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Webinar How Premium Finance Life Insurance helps with Estate Taxes and Buy Sell Agreements

Dave Toeben of Insight Insurance Services is a member of XPX Nashville
Dave Toeben
Insight Insurance Services
8 months ago

Unlock the Potential of Buy-Sell Agreements and Estate Taxes with Premium Financing As a professional in the premium financing life insurance industry, staying informed about the strategies that can benefit your clients the most is crucial. One such strategy is premium financing, a powerful tool for paying estate taxes and fund buy-sell agreements. Join us on May 22nd at 9:00 a.m. CST for a webinar, where we’ll dive into the world of premium financing. Here’s why you can’t afford to miss it: Strategic Financing: Learn to utilize bank funds for life insurance to minimize estate taxes and buy-sell agreements Case Study Insight: Examine strategic buyout funding through a case study, highlighting how bank financing can uphold business continuity following a partner’s death. Timely Tax Strategies: Uncover vital estate tax strategies before the current provisions sunset on January 1, 2026. Expert Guidance: Gain insights from industry leaders, ensuring you receive ethical and well-informed advice. Don’t miss this opportunity to learn from Dave Toeben of Insight Insurance Services and Chris Dunham of Kuorum Partners. They’ll provide valuable insights that will empower you to offer top-tier advice and solutions to your clients. Register now: 

Contribution Margin: Why Profit Planning Matters for Manufacturers

David P DeMuth
CFO Consulting Partners LLC
1 year ago

By Jeffrey Appleman Manufacturers are focused on sales—not cost or profit. If they were keen on net income, manufacturers would know one key data point: contribution margin. Once you know it, the possibilities are endless for growth, sustainability and efficiency. In effect, a contribution margin is the percentage of revenue that remains after you pay for your variable costs, which include the materials and labor to make your products. If the remaining revenue covers your fixed costs—the top item tends to be salaries—then you have a profit. For manufacturers, a contribution margin should be in the neighborhood of 30%-40% so everyone gets paid including the business owners. Contribution margin helps a manufacturer figure out its breakeven point. Let’s say your fixed costs equal $1.2 million a year and your variable unit cost per unit is $10, while the sales price unit is $15. Because you know the variable cost, you can determine the contribution margin, which is the remaining $5 from the average sales price. So how many units would you have to sell to break even this year? Divide the fixed costs by the contribution margin ($1.2/$5) and you will need to sell 240,000 units. So, why don’t more manufacturers know their contribution margin? It’s because they don’t make time for profit planning, which is a financial plan for your business. The process aligns operations with financial objectives by projecting revenue and expenses. It views profit as a crown jewel, not as a byproduct, making everything else revolve around it through transparency. At first, the light may seem blinding. Here are several critical items that manufacturers will be able to see more clearly: Manufacturing Insight: We Need To Raise Prices Most manufacturers are not eager to test price elasticity with their stable of products, but your company could be living on borrowed time. Invest the time to find your true costs. Don’t take shortcuts with estimates unless it’s necessary. When I consulted with a manufacturer that made printed boxes, we broke down every operation in the process. For example, when making a printed carton, you need employees in many areas to make the final product. Every station in the process is a profit center that needs to be covered in the final sales price. So, every printed box started with a paper-sheeting operation, then the printing, the die-cut operation, the waste-product operation, the cellophane operation, the gluing operation and shipping. That’s six operations, each with one to three employees. If you don’t take the time to add it up, there’s a good chance your pricing will be too low. And then, you will pay the price. Manufacturing Insight: We Have Too Many Loss-Leaders If a squeaky wheel gets the grease, then manufacturers will undoubtedly end up with stains on their financial statements. Over time, manufacturers have a tendency to listen to the wrong people when it comes to their lineup of products. A contribution margin is a formula that brings one of the Laws of Business to life: 80% of outputs come from 20% of inputs. This general truth, which has withstood the test of time across any industry, is called the Pareto Principle. Does 80% of the company’s turnover come from 20% of the product line? Put another way: Is 80% of your product sitting there in the warehouse, typing up resources for an inordinate amount of time. Instead of listening to random customers about suspect marketplace needs, the C-suite at manufacturing facilities need to listen to the data, which should come from profit planning at the beginning of every year. Manufacturing Insight: We Pay Too Much Whether it’s your customer or your suppliers, most manufacturers are probably paying too much. Now that the company has a contribution margin and a 12-month profit plan, you actually know how much you can afford from both stakeholders. If you don’t make a reduction, something else will have to be reduced. Creating terms for your customer is the best way to reduce the cost of accounts receivable. If they have 45 days to pay, you will need to enforce it if the obligation is not met. Most manufacturers don’t have the discipline and persistence to protect the bottom line. In the end, 90 days can be too costly. Your suppliers are another area to scrutinize. Do you know the quickest way a manufacturer can get a discount from one of their suppliers? They can ask. (In the real word, this often works.) (This story originally appeared in

Three-Part Process: How CFOs Shore Up Finance Teams for Private Equity Resell

David P DeMuth
CFO Consulting Partners LLC
1 year ago

By Tim Jung As CFO, you have 60 months before the private equity firm sells your company again. And the newly installed CEO doesn’t like the company’s reports. Maybe the reporting isn’t timely or lacks the right numbers. Maybe it doesn’t tell a story from the progress that has been made, how you’re going to achieve higher revenues, who on the team are the right resources and when this will be realized. Executing this strategy will result in a higher sale valuation. If your lawn is green, you don’t think about it. But if your grass starts to turn brown, you start asking questions. In any case, you have already started the prep work for upgrading the Finance Department. You have a better understanding of where your team fits within the five buckets: People, Process, Technology, Culture and Governance. Now, it’s time to start a three-part process with overlapping stages. This system can take three to nine months depending on your needs. Stabilization This part of the process is mission critical. Stabilization is about making sure people know what they should be doing, what they need to do is being done correctly and when these actions need to be done so reports and analysis are readily available for timely review. Let’s say you make a sale and send the invoice. Was the sale recorded in a timely manner so that various stakeholders along the process could track, forecast and report sales, profitability and cash flow? These actions need to be documented and verified. The company is working hard at selling goods and/or services, however, it may be inefficient at reconciling goods or services sold with billing, accounts receivables and cash receipts.  It all may work, but having timely processes, data flow and reports are important to manage the business. If your Finance Department is sending out invoices late due to antiquated manual processes, cash flows could bottle neck from purchase order fulfillment all the way to collections of accounts receivables. Are some of your customers still sending manual checks? Given the trend towards a hybrid working environment, if your team is only in the office once a week, incoming checks may sit uncashed for an entire week. Time is money. To establish an acceptable level of cash flow confidence, you must ask questions pertaining to resources, process and technology. Resources Are the resources capable (e.g., skills, integrity, training) of assuring that the cash flows are being compiled, reconciled and reporting completely, accurately and timely? Do the resources have the capacity to carry out the processes and controls? Processes Is the process coordinated (e.g., information hand off points) from stakeholder to stakeholder along the operational flow so that each stakeholder is receiving what they need? Is the stakeholder passing data to the next stakeholder based on what that person needs as compared to what the prior stakeholder believes the next needs? Are there information gaps that are filled with reasonable assumptions? Technology Does the current technology limit the resources and influence processes (e.g., manual, paper based, spreadsheet-based processes), but in a way that it functions with the basic controls, reviews and process integrity, be it not the most efficient? Are there technology capabilities available that would improve the process and control flow that drives efficiency, cost-effectiveness and allows resources to perform more value-added activities?   Transform The second phase of shoring up a finance team—transformation—can begin once deficiencies and opportunities are identified while the stabilization phase is still in flight. During this time, resources can be presented and moved toward a better team-based cross-functionally coordinated approach. Processes can be retooled to remove unnecessary steps, so they provide each stakeholder with the necessary data needed to perform their function efficiently, effectively and timelier. In addition, technology can be enhanced to incorporate capabilities that are available, but not being utilized. Manual processes can be automated to save time and improve controls. In an earlier example discussed in the stabilization phase, several factors could cause your company to fall behind your competition, including uncoordinated processes, a lack of innovation and technology that does not leverage automation. For example, to speed up cash receipts, you could ask your customers to electronically debit your company’s bank account (e.g., ACH, wire transfer). Not only would you turn receivables into cash quicker, there would be less processing time for your finance and treasury teams. Embracing technology, such as utilizing AI functionality, will help the Finance Department with forecasting, which would yield better case management, analysis and decision-making. Leveraging technology may lead to an analysis of personnel and training, which are important variables in the equation. Transition The third and final stage in shoring up the Finance Department centers on transition. At this point, the finance operating platform is functioning, any significant deficiencies should be remediated and the road map to the target operating model has been prepared. If you are working with a third-party partner or an in-house committee, there will come a time when oversight of the program needs to be handed over to the permanent team members so they can carry on. Then, going forward, the finance team is set up for success. In some cases where new skills are required, the upgraded program could include existing resources and new ones. Retraining and, in some cases, recruiting resources that embrace change can continually enhance the process flow and controls to meet the changing business demands. Having the technical skills are the minimum standards. Possessing a forward-thinking attitude without fear of challenging the status quo will provide the framework to conquer whatever impact from the market, clients and accelerated technology. (This story originally appeared in

Are De Novo Banks Ready for a Comeback?

David P DeMuth
CFO Consulting Partners LLC
1 year ago

By Eric Segal The banking landscape has consolidated in the last three years. Maybe it was runaway inflation that caused cost-cutting branch closings. Or it was bigger banks gobbling smaller banks for quick market share. And let’s not forget the industry’s ongoing march toward digital transformation, which grabs more traction each month. Whatever the cause, several data points tell us that we may have reached an inflection point in the business cycle. Earlier this year, the Federal Reserve Bank of Philadelphia issued a report that found the closures of bank branches in New Jersey, Pennsylvania and Delaware has more than doubled since the pandemic. The three states lost a combined 627 branches during that time period, increasing the number of “banking deserts” to 63 areas in the region. Recent bank and branch consolidation have created some pockets of opportunity and could trigger the next wave of de novo banks. But here’s the catch: You may only need to raise $30 million of capital to open a bank, but you will need a lot more to make it successful. Crown Bank Vice Chairman Paul Fitzgerald says “due to ever increasing compliance costs, banks need to reach a critical mass sooner rather than later.  The first target is usually $100 million in assets.   Banks will not need a branch on every corner, but a well-defined branching strategy is still important.  Technology can help reach the target critical mass right from the start.” For startup banks, it’s not a straight line to success. Here are four factors a de novo bank needs to be part of the next wave: The Right Team If you have the right senior management team, they will hit the deck with existing relationships. Stocking the board with experienced directors who believe in the mission, however, could be the factor that turns a startup bank into a major success. Fostering unity on the board—with everyone on the same page supporting the business plan—would create a constructive environment. There is a period in the beginning when banks are on “probation.” When you give regulators a business plan, they view it as a contract. You are communicating to them that you will do in the first three years, which means you will have to explain every variance. If the board is not aligned on the plan, then you will have a problem. A supportive board can be the X-factor. Engaged board members will open doors and share their business relationships, which can give a de novo bank instant credibility within the community. And that’s an important thought when you consider the history of de novo banks driven by local business owners who felt their community was ignored by mergers that left their region without access to banking decision-makers. The Right Area Location. Location. Location. To be successful, you will need to launch your de novo bank in an area with attractive demographics for both consumer and commercial business, and that also has an abundance of experienced talent with industry experience. When it comes to winning over your new customers, make operations revolve around them. “When I started a bank in northern New Jersey, my office was visible from the main lobby” Fitzgerald said. “People could talk to me when they wanted. In large banks many of the credit decisions are now made out of state by anonymous back-office people. There are a significant portion of business owners who appreciate access to senior management.” Successful new banks don’t really start from scratch. The right relationships with other banks in the market could also yield participation loans, which are funded by multiple lenders to reduce risk and manage liquidity. These facilities can help startup banks generate interest income on the first day. Access to the right lending, operations, and senior management team also plays a large role in selecting the right trade area for a startup bank. De Novo banks can benefit from outsourcing some finance, accounting, balance sheet management and credit administration tasks until the core team has the bandwidth to take them on. One of my colleagues, Larry Davis, who has more than 25 years of senior financial management experience in commercial banking and manufacturing, has worked to train and mentor a de novo bank finance team with virtually no bank experience. “The regulators didn’t believe they had enough banking experience on the accounting team, so they called us,” Davis added. The Right Technology In today’s digital, on-demand world, banks must give serious thought to the right array of fintech providers, a daunting task. CFO Consulting Partners is part of the advisory board for

Short-List KPIs: Why Manufacturers Need More Than Historic Data

David P DeMuth
CFO Consulting Partners LLC
1 year ago

By Chris Delaney When it comes to managing their business, manufacturers need much more than historical financials to project their future revenue, profitability and liquidity. Historic numbers simply capture what has happened in the past—but traditionally do a poor job predicting where a company will be in the near (3-6 months) or distant future (1-2 years). To make matters worse, most smaller manufacturers simply rely on financial statements as their historical data to help make decisions, but this is only the first level of information that they need to understand. Historical numbers will tell you if you grew, but they will not tell you why. Key questions are: Where is the growth and why? Is it sustainable? Which customers? Which divisions? How profitable was the growth and does it represent a new opportunity for investment? If your company is in growth mode, forget historic numbers and focus on the key KPIs that are going to be predictive of future growth and profitability. KPIs are easier to project and do a better job at forecasting future financials than historical data alone. Is there a new customer onboarding or is a recession coming? Are customers going to leave shortly? New mergers on the horizon? A handful of KPIs will create a more accurate forecast for manufacturers, which is invaluable. Here’s a good place to start: Sales Pipeline KPIs Most manufacturers have a sales pipeline, which is the life blood of the company, but they tend to do a poor job in predicting future revenue. Typically, that is because it’s not systematic nor consistent, and because it’s done in an ad hoc manner. “Garbage in, Garbage out” is what I typically see. Without reliable reports on future revenue, moving forward will be a challenge. Bottom line, manufacturers tend to not break down the sales data in ways that are meaningful. Start with the next 12 months and start framing it in two different ways. What is my core business (existing customers and existing SKUs in the marketplace)? Where are they and how can they be forecasted? I traditionally look at the core business in three ways: 1) what do you know (for example, future purchase orders that might be on hand, 2) what do you think (sales forecast provided by a customer) and 3) what are you guessing (no purchase orders or forecasts provided, but looking at historical data on how this customer typically behaves). On top of that, what is the new sales pipeline? What do we expect to “hit” and when? If one utilizes this simple technique from a “bottoms up” perspective, overlaying “core business” and future growth, forecast will be more reliable than what any historical data would predict. Revenue forecasts, by nature, will never be perfect. But performing forecasts utilizing the above technique and in a consistent manner will always be more predictive than historical data alone. And further, and perhaps more importantly, it will also allow management teams to better predict future performance by allowing an analysis of “what we thought back then and why” and comparing it to actual results. The easiest example of this is the new sales pipeline. Last year, you had a $10 million dollar sales pipeline and you predicted 50% of that would translate into incremental revenue over the next 12 months. Well, what happened? Did that pipeline translate into $3 million, $5 million or $8 million of actual revenue and how do you use that information to forecast the business over the next 12 months when the current sales pipeline is $15 million? Overhead KPIs When it comes to gross margins, manufacturers struggle with the real cost of delivering something out of the business. We used to call it “unit economics,” matching revenue to expenses per widget. Manufacturers understand direct costs and margins, but they have trouble quantifying semi-fixed costs, which are items that feature both fixed components—set expenses—and variable components that are based on activity like utilities, maintenance, R&D and labor to name a few. Overhead costs that are not part of direct labor or materials can be tricky to assess. They tend to show up on the income statement in different places. Your KPIs will break out the valuable parts that will serve as the basis of managerial accounting and forecasting. For example, a customer may require a special batching process to make the product. If the management team doesn’t understand the semi-fixed costs, the magnitude of increasing quantities and capturing indirect costs can create a situation where the true profitability of a project is not fully understood and could create problems in the future. In such a situation, the economics around a 30,000-unit order (after allocating for indirect costs) may still lead to attractive margins, but a 5,000-unit order may and will create an inability to scale into the future. Working Capital KPIs From a number’s perspective, working capital is current assets divided by current liabilities. More importantly, this number, which should range from 1.2 to 2, tells your management team and investors if you can sustain day-to-day operations in the short term. Your KPIs should include inventory levels, accounts receivable and accounts payable. Improving working capital could look like standardizing payments terms and providing incentives to speed up cash collections. Outsourcing operations, selling assets or leasing assets could improve your cashflow and generate a more favorable tax treatment moving forward. While paying vendors in a timely fashion may seem counter-intuitive, it could allow you to negotiate better terms in the future based on your strong relationships. This set of KPIs is about liquidity—the more, the better—for all your stakeholders. Utilization KPIs If you can’t measure something, then you can’t manage it. For manufacturers, the utilization rate deserves plenty of attention. It has been stated that 80% is the goal for utilization, but a recent survey shows that reality is a different story. More manufacturers believe their company’s utilization rate hovers around 50%, which takes into account setups, breakdowns, as well as staff breaks. Unfortunately,

How CFOs Upgrade Finance Team to Prep for Private Equity Resell

David P DeMuth
CFO Consulting Partners LLC
1 year ago

By Tim Jung A private equity firm just bought your promising firm with high hopes. You estimate that the company will be sold again for a much higher margin within 60 months. But your finance team has trouble closing the books in a timely manner. So, what does the company’s financial picture look like? You can’t analyze results or establish a timely baseline. You don’t have true control over the bank account because you don’t know what is flowing in or out. Are there missing transactions or cash? How can you mitigate liquidity problems? Too many companies believe the finance and accounting arm just somehow works like gravity, but without an upgrade to the next level, everything will eventually come crashing down. As the CFO, you know promises need to be kept and old habits need to be broken. The acquisition closed last week, and you now live on Jump Street. You have three to six months to turn your band of silos into a well-oiled machine. Here is a checklist that will allow you to upgrade your Finance Department so they can hit their own numbers: People To begin the process of upgrading your team, start with stabilizing your current situation. That’s where your finance team members enter the picture. Assess their work based on timeliness, accuracy and completeness. Can they work independently at tasks, as well as collaborate with others to complete group projects? Now, look for skill gaps. Most of the workforce (58%) need new skills to do their jobs, according to research from

What Bank CFOs Are Missing From Their Finance Team

David P DeMuth
CFO Consulting Partners LLC
1 year ago

By Paul Karr There is a common misconception that accounting policy is something that controllers can do in their spare time. Midsize firms especially can fall into the same trap: We’ve always had a small team, and everyone has to complete a lot of work, and we can’t afford another resource. Your controller already has a day job, supervising routine accounting activities, closing the books, keeping the internal and external reports moving forward, and, hopefully, improving the accounting, closing and reporting processes. Instead of an ad-hoc approach to accounting policy and technical accounting matters, which can be costly in terms of missed deadlines, increased audit fees, etc., bank CFOs should consider adding an accounting policy resource to the finance team. Following are five responsibilities that a new accounting policy resource can utilize to help fill the missing piece on your team: Manage New Transactions For example, you may want to modify employee compensation programs, change categories or move investments within categories in your investment portfolio, enter into a new type of lending transaction or vacate a building that you own or lease. The accounting ramifications of these transactions need to be understood up front, before decisions are made, and the execution needs to be carefully managed across the functions of the bank. Maintain Accounting Policies Boards, regulators and outside auditors expect accounting policies to be documented and kept current. The updating process needs to include subject matter experts at the bank and needs to be managed in order to be done efficiently. Implement New Accounting Guidance An accounting policy resource would play a major role when a rule maker comes along with new rules that you must adopt. The biggest recent change is obviously in how you reserve for loans (i.e., Current Expected Credit Losses or CECL). Other examples include the change from LIBOR to SOFR and how to treat cloud computing costs. Implementation of standards is a process requiring research, networking, planning, communication and execution. Assure Ongoing Adequacy of Documentation Some accounting policies are particularly onerous in their ongoing documentation requirements, and CECL is a perfect example. Maintaining that documentation can mean as much as 100 pages of documentation every year (every quarter if you’re a publicly traded company). Your accounting policy resource could help assure the appropriateness and adequacy of the documentation of the allowance for credit losses under CECL. The new team member could bring in all the people needed and drive the process—and before you know it, there will be new guidance sooner or later that will also have to be adopted. Assist in Preparing Financial Statements The significant accounting policies note to the financial statements—which seems to grow every year—is an obvious one for the accounting policy resource to own. This note is also an example of a part of the financial statements that can be completed prior to year end, and it can be used as a control to make sure all of the bank’s accounting policies are well documented (see “Maintain Accounting Policies” above). Because of their accounting expertise, accounting policy resources are also in a good position to provide quality assurance and quality. ***** An accounting policy resource can significantly strengthen a bank’s finance team by bringing focus to accounting policy/technical accounting tasks and enabling you to easily answer questions from your audit committee, outside auditors as well as regulators. As a bonus, an accounting policy resource could fit into your succession plan as they become a candidate for your next controller or chief accounting officer. Bank CFOs should fill the hole in their Finance Department before overwhelming workloads—not to mention climbing consultant bills—bury them. (

M&A Success: How Midsize Sellers Cash Out

David P DeMuth
CFO Consulting Partners LLC
1 year ago

By Allan Tepper Often, parties interested in making a purchase are serial buyers, hence their advantage. But for midsize sellers, this will probably be the one and only time they sell. Sellers spend the better part of their lives building a company so they can now cash out and ride into the sunset. Unfortunately, mergers and acquisitions can be very challenging—and I’m not even talking about what happens after the deal. I’m solely focusing on the deal itself. There are many pitfalls and traps that await, especially if this is your first time. Here are five items that will help sellers obtain the value they created: Project Over Personality If you don’t get a good feeling from the buyer in the first few minutes, you should give passing some real consideration. In the end, the outcome of pending mergers and acquisitions will hinge on whether you can keep both parties focused on the project (i.e. the deal). Regrettably, the matter can shift to center on the personalities involved with the deal. And that’s usually the beginning of the end. It may start as a “chemistry” issue between two individuals, but it can quickly devolve into a lack of trust. You began the deal with plenty of trust, but what happened? Well, you just learned the price changed. Maybe it’s legitimate, but now your antennae are up. As soon as the win-win deal becomes a perceived win-lose, it’s no longer about the deal. Now, it’s about you versus them. Unfortunately, the lack of trust diminishes value. So, how can you avoid those barred-knuckled conversations? Say what you mean and mean what you say. The letter of intent is a great place to start. Make sure the critical aspects of the deal are captured in the letter. The letter will be turned into a contract, so if there are missing parts and surprises once the lawyers get involved, the deal may crater. Plan To Win For sellers, planning is the absolute key to success. Your goal is to win the war, not a battle, so start planning early in the process. What do you want to accomplish by selling your company? Do you want to sell to a private equity firm or a strategic competitor? Would you want a position in the merged company? How long will you stay after the deal closes? You will need to know the answers to these questions to guide you through negotiations. Even the smallest details matter. For example, gather all your required documents in the deal room to make sure the process goes smoothly. We had a client that had several contracts where the executed version could not be found. Failing to plan means planning to fail. Good planning should avoid seller’s remorse. Fix Your ‘Hair’ Negative items—things that give buyers consternation—need to be disclosed right away. Bad news, also referred to as “hair” in M&A speak, doesn’t age well. Worse yet, don’t create an opportunity where the buyers find out about the negative stuff first. This is not a birthday party; surprises are bad for business. When you present the negative news, make sure you include how it is being addressed. If the buyer thinks he is purchasing $5 million in inventory, he will be surprised to learn $3 million is obsolete. So, take a write-down to ensure the buyer gets quality inventory. Then, communicate your solution. Of course, performing due diligence on the buyer can go a long way. Sometimes, seemingly negative issues can be turned into positives. For example, if 80% of your revenue is coming from one company in a specific sector, it could be seen as a negative for your company, but it could be viewed as the missing piece for a larger company with a diverse customer base. Use The Right Numbers Numbers are the quickest way to build reputation and trust. They also are the quickest ways to kill the deal. The Chief Financial Officer should play the role of facilitator, gathering all the key players on the sell side. At that point, the CFO should go through the key numbers of the business that are important to the deal. Then, the other key players should highlight their key numbers that dovetail back to the CFO’s numbers. And then everyone should memorize their numbers. In my experience, many companies fail to do this part. Do you know what happens when the warehouse manager says you have $3.5 million in inventory, the CEO says it’s closer to $2.5 million and the CFO says it’s $3 million? The buyer runs out the door. Developing the right policies and procedures will also help you arrive at the correct numbers. Closing your books quickly and accurately is more about trust than accounting at this stage. Don’t allow poor quality of information to erode value and crater the deal. Quality Counts Earnings before interest, taxes, depreciation and amortization (EBITDA) is a measure of cash flow. And that’s important because it plays a large role in determining your company’s valuation. Every industry has a multiple, which will be used with your EBITDA to determine fair market value. But here’s where it gets interesting. Even the most scientific equations contain elements of art. You should conduct a sell-side quality of earnings analysis to create an adjusted EBITDA. For instance, you may want to add back the CEO’s salary because the acquiring company already has one. The purchasing company, however, argues that they will need to hire someone to fill a part of the role left by the outgoing CEO. You should consider the past and the future when thinking about what quality of earnings means. If you are selling an event production company that derives a large part of its revenue by hosting several annual events on set dates, what happens if those dates change? How much would quality of earnings dip? If you are selling a company that owns ski resorts, how will climate change impact future earnings? Forward-looking statements carry many shades of gray. Analyzing quality of earnings will remove a big part of the mystery and increase the chances for a successful merger. (

Are Your Business Financials in Order for Exit?

Bill McDermott of The Profitability Coach is a member of XPX Atlanta
Bill McDermott
The Profitability Coach
2 years ago

Every business owner dreams of selling their business one day for a lot of money then retiring with a home on the beach or traveling the world. However, when it comes to actually selling the business, many business owners don’t follow a unified strategy, leaving them confused and frustrated because they realize running a business is much easier than selling it. I have an HR consultant that I work with who was on the M&A team for the large company he worked for. He was brought into every company purchase they were about to make along with the company CPA and attorney. Their sole goal was to attempt to find weaknesses in the seller’s business in order to drive the price down. The HR consultant was looking for weaknesses in the HR portion of the business. But, the CPA was brought in to determine the reliability of the financial statements. Read more:

ProfitSense with Bill McDermott featuring Bradley Carroll, Progressive Lighting & Gary Clayton, Superior Business Management

Bill McDermott of The Profitability Coach is a member of XPX Atlanta
Bill McDermott
The Profitability Coach
2 years ago

A major theme of this edition of ProfitSense was accounting, as host Bill McDermott welcomed two CPAs, Bradley Carroll, CFO of Progressive Lighting, and Gary Clayton, CFO of Superior Business Management. Bradley discussed his move from a CPA firm to in-house practitioner, the significant problems associated with logistics and sourcing products internationally, and more. Topics Gary addressed included enhancing the value of the business, major challenges business owners face today, and why misclassifying employees is so high-risk for such small savings. ProfitSense with Bill McDermott is produced and broadcast by the 

Interpreting the Language of Accounting

Bill McDermott of The Profitability Coach is a member of XPX Atlanta
Bill McDermott
The Profitability Coach
2 years ago

For my wife’s and my 25th wedding anniversary, our family went to France. Paris, Provence, Chamonix and on the way back to Paris to catch our flight home, we went to the cathedral in Reims. The one with the Chagall stained glass and where Joan of Arc was to be crowned by King Charles in 1429 after her victory in Orleans in the 100 Years War. On the drive back to Paris, I was a little uncertain about directions so I pulled into a gas station to ask. By the way, none of us spoke French. But, in the best French I could muster I said, “Parlez-vous anglaise?”. The owner’s reply was to spit at the floor and give me a look that sent me quickly on my way. How dare I come to his country and not speak his language. Just like trying to speak the language in a foreign country, if you’re trying to run a business but you don’t speak the language, how do you know you’re headed in the right direction? Read more:

What Would Rockefeller Do?

Bill McDermott of The Profitability Coach is a member of XPX Atlanta
Bill McDermott
The Profitability Coach
2 years ago

Every business owner has a big vision for their company and wants to make it happen. However, most don’t follow a unified strategy to get there. Leaders often have trouble pulling the trigger on spending money on people or new strategies because they don’t understand what their numbers are telling them. Many business owners haven’t fully appreciated accounting as 

Annual Audit: 5 Ways to Save Time, Money

David P DeMuth
CFO Consulting Partners LLC
2 years ago

By Allan Tepper Companies need about three months to receive a clean opinion for their annual audit. So why does your company need more time? Expending too much time and money on your annual audit is a red flag for the executives involved with corporate governance and financial oversight. New accounting rules and regulatory changes continue to drive the average hourly fees that public companies pay to external auditors. The rate has increased 31% during the last decade, according to a

Dual-Residency Issues – Vacation Homes

Diane DeCesare of Armanino LLP is a member of XPX Philadelphia
Diane DeCesare
Armanino LLP
3 years ago

With more employees working remotely, it can be an escape to enjoy working from anywhere. If not home, maybe a vacation home? However, many may not realize if they stay in another state for a long period, they could be considered residents of both that state and their home or “domicile” state, resulting in double taxation of all of their taxable income for the year. In this blog, we will discuss the concepts of dual residency and double taxation, including how owning a home in another state can lead to it, and give points on how you can avoid it. Click

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New Years Resolutions: Why They Miss the Mark, and What to Do Instead

Maria Forbes of FIREPOWER Business Catalyst, LLC. is a member of XPX Atlanta
Maria C Forbes
FIREPOWER Business Catalyst, LLC.
3 days ago

Entrepreneurial business owners, is it time to consider a new approach to setting goals in the New Year? We’ve all been there. January 1 rolls around, and we set resolutions with the best intentions. “This will be the year I double my business,” we say. An article in Forbes 1 states by mid-February, 80% of people have made their resolutions a distant memory. Why? Because we have high ambitions hinging on mostly unrealistic and unsustainable methods, setting broad, lofty goals without a roadmap is like trying to sail a ship without a compass—directionless and daunting. There is a simple fix for this problem.  Start the road map with some pre-work. The root issue? New Year’s goals should always start with who you are, how you want to serve, and what you want to enjoy. If you start a New Year’s Resolution with what is trending in the world, in business, or in society, you will leave some or all your resolutions behind as you realize there is a misalignment between who you are and what is trending. It’s all one path! As business owners, we are bombarded with tasks that can be exhausting and lack enjoyment. Goals should be derived from envisioning a picture of your personal world: God, business, family, your unique personal desire to share creatively, and the core of who you are, so your business and your world are synced within a set of goals. What should your world look like in the New Year? Don’t compartmentalize! Your business cannot be separated from all the rest; successful business owners know who they are and how they intend to serve.  Get reacquainted with who you are, your personal talents to serve (clients, friends, family), and how you can get back to enjoying your life. Now we can talk about Business Resolutions You know what you want to achieve for your business. Now, make it a team effort. Go beyond your own efforts to engage your team in goals that are well aligned with their strengths and do it in a doable fashion that engages the spirit of growth together. The Problem with Most Resolutions Resolutions lack specificity, accountability, and, most importantly, our teams’ collective firepower. Transformative change doesn’t come from wishful thinking but from actionable, measurable steps involving everyone on deck. So, what’s the game plan? Shift from solo resolutions to team-powered actions. Set Specific Goals: Break down that big vision into smaller, achievable milestones. “Increase sales by 10% in Q1” beats “Double my business” for clear targets. Harness Team Strengths: Every member has unique skills. Use them to your advantage by assigning roles that match their strengths and watch motivation soar. Perform Regular Check-Ins: Make accountability a team effort. Frequent updates keep everyone on the same page and moving forward together. Celebrate Wins: Whether you hit a small target or make significant progress, celebrate as a team. This will help you feel more united and keep the momentum going. Making Sustainable Resolutions Remember, a sustainable resolution starts with the core of who you are as an owner, how you want to serve, and what is enjoyable to you.  Once you know what you want to achieve for your business your team can help you get there. With some pre-work, a New Year resolution might spark the fire, and then your team’s day-to-day actions will keep it blazing.

Quantum Computing Investments: Key Players, Risks, and Opportunities for 2025

Billy Amberg of Bloomwood is a member of XPX Atlanta
Billy Amberg
Bloomwood
4 days ago

Listen to this post as a podcast: www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services. The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.   The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.    All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.  There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. Bloomwood is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Bloomwood and its representatives are properly licensed or exempt from licensure. 730 Starlight Lane, Atlanta, GA 30342.

What to Expect in 2025: Changes to the Three Branches of Government

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
1 week ago

As we enter 2025, businesses face a rapidly evolving employment law landscape shaped by dynamic shifts across all three branches of government. With a new president set to take office, significant developments at the Supreme Court, and the Republicans securing control of Congress, 2025 is shaping up to be a year defined by upheaval. Each branch of government will be different than any of us have seen in decades. The Executive Branch First and foremost, Donald Trump’s second presidential term is set to begin on January 20. Over the last four years, the Biden administration, known for their pro-employee policies, ushered in a wave of regulations aimed at expanding worker protections. Conversely, the Trump administration is expected to continue their pro-employer, laissez-faire approach that prioritized deregulation and employer flexibility during his first term. (Interestingly, the Trump Administration has started supporting more union issues and no one knows how that will impact his second term.) Significantly, labor and employment law developments often arise from action on behalf of various agencies such as the National Labor Relations Board (“NLRB”) and the Department of Labor (“DOL”). Because these agencies are part of the Executive branch, the president is effectively charged with overseeing them, and therefore plays a significant role in the implementation of their policies. Employers should expect Trump to utilize these agencies to implement his pro-business agenda. It is worth noting, however, that a 2024 Supreme Court decision (Loper Bright Enterprises v. Raimondo) overturned the long-standing Chevron doctrine, a legal principle that directed courts to defer to federal agency’s interpretations of law that agency is empowered to enforce. As a result of this decision, the Executive branch was effectively weakened, shifting greater interpretative authority to the Judicial branch. It will be interesting to see how much impact this change will have on the balance of power among our branches of government. The Judicial Branch Loper was not the only Supreme Court decision in 2024 that contributed to the shift in power in favor of the Judicial branch. The Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, overturned the landmark abortion decision Roe v. Wade. Historically, courts, including the Supreme Court, follow precedent created by earlier decisions. But now the Supreme Court showed its willingness to overturn longstanding precedent based on a difference in their opinion of what is right or wrong. This shift away from strict adherence to precedent allows the Supreme Court greater latitude to reinterpret past decisions. With more flexibility to pursue a wider range of cases, as well as greater interpretive authority, the Judicial branch is shaping up to be much more powerful than it has been in the past. The Legislative Branch Lastly, in the 2024 election, the Republicans secured a majority in both the House of Representatives and the Senate. This means that the Legislative branch will have broad authority to enact their agenda over the next two years. Additionally, with Donald Trump in the White House, the likelihood of presidential vetoes decreases significantly.  This alignment will increase the likelihood that Congress will pass more new laws than is typically seen under a divided legislature. As a result, employers should closely monitor what new laws Congress enacts. Employer Takeaways Overall, the three branches of government are all undergoing significant changes. Donald Trump is likely to resume his pro-employer agenda, albeit with a slightly weakened Executive branch in the wake of the Loper decision. The Judicial branch is as powerful as ever, exemplified by the Supreme Court’s willingness to overturn longstanding precedent. Lastly, with Republicans in control of both the Senate and the House, the Legislative branch is primed for significant activity through 2026. With all these changes taking place, it is crucial for businesses to keep abreast of developments in labor and employment laws to ensure compliance and minimize legal risk in the new year. Brody and Associates regularly advises management on complying with the latest local, state, and federal employment laws. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.

Developing Leadership Depth for Business Exit Readiness

Marci Caudle of Tagro Solutions is a member of XPX Philadelphia
Marci Caudle
Tagro Solutions
2 weeks ago

A robust leadership pipeline is crucial for any business, but it becomes particularly vital when preparing for a business exit. Whether you’re planning a sale, merger, or leadership transition, ensuring that your leadership depth is strong can significantly enhance the attractiveness and value of your business. This HR Insight explores how strategic human resources management can cultivate leadership depth to support a smooth business transition. The Importance of Leadership Depth in Exit Planning Leadership depth refers to a company’s ability to fill key leadership roles from within, ensuring business continuity and operational stability. For businesses considering an exit, strong leadership depth reassures potential buyers and investors of the company’s resilience and future performance potential. A well-prepared leadership team can effectively manage transitions, uphold company values, and drive growth, even during periods of change. Strategies for Developing Leadership Depth Leadership Development Programs: Implement comprehensive leadership development programs tailored to your company’s needs. These programs should focus on nurturing high-potential employees with critical skills such as strategic thinking, decision-making, and change management. Methods might include formal training sessions, mentorship programs, and leadership retreats that emphasize real-world business challenges and leadership responsibilities. Succession Planning: Effective succession planning is essential for ensuring that key positions can be filled quickly and competently. HR should work with current leaders to identify potential successors for each critical role. This process includes assessing the skills and readiness of potential leaders and providing targeted development opportunities to prepare them for future roles. Talent Identification and Management: Use talent management tools and assessments to identify employees who have the potential to become future leaders. Once identified, provide these individuals with customized development plans that align with their career aspirations and the company’s strategic goals. This approach not only prepares them for leadership roles but also helps retain top talent by actively investing in their career growth. Performance Management: Align performance management systems to leadership development goals. Regular performance reviews and feedback sessions help potential leaders understand their strengths and areas for improvement, ensuring they are on the right track to taking on more significant roles within the company. Cultivating a Leadership Culture: Foster a culture that promotes leadership from every level of the organization. Encourage employees to take initiative, lead projects, or mentor others. This environment supports leadership development organically and can identify and elevate hidden talents within the organization. The Impact of Leadership Depth on Business Valuation A strong leadership team can significantly enhance a company’s valuation during an exit. It demonstrates to potential buyers and investors that the company is well-managed, has a clear direction, and is capable of sustaining growth without the original owner or current leadership team. Additionally, companies with effective leadership transitions are more likely to maintain performance levels during and after the exit process, reducing risks associated with the transition. Developing leadership depth is not just about filling positions but about creating a sustainable framework that supports the company’s long-term goals and ensures a legacy of success. As businesses prepare for exit, the role of HR in cultivating this environment becomes a cornerstone of strategic exit planning. By investing in leadership development, companies not only enhance their marketability and potential sale value but also secure a stable and prosperous future for all stakeholders. At Tagro Solutions, we bring our deep expertise in Human Resources consulting to the table, aligning HR strategies with business objectives to enhance company performance and prepare for successful transitions. Our approach integrates seamlessly with the philosophy of the Exit Planning Exchange, which fosters collaborative exchanges of information and experiences among its members. Together, we aim to empower business owners through strategic insights and actionable solutions, making the journey from business operation to exit as profitable and smooth as possible.

New York City Mayor Signs Legislation Regulating Hotel Safety: What Employers Need to Know

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
1 month ago

On November 4, 2024, NYC Mayor Eric Adams signed into law the Safe Hotels Act (Int. No. 991-C) aiming to promote hotel safety and boost tourism. The Act, taking effect May 3, 2025, requires hotel licenses, restructuring of employment agreements, and a number of new staffing requirements. Hotel License Requirements Hotel operators defined as persons who own, lease, or manage a hotel, and control day-to-day operations, must obtain a hotel license from the Department of Consumer and Worker Protection (DWCP) to legally operate a hotel. Hotel operators must file an application with the Commissioner of the DWCP to obtain a license. The application must contain contact information as well as details of safeguards and procedures which show the hotel is in compliance with the Act’s staffing, safety, employment, and cleanliness requirements. The application will differ if the operator has a collective bargaining agreement (CBA) with a union. If the operator has a CBA which contains the required information and references the CBA in their application this may satisfy the Acts notification rules. The notification requirement will be satisfied for the term of the CBA or 10 years from the date of the application (whichever is longer). The commissioner must be notified if there are changes to the CBA which remove references to the Act’s requirements. The hotel license may be denied or revoked if operators fail to comply with the Act, however there are a number of notice requirements for the Commissioner prior to revoking a license. The Commissioner must notify the licensee of a potential revocation in writing. The licensee must be given 30 days from the notification to remedy the violation and this notice must be in writing. A license will not be revoked if it can be demonstrated that the condition has been resolved in the 30-day period. Evidence of this correction can be delivered electronically or in person. Upon the Commissioner’s decision, the licensee has 15 days to request a review of the decision. A license will not be revoked in the following situations: service disruptions such as construction work noise; conditions that the hotel is aware of and treats within 24 hours such as bed bugs, rodents, etc.; unavailability of hotel amenities for a period of 48 hours; unavailability of utilities for a period of 24 hours; and importantly any strike, picketing, lockout, or demonstration at or by the hotel. Hotel operators must display their license in a public area.   Employment Agreement Requirements The Act requires hotel owners, with 100 or more guest rooms, “directly employ” all “core employees”, except a single hotel operator to manage operations on the owner’s behalf. This rule effectively eliminates intermediaries such as staffing agencies or management companies. Core employees include those whose work relates to housekeeping, front desk, or front service. Valets, maintenance workers, parking security, and employees mostly working with food and beverages are not considered core employees. This provision greatly impacts employers who utilize subcontractors; however some contracting agreements may be grandfathered in if they are entered into prior to the effective date and have a specific termination date. Violating this provision may serve as the basis of license revocation. Staffing Requirements In order to maintain safe conditions for guests and hotel workers, the Act implements a number of new staffing requirements. One employee must provide front desk coverage at all times (during night shifts a security guard who has received human trafficking training may take this employee’s place). Hotels with more than 400 guest rooms must have a minimum of one security guard providing continuous coverage while any room is occupied. Hotels must maintain cleanliness and not impose fees for daily room cleaning. Core employes must receive training on how to identify human trafficking within 60 days of employment. Hotels must not accept reservations for less than 4 hours. Penalties and What Else Employers Need to Know Hotel operators are strictly prohibited from retaliating against any employee who discloses a potential violation or assists in an investigation. Hotel operators are also prohibited from retaliating against employees who refuse to partake in a dangerous activity that is not part of their job. As previously discussed, noncompliance can result in a hotel operator’s license being revoked, but that is not all. Anyone alleging a violation can seek a civil action within 6 months of the alleged violation. Furthermore, the Act provides for civil penalties which vary based on the number of violations: $500 for a first violation, $1,000 for a second, $2,500 for a third, and $5,000 for subsequent violations. The Commissioner is expected to issue rules by which this law will be enforced. A timetable for their issuance has yet to be set. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560  

Navigating Business Exits: An HR Roadmap

Marci Caudle of Tagro Solutions is a member of XPX Philadelphia
Marci Caudle
Tagro Solutions
1 month ago

The Role of Culture in M&A Success: Navigating Integration with HR Insights In the dynamic world of business, effective exit planning is crucial for ensuring a smooth transition and securing the legacy of a business owner’s life’s work. Mergers and acquisitions (M&A) are more than just financial transactions; they are a fusion of values, people, and aspirations. Amid the complexities of these business maneuvers, the significance of company culture cannot be overstated. It is the glue that holds an organization together and can be a make-or-break factor in the success of M&A activities. This post explores the pivotal role of company culture in M&A success and how HR can drive positive outcomes through strategic cultural integration. The Importance of Cultural Compatibility: Cultural compatibility is crucial in M&A scenarios. When two companies merge, they bring together distinct cultural identities, which can either harmonize to drive the company forward or clash and impede integration efforts. A study by Deloitte found that nearly 30% of M&A failures could be directly linked to cultural issues, illustrating the need for a deliberate focus on cultural alignment during the merger process. HR’s Role in Cultural Assessment: Human Resources departments play a strategic role in assessing cultural fit before a merger is finalized. HR professionals can conduct cultural audits to identify the values, beliefs, and behaviors that define each organization. This assessment helps predict potential areas of conflict and synergy, enabling informed decision-making during the merger or acquisition. Strategies for Cultural Integration: 1. Identifying Core Cultural Elements: Before any integration can begin, HR needs to identify the core cultural elements of each company. This involves understanding not only the explicit elements like company values, mission statements, and codes of conduct, but also the implicit elements such as communication styles, decision-making processes, and the level of formality or informality prevalent in the workplace. 2. Evaluating Compatibility and Areas of Divergence: With a clear understanding of each culture, HR should evaluate which aspects are compatible and which are divergent. This step is crucial because it highlights potential areas of conflict that could disrupt integration efforts. 3. Designing the Blended Culture: Once key elements have been identified and evaluated, HR can begin designing a blended culture. This doesn’t mean creating a culture that is merely a mix of pre-existing ones; rather, it involves selecting the best aspects of both cultures based on how well they align with the merged company’s new strategic goals. 4. Developing Transition Plans: With a design in place, HR should develop detailed transition plans to implement the blended culture. This includes setting up cultural integration teams, conducting training sessions to introduce and reinforce the new cultural norms, and using change management techniques to help employees adjust to the new environment. 5. Monitoring and Adjusting: Cultural integration is not a one-off event but a continuous process. HR should monitor the implementation of the blended culture using predefined metrics such as employee satisfaction scores, retention rates, and feedback from leadership. 6. Celebrating Cultural Milestones: To reinforce the new culture, celebrate milestones that reflect cultural integration. This could be through company-wide events, recognition programs, or internal communications that highlight success stories and examples of the new culture in action. 7. Communicate Transparently and Frequently: Regular, clear communication from HR and top management about the integration process can alleviate employee anxieties and build trust. This involves not just sharing what is happening and why, but also how employees can contribute to the integration efforts. Measuring Success and Adjusting Strategies: Post-M&A, it’s important for HR to measure the success of cultural integration efforts through employee feedback, surveys, and other metrics like turnover rates and engagement levels. These insights should inform ongoing adjustments to integration strategies to ensure long-term success. The role of company culture in mergers and acquisitions extends far beyond the initial deal-making phase. It fundamentally affects employee morale, retention, and ultimately, the success of the new entity. By placing HR at the helm of cultural assessments and integration strategies, companies can enhance their chances of a successful merger or acquisition. For businesses preparing to embark on this journey, understanding and proactively managing cultural integration is not just advisable; it is imperative.   Navigating Business Transitions – The Strategic Partnership of Tagro Solutions and the Exit Planning Exchange At Tagro Solutions, we bring our deep expertise in Human Resources consulting to the table, aligning HR strategies with business objectives to enhance company performance and prepare for successful transitions. Our approach integrates seamlessly with the philosophy of the Exit Planning Exchange (XPX), which fosters collaborative exchanges of information and experiences among its members. Together, we aim to empower business owners through strategic insights and actionable solutions, making the journey from business operation to exit as profitable and smooth as possible. This partnership enriches our weekly roundtables, where I, alongside other business owners, delve into discussions that span the spectrum of exit planning. These conversations are not just theoretical but are grounded in the real-world challenges and successes that define the business exit landscape. Through our collaboration, Tagro Solutions and the Exit Planning Exchange bring a unique, holistic perspective enhancing both our insights and our impact. As we unfold this series of insights on how HR strategies integrate with and support successful business exits, we invite you to engage with us. Whether you are contemplating the future sale of your business or are in the process of shaping the strategic direction of your company towards a transition, this series will provide you with the knowledge and tools essential for navigating these complex waters. Join us as we explore the critical role of HR in business exits and how strategic HR planning can significantly influence the outcomes of mergers, acquisitions, and business sales—ensuring a legacy that endures beyond the sale. Interested in learning more about Tagro? Email info@tagrosolutions.com Interested in learning more about XPX or joining a Roundtable?

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