected. For each employee, identify skill adjacencies to facilitate training for new positions requiring similar skills.

If you are entertaining the “buy, not build” talent acquisition strategy, remember there is always risk in external hiring. Although you may be acquiring a skill set you don’t currently have, new employees may not share your work ethic or company culture. As the saying goes, “Better the devil you know…”

Open internal lines of communication, review training options, and keep your team engaged and motivated. Show your employees the importance of being future-ready; listen to their ideas and concerns and engage the process as a unified team.

Unavoidably, as you future-ready your company, some workers won’t sync up with company goals or will refuse to learn new skills; assist in outplacing them. In the long run, it will be good for both them and the business.

For flexible employees, evaluate alternative forms of training, such as bringing in contract trainers, accessing webinars and e-learning platforms, or paying for them to pursue coursework and degrees on their own time.

Based on individual needs, consider implementing a mix of training options. Some people may have to commit to night school, while for others a few webinars may suffice. Boost employee buy-in by keeping their sights set on stronger outcomes, including higher compensation. Share the benefits that everyone will gain from more productivity with fewer people. Amazon’s 16- week certification program enables warehouse workers to become data technicians—and double their salary! Better pay is also important to retain talent and ensure that after investing in training, your employees aren’t snatched away by the competition.

Business owners are generally aware that in a transforming world, the way business was done yesterday won’t fly tomorrow. The problem is that rather than plan and prepare, many are playing ostrich and hoping challenges will somehow disappear. With autonomous technology taking over, truck drivers, for example, might become as extinct as dinosaurs. Businesses that don’t evolve will suffer the same fate.

Avoid insurmountable issues tomorrow by tackling them today. Take a hard look at your business, where you want to take it, industry and technology trends, and how your team measures up. Then, focus on implementing your plan. Reskilling may not be for the faint of heart, but neither is conquering tomorrow.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., an investment-banking firm based in Miami. or via LinkedIn at

How to find and retain talent in a tight labor market? Flex your creative muscles

By James Cassel

In the past, when my colleagues lamented over their hiring difficulties, I asserted that there was plenty of talent available in the area — and regardless, South Florida would always be able to attract qualified employees. Having now experienced first-hand hiring challenges as our own firm grows, I believe I was wrong.

With unemployment around 4%, the talent pool appears to be running dry. The just-released 2018 Greater Miami Chamber of Commerce Executive Survey indicates that the top concern among area executives is finding and retaining qualified employees. Nationally, according to Aptitude Research Partners, three in four hiring decision-makers say that, “ finding quality candidates is their #1 challenge.” To grow, despite this difficulty, companies must aggressively recruit.

First, announce on a range of channels that you’re hiring. Post available positions on all top job sites, including Indeed, Monster, and LinkedIn. Consider supporting these efforts with digital advertising, a cost-efficient means of targeting the segment you’re after.

Other valuable channels for accessing talent include headhunters and your network. Speak to clients and vendors—particularly any that are downsizing—as well as employees, friends, and family. Contact organizations that could help you tap into the local workforce, like colleges, chambers of commerce, and business councils.

Having broadly disseminated your talent needs, contemplate candidates that aren’t currently in the workforce or don’t fit a traditional mold. Parents raising kids and other homebound caregivers ready to rejoin the workforce are often discounted due to lack of recent experience, which training can readily overcome. Offer workshops and mentoring to re-sharpen skills.

Also important are underemployed, semi-retired, and retired individuals who bring a wealth of knowledge and experience. On the other end of the age spectrum, internship programs can yield employment offers upon graduation, giving you a leg-up on the competition.

It’s also wise not to discount applicants lacking some credentials. Motivation and a good work ethic often surpass a degree, and many of the best employees don’t always look perfect on paper.

Capturing and retaining talent also requires offering compelling pay, benefits, equity or profit sharing, and perks. 2018 saw wage increases across companies and industries, including Walmart, American Airlines, and Comcast. Prioritize competitive salaries and reward existing employees with annual raises, which shouldn’t fall below the 3.1% national average. Equally important is vacation time, which can be a reward for tenure, increasing annually. Keep an eye on how your competitors are compensating, it’s very costly to lose good people to others who are willing to pay more.

Offer desirable perks, such as childcare or a gym membership, and implement a plan for out-of-the-box benefits, which may include assisting with the costs of certain medicines or treatments not typically covered by insurance plans. Helping to pay off student loans has also become a hot new benefit. Create a culture that is inclusive, supportive, enjoyable, and prioritizes giving back to the community and your employees won’t want to go anywhere else.

A general dearth in people for hire needn’t block your upward momentum, but it requires a paradigm shift in thinking. The challenge in finding and retaining good talent is to scrap preconceptions, think strategically, flex your creative muscles, and keep seeking. In the words of Zig Ziglar, “There is no elevator to success. You have to take the stairs.”

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., an investment-banking firm based in Miami.
At LinkedIn:

Buying a company? Due diligence is needed — and it’s a balancing act

By James Cassel

In 2011, Hewlett-Packard acquired a company called Autonomy for over $11 billion. Unfortunately, after the acquisition, HP found out that Autonomy’s management had committed fraud. For years, prosecutors alleged, Autonomy had been cooking the books ultimately resulting in HP being swindled and lots of litigation. It’s a great, albeit costly, lesson on the importance of proper due diligence.

The amount of due diligence needed when purchasing a company is a balancing act. One has to take into consideration the available resources. You often have to decide whether to drill deeper when a red flag arises, even as you try to determine if it’s feasible or not to proceed with the deal. But you shouldn’t be penny-wise and pound-foolish. There are areas you must target and costly services you must use. That’s just part of the cost of any deal.

Company finances are a good place to start. It’s costly, but hiring an experienced accounting or consulting firm is essential. You are looking for the true financial picture of the company. You need to know whether the company is growing or shrinking, its profitability and cash flow, its capital needs, its customer concentration, and its relationship with its suppliers.

To get this information, a financial audit may be necessary, as well as obtaining a quality of earnings report. Beyond looking at the balance sheet, a quality of earnings report provides a true financial picture by looking at the financials, books and records of a company, including its EBITDA, earning power, cash flow, financial systems and its accounting principles and policies.

You should also conduct operational due diligence, looking at the company’s main operations to try and determine whether its current facilities and capital expenditures are in line with its present and future operations and that everything is in good condition. You might also want to conduct some commercial due diligence to review the market position of the company’s products or services. If you’re concerned about the company’s exposure to reputational issues, you may want to conduct IDD, an integrity due diligence. And of course, legal and regulatory due diligence is required to be performed by lawyers.

There’s a due-diligence provider for almost every aspect of a company, from its IT to its IP, but before you begin any of them, you’ll want to research the company’s leaders. You might be surprised what a simple Google search can yield. Compromising reputational matters, strained relationships with clients or suppliers, even fraudulent activity, can often be discovered with a few clicks of a mouse.

When you find something amiss, take a step back and review what can be fixed and what can’t. Sometimes a price adjustment works. Sometimes it’s best to walk away. But sometimes, you may find that the issues can be resolved or overcome, and the deal can move forward.

If the issue is something like sloppy bookkeeping, perhaps a good financial professional can clean it up. Maybe it’s just that the company isn’t running efficiently. In that case, you can hire a process improvement expert.

Even if it comes to pass that you do all your due diligence and everything checks out, remember that even with the best due diligence, you can’t always find fraud until it’s too late. For that reason, you might consider insurance in case everything isn’t on the up and up. Representation and warranty insurance may cover certain losses resulting from a violation of the representations and warranties that were made to you by the seller, whether intentional or not. It can be a useful tool to protect you from potential exposure should it arise.

But some problems can’t be fixed or are just too costly to fix. If that’s the case, you must walk away. And if you didn’t, and find yourself in a situation similar to HP’s, then it’s time to take a step back and see where your due diligence might have failed. Don’t look for another deal until you understand what you did wrong and how you missed the problem. A costly mistake can still have value if it teaches you how not to repeat it.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., an investment-banking firm based in Miami.
At LinkedIn:

Florida’s private equity deals were strong in 2018

By Kevin Gale

James Cassel

Chairman & Co-Founder

Private equity deals in Florida for 2018 were nearly double the total of 10 years ago, showing a recovery from the Great Recession.

An analysis by Cassel Salpeter & Co., a Miami investment banking firm, counted 293 PE deals in 2018. In 2008 there were only 154 deals while the total reached a low of 131 in 2009.

Cassel Salpeter says the total for 2018 will likely rise since reporting often lags the actual activity. South Florida accounted for 39 percent of the PE deals statewide in 2018. “Despite the nebulous economic times we live in today, deal activity in 2019 is showing no signs of slowing down. As economists start to talk about a possible slowdown or recession in 2020, PE firms and family-owned businesses are giving thought to going to market now so as not to miss this opportunity before the next cycle. Still, whether it happens in 2019, or in the years that follow, as each day passes, we are one day closer to a possible slowdown or even a recession,” says James Cassel, co-founder of Cassel Salpeter.

Add-on deals accounted for approximately 57 percent of the state’s PE deals, topping platform creation, growth/expansion, recap, add-on and buyout/LBO, Cassel Salpeter found in its analysis of data from Pitchbook. Click here to take a deeper dive into Florida’s private equity deal activity for all of 2018 and get more of the firm’s insight for 2019.

Prepare now for impacts of new tax bill on middle-market businesses

By James S. Cassel

While many hope the new tax bill will stimulate the economy and bring faster GDP growth, we must consider whether it will indeed benefit us to speed growth from where we are today, or to experience a longer period of extended slower growth. Will the stimulus cause the economy to overheat and therefore bring us closer to the next recession? Are we better off as the tortoise or the hare? Fact is, middle-market business owners would be wise to prepare for both scenarios.

Since we are not currently in a recession and we have had steady, slow growth for almost 10 years, it is not clear that we need the stimulus this bill is supposed to bring. If we overheat, the Federal Reserve will likely pull back by raising interest rates faster to slow the economy. Rapid growth could cause inflation, because of a shortage of labor in today’s already tight employment market, among other things. Would that mean the Fed needs to raise rates faster (many already predict three quarter point interest hikes in 2018) and push us closer to the next recession, or are we better off with slow, sustained growth? Slow, sustained growth over the long term may be more beneficial to individuals and middle-market businesses.

Based on our experience working with middle-market business owners in all types of economic cycles, here is some general guidance to help your business decisions this year:

Hiring. You should be very cautious and not be overly exuberant when hiring because adding too many full-time employees too fast could put you at risk of having to fire those people just as fast when things slow down or your projections are not met. In the last recession, employers who hired in 2006 had to fire fast in 2008. Those who didn’t react quickly enough may not have survived. The key is to remain quick and nimble, and always hire people for the right reasons at the right times. You may want to start by hiring temporary help or part-time employees with the idea of converting them to full-time if growth continues.

Capital expenditures and real estate. When it comes to your capital expenditures, you must be careful to not overexpand. With real estate, you must be flexible. Consider solutions like WeWork or Regus shared office spaces to avoid long-term real estate commitments, which have proved to destroy many companies. Beginning in late 2000, large real estate commitments doomed companies when the internet bubble burst.

Expenses. You must continuously monitor your expenses and evaluate your medium- and long-term commitments to ensure you have flexibility. You want to continue to keep a strong balance sheet, being cautious with your commitments for borrowing. Particularly during the next year or two with the continuation of the growth of 2017, there is an expectation that interest rates will continue to rise, increasing borrowing costs.

Taxes. While some will get an increase in their taxes, the bulk of the tax relief will go to the wealthiest individuals and businesses, and thus will, in all likelihood, be saved rather than spent. In the case of companies, it will probably be used for dividends or stock buybacks, with limited increases to employee compensation where required to retain talent. Some of the benefits from this tax cut could be very short-lived, and as the bill exists today, individual tax benefits are not permanent.

It will be interesting to see what happens to economic growth with the new tax law over an extended time, because depending on which economist you listen to, forecasts vary from short-term blips in growth to long-term, extended growth. Some of the benefit will be offset by the misguided immigration policy which, as we deport workers, reduces the pool of potential employees. At the same time, in today’s economy that is near full employment, our immigration policy also reduces the pool of consumers who are spending money and in many cases paying taxes, decreasing GDP growth.

Without a doubt, exercising caution and preparing for both outcomes can help protect your best interest in any of these scenarios.


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 or via LinkedIn at

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Bad hire? Fast fire!

By James S. Cassel

Imagine: You hire a new employee but after a few weeks, you realize you made a bad choice. What to do?

Whether the problem is competence or chemistry, or anything else in between, the best advice is to be decisive and act — fast. Some business owners hesitate to pull the trigger because they do not want to admit they made a mistake. Unfortunately, the mistake magnifies with time and does not get better. It is OK to admit you made a mistake in hiring someone. Not terminating sooner rather than later is a bigger mistake.

Firing employees can be difficult for many reasons. As Warren Buffett said: “It’s pure agony, and I usually postpone it and suck my thumb and do all kinds of other things before I finally carry it out.”

Regardless, it must be done. As many of my clients have told me over the years, when you keep around a bad hire or employee it only gets worse the longer you retain them. Moreover, when you terminate a senior-level hire, such as a CEO, and you bring back a former CEO on an interim basis, most of the time that interim CEO will find things worse than they were when he or she left. If things were the same, then you probably would have kept the new hire.

Former General Electric Co. CEO Jack Welch — distinguished as one of history’s most famous managers, and noted for turning the struggling GE into a global giant during his 20-year tenure — was not called “Neutron Jack” for no reason. Indeed, he was known for his aggressive approach to categorizing and promptly terminating employees he ranked in the bottom 10 percent of his workforce, encouraging leaders to automatically fire their lowest performers as part of an annual corporate improvement process.

As part of his “rank and yank” system, managers were asked to group all team members into A, B, and C categories: the top 20 percent, the middle 70 percent, and bottom 10 percent. According to Welch, the middle should be coached and groomed to move up to the ranks of the top 20 percent. The bottom 10 percent, according to Welch, had to go.

Welch innately understood what many business owners neglect to realize: Keeping around poor performers becomes a major drain on your company, costing you money, time and energy, not to mention morale. It also makes things worse for the bad hire. I tell you this from experience.

So, how long should you wait before pulling the trigger? There is no cookie-cutter time line, and you should do it as soon as you realize it.

However, while it is never too “soon” to fire a bad apple, it should not come as a surprise to the person being fired. As Welch said, they should have had an opportunity to hear and respond to feedback. Make sure your employees have well-defined job descriptions and expectations, so they know what is required for success and can minimize the likelihood of failing.

When firing someone, the key is to take ownership of your hiring mistake and implement the right strategy to reposition your company. It is always good to consult with human resources specialists and labor attorneys.

As it relates to high-level terminations, communicate properly with your internal (employees) and external (clients/customers, vendors, partners, etc.) stakeholders. Provide reassurances the company is on track and will continue moving forward as planned. Also, identify what lessons can be learned to avoid the same problem with the next hire.

Bad hires or bad employees are part and parcel of doing business, for any company in any industry. We all make mistakes. Business owners who take timely, decisive action are protecting the best interests of all parties involved — including the bad hire, who is now free to find employment somewhere that he or she will be a better fit.


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 or via LinkedIn at

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Why more banks are launching IPOs

By Jackie Stewart

A bullish outlook on the financial sector encouraged more banks to go public this year.

A number of banks were eager to take advantage of investor optimism after last year’s presidential election. Several had compelling stories built around high flying niches, while others were looking to provide liquidity for investors or create a currency for acquisitions.

Eleven banks have held initial public offerings this year, excluding mutual conversions, or almost double the number that took place in 2016, based on data from Sandler O’Neill. Though down from the 15 IPOs conducted in 2014, a year when post crisis investors pursued exit strategies, momentum could continue if bank stocks remain hot.

“I think the stock market is a factor, but also which banks will have a good earnings growth story,” said Vincent Hui, a senior director at Cornerstone Advisors who oversees the firm’s risk management and M&A practices. “People will buy into you if you have a good earnings growth story. But we will have some headwinds.”

The KBW Nasdaq bank stock index is up about 16% this year, which has spurred more investors to pump more money into bank stocks, industry experts said.

Banks also have cleaner balance sheets and stronger operations compared to the post crisis years, said Brian Sterling, co head of investment banking at Sandler O’Neill.

“If you put together good stories, you’ll get increased activity,” Sterling added. “I do think you have some unusual business models [of banks that have gone public] and different approaches with good management teams.”

Banks with unique business models are also appealing to investors.

Esquire Financial looked at the IPOs at Triumph Bancorp in Dallas and Live Oak Bancshares in Wilmington, N.C., as it was preparing to go public, said Andrew Sagliocca, the Jericho, N.Y., company’s president and CEO.

Triumph, which focuses on factoring and other nontraditional businesses, held its IPO in 2014; Live Oak, a major small business lender and technology innovator, went public the following year. Triumph’s stock is up more than 25% this year, while Live Oak’s shares have increased by roughly 35%.

Executives and directors at Esquire, which has a specialization in offering services to law firms, began mulling an IPO in early 2016 to create liquidity for shareholders and allow employees to take an ownership stake in the company. A publicly traded stock also allows the company to access capital markets more efficiently, Sagliocca said.

“We were in a true inflection point,” Sagliocca added. “There were a lot of institutional investors that wanted to invest in a unique business model. The market conditions were stronger than in the past.”

An increasing number of banks with less than $1 billion in assets are bucking conventional wisdom by going public, said Rory McKinney, managing director and head of investment banking at D.A. Davidson. Such institutions can make the leap if they have strong management teams and returns that are beating out larger rivals.

“Investors are always looking to invest in different types of new stories,” McKinney said. “There is interest in the sector as a whole … because of the bright lights economically across the country, tax reform, reg relief. Those things come into play from an investor perspective in connection with an IPO.”

Esquire, with $480 million in assets, was familiar with the view that banks of its size may be too small to go public, Sagliocca said. Investors, however, seemed more concerned about the company’s business model and performance metrics.

Esquire’s stock price has increased by more than 25% since its June IPO.

“The proof is we have been successful,” Sagliocca said. “Based on the stock price, there’s interest I would assume.”

M&A is another factor. Aspiring acquirers can benefit from having a stock to offer a target.

“Banks need a currency to do deals,” Tom Michaud, president and CEO of Keefe, Bruyette & Woods, said during a recent panel discussion at the University of Mississippi. “Cash can’t compete with a bank that can offer stock trading at 2.5x tangible book.”

While there is an expectation that IPO activity can remain steady next year, some constraints exist. The number of banks is down 7% from the end of 2015, providing fewer candidates for public offerings. At the same time, there are only so many management teams that have want to go public and have a constructive use for extra capital.

Earnings stories could also be challenged for executive teams that relied heavily on cost cutting to boost the bottom line, Hui said. Some institutions, which have run into concentration limits in areas such as commercial real estate, could face challenges as they try to diversify their portfolios.

Investors could also turn bearish based on a domestic or international shock, noted James Cassel, chairman and co founder of investment bank Cassel Salpeter. “There’s no reason next year shouldn’t be good for bank IPOs — but with an asterisk,” he said.

“My view in general is that time is never your friend with an IPO because so many things are outside of your control,” Cassel added. “If you want to raise capital in the third quarter of next year, you might want to have your head examined as to why not now.”

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Prepare your middle-market business now for future storms

By James S. Cassel

In light of the devastation following the recent hurricanes, it is important to evaluate what happened in Puerto Rico, Texas and even Miami, and consider how our middle-market businesses would have fared if a major hurricane, like Irma or Harvey, had been a direct hit on South Florida.

We fortunately dodged a bullet this time, and the damage to South Florida was nothing compared to what it would have been if we had taken a direct hit. Without a doubt, companies must have the right emergency contingency plans in place to protect businesses and people before, during, and after a storm. With proper planning, we can minimize the damage to our business operations and best protect our property and our relationships with customers, employees and community. We need to be able to expedite the return to normal operations.

So, how can we achieve this? Planning. While the appropriate steps may vary depending on your industry and the type of company you own, in general these best practices can be helpful:

Review your insurance policies now, before an impending storm. Get an expert to assist you so you truly understand your coverage. When a storm approaches, it is generally too late to make changes.

Have a written contingency plan and a preparedness checklist to put in place five days in advance of the storm. The Internet is full of many good resources like this one, and I recommend combining ideas from several resources and creating a customized checklist for your company. Additionally, it is important to identify appropriate protocols for protecting and securing your valuables, including everything from documents to property. Assign specific roles and responsibilities and train employees to execute the plan.

As the storm approaches, refresh your recollection of your insurance policies. Keep printed copies safely stored as well as digital copies.

Negotiate upfront with key suppliers to ensure that you have an appropriate system for receiving key materials and with fair pricing in place. You can ensure better outcomes and lower pricing by negotiating ahead of time, well before hurricane season. Also, make arrangements for alternate sites for storing products or running operations in the event that yours becomes unusable.

Ensure that you have adequate technology to communicate with the necessary team members and clients. Cellular phones might not work. Consider satellite phones.

Identify key team members to help ensure your company has adequate power generation (i.e. a generator) and key employees have access to power in order to keep the business running during outages. Have a secondary location(s) outside the market where you can move key people to continue operations.

Develop a post-storm plan, including assigned tasks, and train your employees to follow it. The plan should first assess the condition of your work force. Conduct practice drills — well in advance, and not just days before the storm. Make sure you do this regularly so that any new employees are properly trained.

Arrange for you and your key employees to have enough fuel, food and cash on hand. You would be surprised how many people fail to properly prepare for storms and are caught without basic necessities for a period of days. ATMs may not work.

While we cannot say for certain when it will happen, there is no doubt that, at some point, South Florida will get hit by a “big one.” Although it can be time- consuming to plan for future storms, it is a fact that when a major one strikes, the right planning can have a big impact on our businesses. Those who plan will protect their best interests and potentially gain an advantage over any competitors who, instead, opt to focus on their day-to-day business operations.


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 or via LinkedIn at

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Recruit, train and mentor to create a diverse workforce

By James S. Cassel

Without a doubt, companies need a diverse workforce to reflect the population that defines the United States and makes us strong. As discussed in my last column, while most middle-market business owners recognize the importance of a diverse workforce, many still struggle to find the right strategy for recruiting and retaining the right team members. This month’s column will provide practical guidance for creating a diverse workforce and the culturally sensitive atmosphere necessary to retain it.

Why is diversity so important? Diversity brings together people of varied talents, skills, experiences, and perspectives, significantly expanding a team’s capabilities and fostering innovation by increasing access to new ideas. Representing a variety of nationalities and ethnic backgrounds can also make companies more relatable to a broader customer and client base and enable them to work in new global markets. A diverse client or customer base requires a diverse workforce. Workforce diversity also has proved to enhance employee and client satisfaction, leading to greater retention.

So how can you create a diverse workforce? While you should always hire the best candidates for job openings and internships based on their qualifications, here is some helpful guidance to keep in mind:

Recruitment: Expand your recruitment and think outside the box. Contact ethnic clubs on college campuses to find good candidates. Develop a strategy for speaking at events and positioning your company in front of a diverse audience. Practice what you preach. An ethnically diverse recruiting force helps you attract more candidates. When using headhunters, indicate that you seek qualified candidates with language and cultural diversity, and do not assume that someone bilingual speaks English and Spanish. Years ago, a former employer in Miami assumed my wife spoke Spanish when my wife said she was bilingual, and was surprised to learn she was referring at the time to Russian.

Training and education: Knowing it might not be possible to hire the strongest candidates with the right experience and skills off the street, you should develop strong training and education programs. Hire younger employees with potential and train and empower them to grow into the desired roles. Do not only look for talent in the big-name universities. Community colleges are a great place to look for talented candidates. Some of Miami’s most prominent business and community leaders graduated from Miami Dade College, for instance.

Mentoring: Mentoring is key to helping cultivate diverse talent. A great strategy is to pair up people. However, mentoring should not only be delegated to your staff — it should extend to you as the owner as well as other senior management. Make sure to personally invest time in mentoring and meet routinely with your employees. This is critical if you seek to cultivate a mentoring-driven corporate culture and instill mentoring in your company’s DNA.

Compensation: Pay people equally and give them the same opportunities for advancement.

HR practices: Advertise job openings broadly, and take advantage of word-of- mouth and referrals from employees, clients and community partners, as well as various websites like and Make sure your human resources department is properly trained and has the right policies — and perspective — to ensure your diverse employees have the support and working environment they need for success. Because all people are created equal, all people should have equal opportunity. Provide diversity-focused events to elevate everyone’s understanding of other cultures as well as an open forum for folks to communicate and build better relationships with those of different backgrounds.

All of this takes a conscientious effort on your company’s part and starts at the top. Considering our country’s labor challenges and uncertainties surrounding its immigration policies, it is not likely to get any easier to establish a diverse workforce. But we should never, ever give up. The future of our middle market and our country depends on it.

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 or via LinkedIn at

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