Knowledge Exchange

Business growth

Search

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?

Revenue Based Capital-What it is, and where it fits

Michael Leary of Learco Business Services, LLC is a member of XPX Triangle
Michael J. Leary
Learco Business Services, LLC
1 month ago

Alternative or creative financing can take several forms. Today I would like to briefly address Revenue Based Capital. As this type of funding is based on the business’ revenue primarily, and not the credit score, it is well suited to address short term capital needs. Typically a business owner facing a temporary working capital shortage, will reach out and utilize this method. Unlike traditional bank funding, the FICO requirements are much more lenient, and since the decision is primarily based on recent revenue, the business owner is assured of an amount that their current cashflow can support. It also boasts the benefit of being collateral free, so there is no need to tie up real estate. Additionally most funding’s can be completed  and deposited into your business account within 24-48 hours. Industries that benefit from, and are frequent clients: Construction, Food & Beverage, Retail, Trades, ie: HVAC, Electricians, Plumbers, Landscapers. In closing, Revenue Based Capital shines due to it’s relaxed FICO requirements, collateral free features, and fast turn around.

Exit Strategy – Harvest or Grow?

John Dini of The Exit Planning Coach is a member of XPX San Antonio
John F Dini
The Exit Planning Coach
1 month ago

  In every internal transfer, whether to family or employees, the owner/seller has to make the harvest or grow decision. We’ll presume that your business has already reached a point where its value meets or exceeds your financial objectives as the owner. If growth is required in order for you to afford your next act, then that decision is less strategic than it is driven by your lifestyle requirements. If the company has already reached a substantial level of success, however, you may still be tempted to maximize cash flow until your departure. Deliberately reducing your cash flow by starting a process of equity transfer may not sound very appealing. The obvious question is “Why would I sacrifice my personal income in order to finance their acquisition of my company?” Why not harvest? The answer to that question revolves around the strength of your desire to control the process. Although staged internal transfers of equity almost inevitably require that the owners surrender some personal income at the outset, there is considerable psychological value in dictating the timing, method, and eventual proceeds of your exit. When compared to the listing and sale process of presenting the company to third-party buyers, an internal transfer allows the maximum of owner control. There is no exposing the finances of the company to strangers. It doesn’t require negotiating, sometimes against professional negotiators, or against low-bid opening offers. Since internal buyers are already familiar with the organization, it can circumvent the often excruciating process of due diligence. IAs a seller, you can look at your up-front funding of initial equity purchases as a sort of insurance policy. No lender will fund 100% of an employee purchase, and family purchases are rarely financeable. Transferring equity to the buyers, whether it is fully paid for or via a subordinated note, allows them to finance the balance of the purchase. The “insurance” factor is usually understood. In return for sacrificing some cash flow now, an owner can leave on a chosen departure date with 70% or more of the proceeds in hand. The longer you wait, the higher the probability that you will have to owner-finance the entire transaction. Why not grow? There are also a few arguments against a growth strategy. The chief one among these is time. If you are pressed for time due to the influence of one of the 

Just Add Capital

Felipe Suarez of Financially Sound Solutions is a member of XPX Houston
Felipe S. Suarez
Financially Sound Solutions
2 months ago

If you’re looking to attract an investor or an acquirer one day, expect them to dig into your sales and marketing process. If you’re a company that sells to other businesses, an investor will want to know where you get your leads from and how much each costs you to generate. They’ll want to know what technology you use to support your sales team. They’ll want to understand how your sales reps get meetings and how many appointments a good rep has each week. They’ll want to know the close rate of a high performer and how it compares to an average performer. The investor’s questions aim to gauge the scalability of your sales model under significantly higher investment rather than to assess your past performance. Acquirers love stumbling over a business where capital is the primary constraint to growth. They fall over themselves for a company with an efficient sales engine that needs more fuel (i.e., money). Most investors have lots of capital but struggle to find businesses with a sales system that won’t collapse under the weight of more money. How Gregg Romanzo Built a Sales System In 2004, Gregg Romanzo started an old-school freight brokering business. Most freight brokers are nothing more than a handful of people arranging shipments in return for razor-thin margins, but Romanzo realized his sales model had the potential to grow into something much bigger. Romanzo’s model involved hiring high-potential people with a relatively modest base salary of between $40,000 and $60,000 per year and teaching them the business from scratch. He armed them with a computer and access to the best scheduling software and tied their variable compensation to the gross margin of the jobs they booked. Romanzo knew if he could get a rep to clear $100,000 per year in total compensation, he could keep them for the long run. Romanzo took his very best talent—the top one or two percent—and built a team around them so they could earn even more. This cohort of salespeople could clear three, four, or even five hundred thousand dollars in an exceptional year. Since Romanzo paid a relatively low base salary and his people didn’t need much equipment, he could hire many salespeople. By the time he sold his company, he had 200 employees, 190 of whom were salespeople. That’s 95% of his headcount dedicated to sales. How does that compare to your company? If you have a winning formula you think would hold up if you doubled or quadrupled your sales team, consider monetizing the sales model you’ve created. Either hire more reps or show a deep-pocketed investor or acquirer how durable your sales model is and how all you need is their capital to grow it.

Why Your Exit Planning Process Needs a Fractional CFO

Michael Stier of FocusCFO is a member of XPX Charlotte
Michael Stier
FocusCFO
3 months ago

What is your goal for your business? As fractional CFOs, when we first meet with our clients, this is among the first questions we ask. Your goals will inform much of our work supporting your company – whether we focus on preparing you for a near-future exit or growing and building the value of your business over time. This is what makes our fractional CFOs – many of whom are also CEPAs – a vital (and often missing) piece of the exit planning puzzle. Many business owners enlist exit planning experts as they approach the exit process, bringing in an army of resources to make the most out of what has already been built. A fractional CFO, however, becomes embedded in your business over time and, in the process, comes to serve as a value growth advisor – a financial expert who can help you 

Tax Advantages of ROBS Rollovers for Business Funding

Greg Silberman of Ritterband tax & Accounting Solutions LLC is a member of XPX Atlanta
Greg Silberman
Ritterband Tax & Accounting Solutions LLC
4 months ago

ROBS – or use funds from their existing personal 401(k) or other retirement accounts as capital for buying a business.   In addition to creating cash flow and minimizing the use of debt, ROBS are an attractive source of funds unlocking value from an individual’s retirement savings to fund a business, what are the tax advantages that make considering a ROBS strategy worthwhile?  First, there is the aspect of tax deferral. Financing through ROBS avoids the early withdrawal penalty normally incurred when funds are withdrawn from retirement savings prior to retirement. When you use the capital from your 401(k) to fund a new income taxes or penalties, more money is available to go into the business, thus maximizing your available capital.  In addition to increasing capital efficiency, you avoid loan obligations because ROBS is not a debt product. It’s simply accessing the equity you already have built up in your retirement plan, so there’s no monthly repayments or interest like you would incur with a loan.  Accessing Business Capital Through ROBS  Here are some points to remember about how the flow of money works when using a ROBS strategy:  The new business entity to be funded must specifically be established as a C-Corp.  After a new 401(k) or profit-sharing plan is the business advisory space and how to implement a ROBS strategy. For a consultation on your business plans and objectives, please contact us at 770.740.0797 or email info2@SJGorowitz.com. 

Mastering the Art of the Strategic “NO” for Business Growth

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

As a small business owner, your instinct might tell you to seize every opportunity that knocks on your door. Let’s face it: saying yes can be a thrilling ride into new ventures. Sometimes, you need to remind yourself of your organizational Sweet Spot.  Does your team have the bandwidth, the people power, and the infrastructure to take it on? Sometimes, saying no is not just the better option; it’s a powerhouse move that aligns your business with your growth goal. Here’s the lowdown on when, how, and why flexing your “no” muscle is your smartest play. The Unmanageable Yes When you’re overcommitted and under-resourced, every additional yes is like adding more weight to an already overstretched team. If saying yes means sacrificing the quality of your work, spreading your resources thin, or burning out your team, then it’s time for a firm, resolute “no.” Remember, quality over quantity isn’t just a great saying – it’s the golden rule for sustainable growth. The Misaligned Opportunity Some opportunities seem golden on the surface, but they won’t help you achieve your business mission, vision, or values. Listen up: Your business is your compass; every decision should steer you to your true north. If it doesn’t fit, say no. It’s not just about avoiding the wrong turn; it’s about staying true to your course and your team’s potential. The Power of Prioritization Here’s a reality check—you can’t do it all. When you say no to less important things, you say yes to more focus, energy, and time for what truly matters. Embrace the art of prioritization because knowing what to decline is as vital as knowing what to pursue. Make your yes count! Cultivating Respect Saying no isn’t just about protecting your time and energy; it’s about setting boundaries. Assertiveness isn’t rude; it’s a sign of respect – for yourself, your team, and your business’s vision. When you respect your limits, others will follow suit. It signals to the world that your time, team, and resources are valuable. Conclusion Saying no is a tough decision. It’s not a negative judgment; it’s a selective choice. Think of the word no as a complete sentence and a powerful tool to guide your business to where it truly belongs. So, the next time you’re faced with a request that doesn’t feel right, plant your feet, take a deep breath, and remember that saying no is not just okay—it’s essential for your business’s health and ongoing success.   Do you need to get in your Owner Sweet Spot?

Using 401(k) Funds to Start a Business

Greg Silberman of Ritterband tax & Accounting Solutions LLC is a member of XPX Atlanta
Greg Silberman
Ritterband Tax & Accounting Solutions LLC
4 months ago

There’s a huge demographic shift happening in the United States, as Rollovers as Business Start-ups. ROBS are rollovers that utilize your existing 401(k) retirement funds to finance a new or existing business without incurring early withdrawal penalties or buy a business, and you may not want to take on debt. The ROBS mechanism is a way to utilize your 401(k) savings to access the capital you need without incurring early withdrawal penalties.   Advantages of ROBS  Advantages of the ROBS financing method include:  Debt-free financing. With ROBS, you’re not borrowing money to put as a payment, a down payment or principal payment on a business. ROBS funds are equity you already have that ordinarily can’t be accessed because of the distribution rules of retirement plans.  Preserved cash flow. Using saved capital eliminates concerns about high interest rates that can hinder business growth.  Improved business success rates. ROBS may contribute to a business’s success compared with traditional methods of financing. Owners using ROBS are fully vested and perhaps more incentivized to make the business work. In addition, there’s no impact on personal credit.  Steps to Using ROBS to Fund a Business  Here’s how ROBS work and how to start the process.  The first step is establishing a retirement plan like a 401(k) or profit sharing plan for the acquired C-Corp business.  The third step is rolling over funds from your personal 401(k) into the new corporate 401(k). The new retirement plan purchases stock in the corporation, which provides it with the capital needed.    You can continue to make ongoing retirement contributions to the tax-advantaged retirement account as the business grows.  Points to Know about ROBS  Whenever money goes back to the 401(k), there’s a sale of the business, or the business declares dividends, that money will pass back directly to the shareholder’s 401(k) plan.   There’s the potential for a total loss. If the business fails, your stock in your C-Corp could go to zero, providing a loss to your 401(k).  There’s a cash flow and business financing options can help you set up your C-Corp and determine how to make the ROBS strategy work for you. Having a professional help you navigate ROBS’ complexities ensures compliance and 

How to turn conflicts into your growth engine

Xavier Lederer of Ambrose Growth is a member of XPX Hartford
Xavier Lederer
Ambrose Growth
7 months ago

“Conflicts look bad. I always prepare touchy agenda points with my 2 senior leaders before leadership team meetings. This way senior leadership presents a united front,” recently mentioned the CEO of a 200-people company. Most leadership teams have too few open, healthy conflicts. This makes them less effective, reduces decision quality, and ultimately slows down business growth.  How can you step outside of your comfort zone and mine more healthy conflicts? Healthy conflicts help propel your business forward Many CEOs stick to their comfort zone: you avoid some conflicts and embrace other, based on your natural conflict style – not based on what is best for your business. Artificial harmony created by conflict avoidance is treacherous, as this 

Choosing ERP/WMS Software for Your Company

Dan Kaplan of SMC Data Systems is a member of XPX New York
Dan Kaplan
SMC Data Systems
8 months ago

The Red Sea disruption forcing ships to go around Africa creates a new Supply Chain reality. It can lead to late deliveries of inventory resulting in disruptions affecting business globally. One of the noticeable issues is the Reuters report, “Tesla, Volvo Car in Europe Pause Output of Certain Car’s models.” Besides the production disruptions, late inventory arrival can result in order cancellations, often creating excess inventory which affects the warehouse. Besides the additional labor cost, it often results in using a 3rd party warehouse or purchasing/leasing additional warehouse space. These disruptions can lower profit margins and cause cash flow issues. Today’s reality of business disruptions makes companies realize that their outdated ERP Software, should be replaced with new integrated ERP/WMS Software that has a Warehouse Management module enabling companies to avoid business disruptions by having the features below: • Inventory availability after it was allocated for production or future orders. • Real-time Analytic information reflecting sales activity, what products should be ordered, and when. • From which vendor to purchase based on analytic information of promised delivery dates. • Customers’ buying patterns of products ordered. If the customer’s current purchases are less than in the past, the reason for this should be investigated. • If the accounts receivable overdue payment days have increased, the customer’s financial stability should be evaluated. Selecting New Software Before the software selection search starts, a committee should be established. Its members should be key people from each department and a requirements list should be developed. • The end users can provide important information that will be needed when the demos are conducted and they will have emotional investment once the software implementation starts. • The developed requirements list should be addressed at each demo. • All the demos should be a “workshop style” rather than a “slide show” with “bells and whistles.” • Not having the “workshop style” demo often results in purchasing the wrong software that does not meet the business’s unique requirements. • Having to change the business model to meet the software requirements will result in business disruption and the end users having a large learning curve. • Software functions that are beyond the users’ ability to learn will result in long implementation, and the project might be eliminated. • Before the decision to purchase the software is made, a visit to the software provider’s client in the same industry should be arranged. • Three people should be met at the vendor’s client site: the CEO, CFO, and IT manager. • The main question the above people should be asked: “How good is the software house hotline support?” • This is a crucial factor that should be considered. Not having good hotline support will result in severe business disruptions when an issue occurs and immediate support is not provided. Issues Arising from Multiple Software Often companies that have legacy software choose rather than replace it with new integrated ERP/WMS Software that has Warehouse Management they choose to buy it from Warehouses Software Vendor and have it integrated with the legacy software. Doing it will result in the issues listed below. • Stand-alone warehouse software can result in integration issues resulting in inaccurate inventory. • Having multiple software platforms creates issues when it’s upgraded. • Excess user efforts accessing multiple software results in business disruptions. • Often when one of the vendors has a software upgrade it might result in integration issues. • When having to contact multiple hotlines, vendors often don’t take responsibility resulting in business disruption. Case Study: Multiple Software • Large Food Manufacturers/Distributors decided not to upgrade their legacy software and purchased four software platforms from different vendors hoping it would enable them to meet their business requirements. • It resulted in the users having to access multiple software platforms resulting in excess efforts retrieving the needed information. • When one of the software platforms was upgraded sometimes it affected the main software platform or the other platform resulting in business disruptions. • When connecting the software hotlines each vendor claimed it was the other software vendor that caused the issues. • After a few incidents the management team decided to purchase new single database software that will have all the software modules needed supported by one vendor. • Before starting the software, a search committee was established having key end users for each department and a requirements list was generated. • The list was presented to each software vendor who gave the demo and made sure that besides addressing the business requirements the end users could master it without a large learning curve. Benefits of Single Data Base ERP/WMS Software • The end users without having to access four different software platforms instantly find the information needed. • The customers were able to place orders on smartphones and have a web portal where they could view various needed information. • Inventory in the warehouse is picked by using Voice Pick which has multiple language capabilities addressing today’s labor reality and RF Guns. • Streamlining the operation resulted in lowering operating costs and improved customer satisfaction. Overseeing Software Implementation Manufacturers and Distributors, who had outdated software, experienced production, and inventory control issues. It resulted in shipment delays leading to products being returned, excess inventory in the warehouse, and penalties affecting the accounting department which had to issue credits and adjustments, often missing the vendor’s early payment discount date. When the shelves were consolidated to receive new inventory, products sometimes were misplaced and were not found until the physical inventory took place. This resulted in excess inventory becoming obsolete. To resolve these kinds of issues, new ERP/WMS Software was purchased from the company we represent. The computer manager designated to oversee the software implementation was related to the president. Unhappy with the decision, feeling that the 20-year-old software he developed met the company’s requirements, he decided that purchasing the new ERP/WMS Software was the wrong decision and became an obstacle to implementing the software. His behavior resulted in implementation delays. The users, seeing his attitude, lost interest in the project and did not practice what they were taught. The president, with whom I had a long-term working relationship, asked me to meet him for lunch and expressed his concerns about the ERP/WMS Software going live on the targeted date. I asked the president to assign a different person to oversee the project. To prevent a family rift resulting from this action, I suggested the person be called the computer manager’s “assistant.” Extensive individual training should be given to the manager to enable him to get over the fear of learning the new software. After the training ended, the manager got comfortable with the new ERP/WMS Software, assumed the project’s responsibilities and the end users practiced what they were taught every day. Case Study: Benefits of the New Software Twelve months after the company went live with the new ERP/WMS Software, the president invited me for lunch again and told me: “I would like to thank you for helping resolve the issue I had with my relative. It prevented a family rift. The new integrated ERP/WMS Software streamlined the production and enabled my company to ship the products the same day, The company operating costs were lowered and the inventory accuracy is 99.6%.” Key Person Overseeing Implementation The large Distributor who bought the ERP/WMS Software from the company we represent had a computer manager who was eager to learn the new software functions. As soon as the project started, he addressed the users’ concerns about learning the new software and made sure they practiced daily. It resulted in going live on the estimated date and budget. The end users, before having the new ERP/WMS Software, had to access multiple software platforms to retrieve needed information. They were happy being able to retrieve information instantly without having to access multiple screens. this resulted in decreasing their workload and improved customer service. Implementing Software without Parallel Run • Before the Software implementation is conducted, the business requirements study should be conducted and a test environment should be established. • The legacy software data should be downloaded to the test environment daily and verified for accuracy. • Data verification will eliminate the need to run parallel software. • The end users should be trained in a test environment that has the information they are familiar with. • Software vendor key personnel should be assigned to each department i.e. accounting, warehouse, and purchasing. Going Live with New Software • Company-wide tests should be conducted in which the end users create errors in the “test environment” and then be able to correct their mistakes. • If the users cannot correct their mistakes, the going live date should be postponed and additional training should be given. • After going live with the new ERP/WMS Software, the training and technical staff should remain on-site to assist with any issues that might arise. ERP/WMS Software Case Study Attending the event at a major accounting firm I met the large Food Manufacturer/Distributor CEO who was the keynote speaker describing his experience of going live with the new ERP/WMS Software he bought from the software company we represent. “I had a sleepless night before we went live with our new ERP/WMS Software concerned about shipping the daily 800 orders to our customers who depend on us. I was relieved that we didn’t have any issues because the ERP/WMS Software House training and technical team were at our location. If any of the users had an issue, it was immediately resolved. The training and technical team stayed at our location until they were convinced that our users were proficient. I was also pleased that our ERP/WMS Software house Hot Line support personnel are all technical. When my users call, they get an immediate response, and any issues they experience are immediately being resolved.” About SMC & Dani Kaplan: Since 1980, Dani Kaplan has worked with Manufacturers, Distributors, and Food companies as a trusted advisor helping them lower their operating costs, streamline their operations, and control the inventory. Dani can be reached at Dani.kaplan@smcdata.com  

4 Tips to Avoid Promoting to Failure

Xavier Lederer of Ambrose Growth is a member of XPX Hartford
Xavier Lederer
Ambrose Growth
9 months ago

“I should demote myself!” joked the head of sales. “It looks like I am better at selling than at managing a sales team.” We were looking at his team’s individual sales numbers. He was selling more when he was a regular salesperson than his whole team today. We too often promote the wrong person into a senior leadership position. The reason is: the promotion criteria we use are poor predictors of people’s leadership potential. How can you better identify potential senior leaders and avoid painful mistakes – so you can grow faster and with less pain? Why are we so bad at promoting the right people into leadership positions? We are all biased. We tend to overestimate specific traits we mistakenly believe indicate leadership potential. Common biases include: Past successes. Unfortunately prior performance is not a good predictor of leadership performance. 

Many business owners are really accidental entrepreneurs – and struggle to sell their business

Paul Cronin of Touchstone Advisors is a member of XPX Greater Boston
Paul Cronin
Touchstone Advisors
9 months ago

The other day, a marketing expert asked me for “a hook” to explain what I do. I replied, “I sell smaller companies to larger companies, I am an M&A Advisor”. The truth is that I often say no to a lot of owners who ask me to sell their business, or hear no from a lot of buyers who take a look at my clients. So painful. You see, many business owners are really accidental entrepreneurs. If you are a business owner, maybe you got good at something working for someone else. Then you got ticked off at your boss, or the company goes out of business (because THAT owner failed to build business value), and someone hires you to do a job. That job turns into two, then 10, then 50, and so on. Before you know it, you have to hire employees (ugh), and you have a business. You work every day – Sundays too. 60, 80, 100 hours a week. Skip vacations. Miss your kids’ birthdays and soccer games. Whatever it takes. Why, because “no one else can do the job better than you”. 25 years go by and you feel an ache in your back, or your hip, or your head, and you say – “maybe I can sell this thing”. So you ask your CPA for some names of brokers or M&A advisors and make some calls. Then you get stabbed in the heart, when people like me tell you that your business is not really a business – it’s a job with employees, and late invoices. Hard to relive 25 years – isn’t it? If you want to change this outcome – there is hope, BUT it takes time and money to make your business sell-able. It starts by swallowing your pride and doing the work ON your business. You can turn things around over a few years, and come back to me with real profits, proven systems, and a key manager or two that you trust to run the business. That is when I say, “I can sell your business”. And the pain starts to go away. Maybe you even start to smile – again. It can happen, but it’s your choice: “Whatever it takes” or “Whatever happens” Which do you choose? ********************************* If you are a business owner who’d like to think more deeply about your business, try the

Popular

What's Trending

Explore more

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?

Previous
Next

Explore the Knowledge Exchange

Search
Make XPX Part of Your Business Plans
Attend an event
Join a chapter
Start a chapter
Find an advisor
Explore
Learn
Account
Connect
Help & Support

© 2025 XPX Global LLC.          Privacy Policy         Norms & Principles          Site Map           Terms of Use

Paper-plane Linkedin Youtube

© 2025 XPX Global LLC. All Rights Reserved.