Tuesday , July 17, 2018

January/February 2016

Featured In This Issue

BizProfiles

22The founders of Cornerstone Wealth share a passion for helping clients achieve their financial goals. It all started with collaboration. Andrew Smith, Brian Needleman and Jeff Carbone managed individual practices while working together at a former brokerage firm, and as their practices grew, they realized the value of working together and decided to pool their complementary expertise and build a team-based business in 2001.

Each partner brought a different perspective and skill set to the team; each shared a vision of building a world-class wealth management firm offering independent and unbiased advice with focus on building lasting client relationships.

Today, the firm manages assets in excess of $1 billion and offers comprehensive wealth management services through a team of 22 wealth advisors and 27 professional staff members. The firm is growing at an average of 25 percent per year by acquiring new clients, establishing new offices, and hiring experts in various sectors of the financial industry.

 

Building a Team

“It’s our business model that makes us different,” Smith says. “Not many people can accomplish what we’ve done together. Our business revolves around relationship management, so it is important for our team of advisors to be in front of our clients. By leveraging our infrastructure, we liberate advisors to do what they love—serve clients.

“Our success has definitely come through working as a team,” Smith continues. “We strive to understand each person’s strengths, and we allow people to focus on their passions. There are advisors and employees who enjoy client acquisition, while others enjoy the operations side of the business.

“Having the right people in an organization is imperative, but it’s also important have them in the right job. We believe that if you have passion for what you’re doing, you’ll do well.”

The division of labor came naturally to the founders.

“Jeff Carbone had been a certified financial planner,” explains Smith, “so he handled the financial planning. His specialty was financial and estate planning, so he brought a comprehensive approach to the firm.

“My passion is client acquisition, so I handled marketing and business development. Brian had many years of investment management experience, so he managed our client’s portfolios. The three of us specialized in these areas and formed a cohesive team.”

The fourth managing partner, Craig Rubrecht, joined Cornerstone in 2003, after leaving Prudential Securities. Rubrecht brought many years of advisory and management experience which was needed in the growing organization.

“As it happened, we formed our company after 9/11 when people were worried about their money,” continues Smith. “We made an effort to get out in front of as many people as possible, and it worked. I believe we were in the right place at the right time, but we also worked smart.”

Notably, says Smith, while other firms were reluctant to engage clients, the group acted proactively in the environment and landed dozens of clients who were accepting early retirement plans from such companies as AT&T and Duke Energy.

“The market rebounded strongly in 2003, so our clients thought we were miracle makers,” laughs Smith, 43, who was in his late 20s when the company started. “Our niche was the utility and telecommunications industry early on. Since then, our business has grown dramatically to include clients from all backgrounds. Today, we are diversified across retirees, business owners, executives, independently wealthy clients and athletes.”

 

A Model for Success

 Cornerstone’s distinctive model involves expert specialists who handle the business details, such as operations and asset management, so that advisors in the field can concentrate on building relationships with clients.

“That’s what makes us different from most firms—our culture of teamwork,” Smith says. “We support our team of advisors so they don’t have to do anything but manage the relationship.”

About half of the firm’s 45 employees work in its Huntersville headquarters, while the others are in branch offices of two to five people each. The firm recently hired chartered financial analyst Chris Zaccarelli from Goldman Sachs as their chief investment officer.

Smith remarks, “There are certainly many companies moving their workforce to Charlotte, and Chris liked the area and the wonderful climate, but it had to be the right opportunity for him.”

Cornerstone has offices in Huntersville, Charlotte, Greensboro and Belmont, N.C., as well as Greenville, Lexington and Aiken, S.C. In 2016, the company will establish offices in Raleigh, N.C., and Lexington, S.C., continuing its growth throughout the Carolinas.

“Internally, I would say two areas are growing rapidly,” Smith continues. “The high net worth area is growing rapidly. We are finding these clients want the level of service we provide. The other we refer to as ‘money in motion,’ whether it’s people retiring or passing money to the next generation.

“It’s really coming at us from every direction. The baby boomers are where the majority of the wealth is,” Smith points out. “They’ve accumulated it and many of them don’t need it, so we educate clients on how to pass it to the next generation. You can either spend it during your lifetime or give it away. If you don’t anticipate using it, there are many strategies to benefit your family or charity.”

Gifting and estate planning can have greater impact than a will, which covers only parts of the estate that are not already designated by beneficiary designations and other instruments.

“That’s where we come in,” comments Smith. “We educate people about the various strategies available and bring in other professionals as needed.”

Cornerstone Wealth has its own apprenticeship program to recruit and train promising young advisors to work for the firm. So far, 11 advisors have completed the program which includes two years of training, mentoring by the partners and working with clients. Many of these advisors have earned the certified financial planner designation and other certifications.

“It’s a challenging but rewarding career,” Smith says. “We try to find those who want a career in the wealth management industry and help them grow as advisors so they become lifelong advisors of the firm. We even provide a pathway to partnership in the firm, similar to the structure of a law firm.”

Smith says the firm’s assets, which topped more than $1 billion under management (AUM) last year, is expected to double in the next several years. It has grown about 25 percent a year, roughly half by organic expansion and half by acquiring existing practices.

“We want to grow at a healthy pace,” Smith remarks. “Our future expansion will come from a combination of organic and inorganic growth. There are many future retirees and other clients looking for a wealth management team like ours, but there are also a lot of advisors who are looking to retire and need a succession plan. Both of these are attractive ways to grow our firm.”

Cornerstone Wealth has implemented various succession plans with financial advisors looking to exit the business. The firm has also transitioned advisors into the practice with the intention of remaining a part of the team. Some advisors desire a hybrid model, where the advisor stays in the business and transitions their clients to a new advisor(s) over a period of time.

Says Smith, “Finding a firm that can handle all of these scenarios is difficult. We offer a tailored and turnkey solution for advisors.”

“For our organization, the No. 1 issue we’re going to face is change in the regulatory environment,” Smith remarks, adding that Cornerstone has created a chief compliance officer position because, “We’re finding that we need more focus to keep up with these changes.”

“We’ve also hired executives to handle the operational aspects of the business. Three years ago, we hired Terri Fiessinger as our chief operations officer to help manage the advisors and staff in our multiple locations. This is critical role in our firm, and she has done a fantastic job.”

Cornerstone Wealth, a Registered Investment Advisor (RIA), offers three custodians—Charles Schwab, LPL Financial, and Fidelity Investments. “Our infrastructure is large enough to handle that,” Smith says. “It makes it easy to do business with us, whether you are a client or an advisor looking to join the firm.”

Many advisors joined Cornerstone during the recession, when the firm maintained its commitment to clients and weathered the downturn successfully.

“Of course, 2008 was the deepest dip in recent history,” Smith acknowledges. “We made our way through it by holding client events and programs. We got in front of our clients to educate them. It’s important to stay the course during volatile times: Our clients listened and were rewarded.”

 

A Comprehensive Approach

 At Cornerstone, both advisors and portfolio managers work together in a rapidly-changing market that demands constant attention.

“This part of the business is extremely important,” Smith says. “You can’t just buy and hold any more. That’s not going to work. You have to understand what’s going on in the world and the economy. These days, that global economy includes issues in China and Europe, as well as the strength of the U.S. dollar.

“The challenge that we’re faEcing right now is that we have a global slowdown,” Smith begins describing a host of issues causing volatility. “Part of this is due to China. They overbuilt—they built cities with nobody in them. Now all of a sudden they have this real estate glut. Even so, there are going to be certain industries that benefit from the 1.3 billion people who live there.

“At the same time, Europe faces a refugee crisis and terrorist fears while it struggles to rebuild its economy.

“Meanwhile, the U.S. has stopped printing money and our dollar has gotten quite strong against other currencies. From a currency standpoint, your dollar would go a lot further today, which impacts trade profits.

“There are many external factors,” Smith adds. “There’s terrorism and cross-border conflicts we need to keep in mind. We’ve lived with this in the past, but now their literally on the news every day.”

Cornerstone Wealth holds client events at all of its locations twice a year—with updates on markets, the economy, and financial planning concepts as well as motivational or topical speakers.

There is no doubt that at Cornerstone Wealth, their passion for serving their clients is the fundamental cornerstone of their success.

“Clear, concise information shared frequently…Engaging interaction between brokers, counselors and clients providing more meaningful strategies to best serve client needs…Constant analysis, research and educational support to stay abreast of global changes and how those changes affect portfolios—at Cornerstone Wealth, we endeavor to keep people informed and aware of changing market influences, market disruptions and significant business trends,” says Smith.

“Collectively, our passion drives our work ethic to not only meet, but to exceed expectations.”

 In the 33 years since starting Griffin Home Health Care, Inc. in the corner of The Peak Drug Store on Charlotte’s Graham Street, Bill Griffin has seen phenomenal growth, relocations and expansions, computerization, and too many changes in industry regulations to count.Under his leadership, the business has grown to include a centralized administrative hub and warehouse and three area showrooms. No small feats, indeed, but his proudest moment may be at hand as he prepares to turn the reins of the business over to his son, Richie, as, together, they launch a new business model.

Spanning the Generations

“It’s been so exciting for me to see my son as the rising star that he is. He’s made such progress towards the growth of the company. I didn’t imagine that this is where we would be today,” says Bill.

Griffin Home Health Care is a leading provider of home health care equipment, supplies and services in the Charlotte metropolitan area and services retail customers around the world. As the population ages and the baby boomers move well into their 60s, the need for wheelchairs, lift chairs, respiratory equipment, and other medical supplies and equipment continues to increase.

“In health care, we are full service from band-aids to hospital beds; wheelchairs to CPAPs; wound care to cast covers,” says Bill. “The business continues to grow in terms of products and services, with the advent of sleep apnea treatments representing the largest shift in emphasis within the medical equipment industry.”

Griffin Home Health Care has just recently moved into new administrative and warehouse headquarters on Monroe Road, not far from its former location. The 5,600-square-foot space anticipates the growth from the company’s new business model and centralizes the company’s operations including order intake, insurance verification, billing, purchasing, finance, human resources, warehousing and inventory.

Additionally, the company has three retail showrooms in the metro area. The new headquarters is only a stone’s throw from the new Charlotte showroom, 3,000 square feet in size and a completely new design. The company has also opened a new showroom in Concord on Copperfield Boulevard, and maintains a showroom in Gastonia on Ozark Avenue near Cox Road.

Bill has always been president and CEO with Richie as vice president and COO, but a succession plan is underway that will soon make Richie the company’s president and ultimately, the CEO. Bill’s brother, Jim, who joined the company in 1996, is secretary and formerly ran the Gastonia showroom. He now manages the showroom in Concord.

“Richie is running the business now,” says Bill. He has a vision.” Bill, at 64, and Richie, at 37, say they have been working towards succession for two years now. When at work, they call each other by their first names.

“It’s more professional than referring to each other as dad and son,” remarks Bill. “But I’m still his dad and he’s still the father of my grandchildren.”

“And when we are here, he’s still my boss,” laughs Richie.

Spanning Health Care Needs

In the fall of 2014, Richie was instrumental in successfully kicking off a new division of sports, health and wellness. “It’s a sister component of what we do,” says Richie. “I saw a niche for service on the health and wellness side. For 32 years we were caring for those who were injured, broken, or sick, but we were missing a big chunk of the family by not serving the health care needs of those who were well.”

With the increased emphasis on health and wellness, Griffin Home Health Care now carries a wide variety of rehabilitative and exercise equipment, pain management, wound care, braces and ambulatory aids, and also provides a team of highly trained staff to assure fit and proper use.

The company has brought in some nutritional products such as Bruk’s Bars and Honey Zingers, as well as CEP compression products and many other wellness related items. While some of their products are available in big box stores, Richie points out the lack of service there.

“If you go into a big box store for a product—be it a bath chair or knee brace—you can select it from the shelf and pay for it, but who’s fitting you for that? How do you know if the fit is right? You could do more damage than good if it’s not the right fit,” says Richie.

“Plus, oftentimes, there is a difference in quality,” he continues. “Big box stores do not have to be accredited and are able to sell products that are of a lower quality—not medical grade.”

In the respiratory division, the company offers with c-pap, bi-pap, oxygen concentrators and nebulizers—everything except clinical services and ventilators. Services are provided by service technicians who do routine checks to ensure that the equipment is delivering the right amount of oxygen.

“We do what we call ‘sunshine calls.’ Anybody that gets equipment from us will receive a call a few days after we deliver it to make sure they are doing well with it. More often than not we get commendations, and sometimes recommendations as to how we can do better,” comments Bill.

“What sets us apart from other businesses is our dedication to compassionate service,” he assures. “Our tagline is ‘Serving your family like family since 1983,’ and we firmly believe that if we serve our customers like our own family, we won’t make too many mistakes.”

The company maintains a significant level of inventory to meet the needs of its clients and prides itself on being special-order specialists. “We have folks here dedicated to finding what clients need quickly. That’s always been a niche of ours,” touts Bill.

Both Griffins say they don’t see themselves as sales people. “We have our own fleet of vehicles and client services technicians who are often the face of our business,” says Richie. “Our technicians are trained for ‘up-caring,’ prepared to discern and recognize the needs of clients. They help them assess their situation and environment to best utilize the equipment they need.”

“There is no outsourcing or contracting with drivers to simply drop things off,” continues Richie, “Part of our service is to show clients how to use the equipment in their own environments.”

Spanning the Health Care Industry

Richie joined the business in 2002 after attending Appalachian State University where he studied Interdisciplinary Studies and Sustainable Community Development and, ultimately, fell in love with the mountains. With a carpentry job waning during the winter months, he came home for a part-time job in his father’s business cleaning equipment and making some deliveries, and never looked back.

“I like that I can go home every day and know that I made someone’s day a little easier, a little safer,” says Richie. Bill says he was only a little surprised: “When Richie was in middle school, I took him to the Jewish Community Center where he worked with children with infirmities. I could see how well he related to others and began to have a flicker of hope that someday he would be interested in the business.”

As Richie became more a part of the business, he was instrumental in forming a vision for a centralized business model. He knew the first order of business was to upgrade the software behind the company’s medical billing and inventory management system to a cloud-based system. “It was a massive undertaking,” attests Richie.

Medical billing is critical because like many industries, medical equipment sales and service requires revenue streams from diverse sources to remain strong financially. Griffin Home Health Care relies on two large and powerful bureaucracies—government and insurance—for approximately 60 percent of its livelihood.

Another 20 percent results from contracts with hospice care and similar organizations, and the remaining 20 percent comes from private individuals.

Because of the company’s heavy reliance on governments and insurance, Griffin Home Health Care is involved in lobbying efforts to keep health care options reasonable for families relying on government or insurance for their medical needs. Additionally, the company is constantly alert to changes in legislation and insurance practices.

About 20 years ago, Bill was instrumental in organizing a network of medical equipment suppliers in North Carolina to help independent providers remain competitive in a market that was quickly changing thanks to the onset of managed care. The resulting organization has become the most successful network of medical equipment providers in the country.

Griffin Home Health Care, Inc. is accredited by the Accreditation Commission for Healthcare, a national organization. “They take all the regulations that are imposed upon us from the N.C. Pharmacy Board, Medicare/Medicaid and boil them down and consolidate them into accreditation standards,” comments Bill.

“The regulations touch upon every aspect of the business from human resources to fire extinguishers, and dictates the training of our folks in a positive manner,” says Richie. “Every three years, we have to pay for an internal industry audit. They ride along with our technicians, look at our charts, and review our policies. It’s a learning process for our employees.”

When asked about challenges, the Griffins agree: regulations and big government. The problems stem from “competitive bidding” legislation enacted during the second Bush administration. “It’s anything but competitive bidding,” laments Bill. “It was shoved down the throats of this industry and the problems are endless.”

Under the rules, people who are unlicensed to work in a particular state can submit very low bids bringing the median bid down below what is a legitimate bid amount, making it difficult to get a legitimate bid through the process. The end result is loss of care, reduction in quality and businesses are closing down, according to the Griffins.

“They are limiting the number of providers that can provide a service. When we entered business, there were at least 50 competitors; now there are three or so. That creates an access problem for patients,” says Richie.

“Plus, Medicare is making it so difficult for patients to qualify for services; patients must jump through so many hoops. If we don’t take care of that patient, they have to go to the emergency room, for instance, for when they are short of breath and need oxygen and equipment. Congress needs to see that this is a very shortsighted and expensive way of doing things,” says Bill.

Part of the Griffin Home Health Care philosophy is to train and retain its 26 employees. “Ninety percent of our folks had no prior industry experience. We hire smart and caring people and train them ourselves,” says Bill.

“After 14 years, I am still learning every day,” comments Richie.

As if handling the recent expansions were not enough, Richie elaborates on his plans for furthering the sports and wellness division and finalizing the succession plan. “I am quite hopeful that this business model is expandable. I would love to get to the mountains. There is a need for what we do there,” he says knowingly.

“The transition has been challenging for me,” confides Bill. “It’s [the business] my child, too. It’s harder for me to turn loose than it is for Richie to take over. I’m not ready to retire but I am ready to take a lesser role.”

Bill is sure to stay busy. He is active on the Council of Aging and works on several boards including the Western North Carolina Region of the American Red Cross. He is also a Rotary member.

“I think Richie still appreciates my counsel. Plus, he’s pretty liberal with me and my hours. I don’t rush to get in here early and don’t always stay to turn the lights off.”

Griffin Home Health Care, Inc.

9123 Monroe Rd., Ste. 135

Charlotte, N. C. 28270

Phone: 855-513-GHHC (4442)

Principals: William H. (Bill) Griffin, President and CEO; Thomas R. (Richie) Griffin, Vice President and COO; James E. (Jim) Griffin, Secretary

Established: 1983

Employees: 26

Locations: Charlotte, Concord and Gastonia, serving the 16-county region

Division: Griffin Sports, Health and Wellness (mygriffinsports.com)

Business: Full service health care equipment and supply company providing a wide range of home medical equipment and related supplies for individual Medicare, Medicaid, and private patients, physicians, clinics, hospice organizations, assisted living centers, nursing facilities and commercial accounts.

www.griffinhomehealthcare.com

Carolina Premier Bank PDF

 

 

 

 

 

 

Charlotte-Invested; A World of Opportunity

“We knew we had a really good team and an opportunity to grow,” says Babson Capital Management CEO Tom Finke, on moving from being bank-owned to insurance company-owned. Today, Babson has over $220 billion in assets under management, about half of which represent MassMutual’s general investment account, and offers global investment solutions. Headquartered in Charlotte, Finke comments, “It became clear this is where a lot of our growth has been and will be.”

 More Than Investing… Invested

 For Babson Capital Management, It’s a World of Opportunity

One of the less frequently recognized financial behemoths in Charlotte is Babson Capital Management (Babson). As one of the world’s leading asset management firms, with investment teams on four continents managing more than $220 billion in assets, Babson works with clients in countries across the globe.

The company offers expertise in a wide variety of traditional and alternative asset classes, including global high yield loans, structured credit, private debt, and real estate. Clients include both institutional and wealth advisory clients.

While Babson began in New England, the company is now headquartered in Charlotte and its presence will soon punctuate the Charlotte skyline with a towering office building providing penthouse views.

North Carolina’s increases are among the highest for the 37 states that rely on the Healthcare.gov website, according to government figures.

CEO Tom Finke’s ambition is to make Babson top-of-mind for institutional investors around the world seeking global fixed-income managers.

A Force to Be Reckoned With

Babson Capital traces its roots back 75 years to the creation of David L. Babson & Co., a Boston-based value equity firm and pioneer in growth stock investing. The firm grew steadily into a highly regarded investment manager, and was acquired by Massachusetts Mutual Life Insurance Company (MassMutual) in 1995.

In 2000, David L. Babson & Co. was integrated with MassMutual’s Investment Division, uniting two firms under a shared dedication to unwavering client service and long-term, fundamental investing.

The combined entity refined its expertise across both public and private asset classes by managing investment portfolios on behalf of the parent company MassMutual as well as a growing base of institutional investors.

The firm continued to grow both organically and through a series of strategic acquisitions, with two in particular significantly adding to the investment management platform: First Union Institutional Debt Management, an experienced leveraged loan and CLO manager in the U.S., Duke Street Capital Debt Management, one of the largest bank loan managers in Europe. These acquisitions solidified Babson’s presence in the world’s two largest high yield markets, and the firm was rebranded as Babson Capital Management in 2004.

With proficiency across the fixed income spectrum, Babson has continued to expand its investment capabilities over the last decade. To serve the needs of an increasingly global client base, Babson further extended its offerings in private finance, private equity and emerging markets.

Today, Babson offers a wide range of investment solutions to a client base that spans the globe. Throughout its growth, the firm has maintained a strict adherence to the bottom-up, fundamental analysis that has long been the hallmark of Babson’s investment process, and fostered a corporate culture that thrives on teamwork and collaboration.

Babson is part of the MassMutual Financial Group, which includes Baring Asset Management and Oppenheimer Funds. Babson also has two wholly owned asset management subsidiaries: Cornerstone Real Estate Advisers and Wood Creek Capital Management.

Charlotte Figures Prominently

Babson opened their first Charlotte office in 2002 when Wachovia sold First Union Institutional Debt Management (IDM), a 13-person boutique high yield loan manager specializing in leveraged loans and collateralized loan obligations (CLO). One of the co-founders of that Charlotte company was Thomas M. Finke.

A Pittsburgh native, Finke received his MBA from Duke University’s Fuqua School of Business in 1991, after earning his undergraduate degree from the University of Virginia’s McIntire School of Commerce. Prior to forming IDM, he held positions in high yield and loan syndications at First Union Capital Markets, Bear Stearns and Company, and Mellon Bank. But in the wake of the 2000-2001 recession, and after the merger of First Union and Wachovia in 2001, Finke decided he needed to find a permanent home for IDM.

“We knew we had a really good team and an opportunity to grow,” says Finke. “Babson offered an opportunity to move from being bank-owned to insurance company-owned. Not only did they want us as an asset manager, but MassMutual’s general account invested in leveraged loans, and they wanted a team dedicated to that. Part of the deal was we got to stay in Charlotte.”

Over the next several years Finke’s responsibilities at Babson grew, and in 2008, he assumed the role of chairman and CEO. The core management team being assembled in the Charlotte office included long-time business partner Russell Morrison, who was with Finke at First Union and who now serves as vice chairman and oversees Babson’s global fixed income and global private credit businesses.

In addition to Finke and Morrison, the team includes company 35-year MassMutual veteran Cliff Noreen, president; Anthony Sciacca, the head of global business development who also oversees private equity investments; Paul Thompson, the COO, CFO, and head of global investment services; Susan Moore, the chief administrative officer; Sheldon Francis, co-general counsel; and Christopher DeFrancis, co-general counsel and chief compliance officer.

“There was no specific intent to move the headquarters to Charlotte,” explains Finke. “It just turned out as we executed our business plan post-financial crisis, and as our leadership took form, it became clear this is where a lot of our growth has been and will be. There’s a very strong base of financial talent in this city, regionally we have great universities, and we have an airport which allows us to operate as a global investor.”

Just as the growth of Bank of America, Wells Fargo, and their predecessor banks drove much of the center city growth in Charlotte from the 1970s to the 2000s, Babson’s growth will soon bring a new addition to the Charlotte skyline—300 South Tryon—a new 25-story, 630,000-square-foot office tower located on the corner of Third and Tryon streets.

The site had been in the MassMutual real estate portfolio for many years; it was the first new uptown tower to be announced after the Great Recession of 2008-2009. Babson expects to relocate their Charlotte offices from the Duke Energy Center to the new tower sometime in 2017.

“As I looked at our long-term space plans, we needed more space,” says Finke about their plans to launch the new building. “Office vacancy was coming down fairly quickly, and when we did the fundamental analysis of Charlotte CBD office real estate, it made sense to develop a prime office building.”

Growth and Globalization

Today, Babson’s 1,100 employees offer a wide range of investment solutions to over 500 clients in more than 30 different countries. These clients include banks, insurance companies, pensions, endowments, foundations, sovereign wealth funds, and private wealth advisory clients.

Babson’s total assets under management have grown from $104 billion in 2007 to $223 billion as of the fourth quarter 2015, an average growth rate of about 10 percent per year. About half of Babson’s assets represent MassMutual’s general investment account, and the growth of MassMutual’s overall business is one important driver of Babson’s asset growth. Just over 60 percent of the external assets under management (those assets excluding the MassMutual general account) are from clients in North America; 26 percent are from Europe, the Middle East, and Africa; and the remainder is from the Asia-Pacific region.

But one amazing thing you notice about Babson’s growth is that, unlike other financial firms that suffered from 2007 to 2010, Babson continued to grow, fueled by large institutional investors in search of higher yields on their investments during the recession and the tepid economic recovery that has followed.

“Coming out of the financial crisis, investors were looking for higher yields and looking for investments that were less correlated to the equity markets,” explains Finke. “We also invested significantly in building out our local distribution business, and we now have about 100 people around the globe developing relationships with the largest institutional investors.”

Something else that helped Babson weather the crisis was their long-term, value-driven investment philosophy. Unlike some asset managers, the unique needs of their clients drive them to a more conservative investment philosophy.

“We’re not a hedge fund where we can just take our parlor chips off the table and go home when markets change,” states Finke. “Our clients are long term investors. You can’t go to cash in the general investment account of an insurance company. Our discipline has been built around the ability to manage through the cycle and adjust, both when times are good, and when times are not.”

In addition to their core asset management solutions, Babson has two wholly-owned specialized subsidiaries: Cornerstone Real Estate Advisers and Wood Creek Capital Management. Headquartered in Hartford, Conn. Cornerstone invests across all four segments of the real estate market—public and private equity and debt. Wood Creek based in New Haven, Conn., focuses on real asset investments, including investments in global agricultural resources, intellectual property, pharma, and reinsurance.

“There are a lot of interesting things going on within real estate,” Finke says. “Foreign money is looking for hard assets, so it just drives up the price of real estate in gateway cities like London and New York. The millennials are also driving growth in cities because of the re-urbanization process that is going on. We invest through cycles, so real estate is no different. It cycles relative to the economy, and it also cycles relative to what’s going on in terms of demographic trends.”

With offices in places like London, Sydney, Hong Kong, and Tokyo, Babson is truly a global business. Through those offices and their other U.S. offices, they are closer to their clients, but those offices are also where they are investing. Babson is a major investor in European high yield debt, Cornerstone invests in European real estate, and in Sydney and Hong Kong they invest in the Asian leverage finance market.

“When you think about the total business—Babson, Cornerstone and Wood Creek—we really have discrete teams defined by their functions,” explains Finke. “Global fixed income, global private credit, global real estate, and private equity are the key functions, but we do believe in being in the markets where we invest as much as we can.

“To sit in Charlotte and think you can invest in a middle market leverage buyout in Sydney, Australia, and do it well—that’s naïve. What you can do is find good people, share a system of how you invest—how you risk manage—and let them do their thing.

“We’re living through an extraordinary time of globalization,” Finke continues. “The technological revolution is bringing the world closer together, and because of that, you see more money flowing from one part of the world to the other. Over the last six or seven years we’ve seen many of our clients in the U.S. look more towards investing in the European high-yield market. They didn’t do that before.”

Finke explains how when investing globally an investor or an investment manager must also be mindful of the macroeconomics connected to the political events in those countries—whether it is the unrest in the Ukraine or the economic and political issues in Greece.

“You always have to assume something will go wrong, because something’s going to happen,” says Finke. “When we build portfolios, we have to consider how this company will perform if we have a real disruption in the Middle East and oil prices spike up.

“You have to build portfolios that have the ability to manage through tough times. We tend not to invest into trends; we invest in companies. We invest in projects, and we invest in properties where we can tangibly analyze the fundamental value.”

The World Economy

Where’s the world economy going?

“I wish I had a crystal ball,” laughs Finke. “What I’ve found since the financial crisis is no one’s right, and no one’s wrong! Every time there seems to be positive momentum somewhere in the economy, the next day you see a negative sign. The reality is the global economy is being exceedingly stimulated by cheap money in terms of low rates.”

“It used to be there was a real cycle coming out of a recession,” he continues. “There were layoffs, but then you’d get hired back. Well, this time, people didn’t just layoff—they reinvented. They became more efficient; they implemented new work processes or new technology; and some businesses completely changed their business models.”

Finke says that while it’s very hard to identify the drivers of growth in today’s economy, many companies are still well positioned to grow. So even though the overall economy may be stuck on a modest growth pace with fairly flat inflation, the key is to identify those companies with attractive growth dynamics that are not sensitive to negative GDP headwinds or low commodity prices.

“I think that’s why the feds have a real hard time here, getting off zero,” he admits. “It’s really hard to commit one way or the other, and to start pushing rates up.”

But in the final analysis, Finke says, no matter what the economy does, it all comes back to the client.

“We’re very proud of what we’ve accomplished since 2009. We wanted to create a presence as one of the leading global institutional asset managers, but that job is not yet done.

“Our goal is to build on what we’ve done before, and to take the disciplines of our investment process and the culture that we bring to what we do, and go to the next level—while always serving the client the best that we can.”

Babson Capital Management LLC

550 South Tryon St., Ste. 3300

Charlotte, N.C. 28202

Phone: 704-805-7244

Parent Company: Massachusetts Mutual Life Insurance Company

Subsidiaries: Cornerstone Real Estate Advisers and Wood Creek Capital Management

Affiliates: Baring Asset Management and OppenheimerFunds

Principals: Thomas M. Finke, Chairman and CEO; Russell D. Morrison, Vice Chairman, Head of Global Fixed Income; Cliff Noreen, President and Managing Director

In Business: 75 Years

Employees: Over 1,100 globally including over 500 investment professionals

Assets Under Management: Over $220 billion

Locations/Clients: Headquartered in Charlotte; locations on four continents and clients in over 30 countries

Business: Global investment management firm with expertise in a wide variety of traditional and alternative asset classes including global fixed income, structured credit, middle market finance, private debt and commercial real estate for both institutional and wealth advisory clients.

www.babsoncapital.com

The Clean and Dry Pros Solve Problems

Dry•Pro Basement Systems are foundation and crawlspace specialists. Founded in 1999, the company has evolved into a comprehensive, one-stop-solution provider for homes and businesses that need some shoring up of their foundations—whether basement, crawlspace or slab—or suffer the musty scent and attendant damage of moisture problems. “We’re out there and people see us,” says founder and CEO Ron Weatherly Jr. “They want to use somebody they can trust.”

The Clean and Dry Pros

Dry•Pro Basement Systems Solves Foundation and Crawl Space Problems

Dry•Pro Basement Systems are foundation and crawlspace specialists. Founded in 1999, the company has evolved into a comprehensive, one-stop-solution provider for homes and businesses that need some shoring up of their foundations—whether basement, crawlspace or slab—or suffer the musty scent and attendant damage of moisture problems.

Founder and CEO Ron Weatherly Jr. says the award-winning business has comprehensive services for the full range of potential problems in below-grade construction, from shifting footings to softened wood structures to cracked slabs.

Most recently, Dry•Pro has started providing PolyLEVEL injected foam for stabilizing slabs, gained a general contractor’s license for its work, and expanded its offerings to include repair of damage when the basic problem is solved, such as tuckpointing once-cracked brick walls.

Foundation and Crawl Space Specialists

“Now we can handle the gamut of everything,” Weatherly says. “From the floorboards down, we can help with it.”

The company, which has grown to upwards of 60 employees, serves customers in a six-county area around Charlotte including Concord, Kannapolis, Hickory, Gastonia, Statesville, Huntersville, Matthews, Salisbury, Monroe, Morganton, Newton, Shelby, Kings Mountain, Mount Holly, Belmont, Lincolnton, Albemarle, and Indian Trail.

Dry•Pro is an Authorized Basement Systems dealer and offers services for both new construction and homeowners or business owners who have encountered problems in their existing structures. On-site inspections, consultations, and estimates are no charge.

According to Weatherly, much of his business comes from referrals through Realtors, HVAC contractors, pest exterminators, and former customers. Dry•Pro also works with Realtors to provide inspections and repair services for their clients.

Customers call when they notice cracks in drywall or brick, problems that often result from problems with the wood structure or the foundational piers. Cracks on the outside are more likely to result from foundation problems, while cracks on the inside usually reflect wood structure problems stemming from termite damage or humidity in the crawlspace.

Typical customer complaints include: “Every time it rains really heavy, my basement leaks or my basement floods.” Or, “Sometimes we get these musty smells coming from the crawlspace in certain rooms. Or, customers report that they walk in the house and everything rattles in the china cabinet. Or, “The door is not opening and shutting—you have to pull hard to get it open.” Or, “The windows on one side of the house don’t open anymore.”

Customers sometimes are working in the yard and see a crack in the brick that goes up to the roof or to a window. Or they see the basement wall has a crack down the center and is bowing in.

“With footings, typically you’re going to see a problem outside the home,” clarifies Weatherly. “The wood structural is going to be more interior cracks. But all customers know is that they see cracks and they need to get this fixed.”

Working on a Good Foundation

 Dry•Pro has two wood structural crews who spend full-time on such repairs, unlike typical contractors who focus on interior home remodels. The preponderance of dirt crawl spaces in the Charlotte area can mean challenging working conditions in tight surroundings.

“We’ve really grown in that market,” Weatherly says. “That’s probably what sets us apart from a lot of our competition. A general contractor might do wood repair for a home once a month or once every couple of months. All we do is structural repairs under homes. The crew that works on that gets to be really good at it. Contractors don’t necessarily like to lie on their backs and do their work. They’d rather be doing a remodel.”

In addition to wall cracks, crawlspace problems can lead to foul odors in the house and even heightened allergy and asthma problems. When they are solved and the crawlspace is dry, the homeowner can see savings on energy costs and gain more useable storage space.

Moisture accumulates in crawlspaces because water in the air that enters from outside condenses when it encounters the cool air in the crawlspace. Mold that grows in those conditions is drawn through the house as air rises and escapes through roof vents. In addition to humidity from outside, water can get into a crawlspace through groundwater flooding or plumbing leaks.

The solutions can involve sealing crawlspace doors and vents to keep out moisture, removing standing water sources with a drain and sump pump, repairing areas of mold and rot in the structure, insulating the crawlspace and encapsulating it with a liner, and installing a dehumidifier for guaranteed dry conditions.

Weatherly adds, “If the structure is sagging, installation of Smartjack Crawl Space Stabilizers can solve the problem.”

 

When the problem involves the foundation’s footings, Dry•Pro enlists an engineer to design the solution as required by North Caroline guidelines.

“We drill into the ground until we hit good soil,” Weather explains. “We attach a bracket to the pier and attach it to the footing about every six feet.”

For example, the Push Pier System by Foundation Supportworks involves heavy-duty steel tube sections pushed through the inadequate soil to a more stable layer and attached to the foundation with brackets. Dry•Pro is a member of the Foundation Supportworks international contractor network based in Omaha, Nebraska, and its employees are certified by the agency.

If the problem is a bucking wall because of pressure from the soil outside, Dry•Pro can install a wall anchor system. Over time, the anchor can be tightened to return walls to their original orientation. If the repair needs to be finished more quickly, that can be accomplished by excavating the soil around the wall. Dry•Pro uses the GeoLock Wall Anchor System, which requires only a one inch hole in the wall for the rod that connects a steel plate to the anchor outside.

New Technology for Slabs

 Homeowners and business owners also call Dry•Pro when they notice cracks in a slab floor.

“Most often, we drill a couple of small holes in a handful of areas and pump in a structural foam under the slab,” Weatherly explains. “It fills the void and raises it at the same time. The hole is roughly the size of a penny.”

Dry•Pro uses PolyLEVEL rather than another alternative, called mudjacking. Weatherly explains that mudjacking pumps in heavy cement slurry, which can lead to further movement, and requires a hole the size of a soda can. Also, PolyLEVEL is lighter—two pounds per cubic foot compared to 100 pounds per cubic foot—and expands in all directions.

Dry•Pro also uses this technology for concrete sidewalks, garage floors and pool areas as well as commercial spaces such as factory floors. PolyLEVEL cures in 5 to 15 minutes after application, compared to a full day’s curing for mudjacking, and the floor can be used in a half-hour.

“We’ve gotten some really cool results out of it and we’ve saved customers money,” Weatherly attests, adding that more commercial customers are beginning to notice the company’s service. “We can go in and put PolyLEVEL under the slab and lift it back up in most cases.”

Most impressively, demolishing the cracked concrete, removing the debris and bad soil, adding and compacting good soil, and pouring a new slab can cost between $5,000 to $15,000—the PolyLEVEL solution costs are significantly lower.

Dry•Pro also installs systems for removing water from basements, a more reliable and less costly solution than digging, applying paints or sealants, and backfilling. Modern solutions with extensive warranties involve drainage and pumping systems with alarms and sophisticated battery backup.

Perimeter damage, crawlspace and basement waterproofing systems come with a lifetime warranty. When the work is finished, Dry•Pro offers an annual maintenance program that includes checking pump operation, cleaning sediment and silt from the sump liner, changing the batteries in the WaterWatch Alarm, checking the discharge line to prevent freezing, inspecting for potential problems, and, with the SaniDry Basement Air System, when applicable, replacing the filter and oiling the equipment.

 

Staying Out in Front

 Dry•Pro continually offers new services ever since its founding 16 years ago. It has added bowing wall repair, a mudjacking alternative, and many other foundation and basement repair products over the years.

“I do see us continuing to get into things,” Weatherly says, such as the tuckpointing that involves the art of matching existing colors so the repair is seamless. “We want to add services that help with the customer experience.”

Weatherly, who did landscaping, cleaning, and sales work after studying business at Austin Peay State University in Clarksville, Tenn., moved to Charlotte and worked in a textile business before starting Dry•Pro. He worked nights while getting the business off the ground.

A true family business, Weatherly’s wife Holly manages the office, and his father Ron Sr., a military retiree who joined in 2003, runs the production side.

Early on, Weatherly affiliated with the 300-member Basement Systems and Foundation Support Works International Contractor network for access to products, support and more than 1,000 hours of staff training each year. Basement Systems has been developing products for keeping basements dry since 1987.

Weatherly expanded the business into mold remediation and duct cleaning in 2006, when he bought the established AdvantaClean of Charlotte company, a diversification that left him less dependent on solving water problems only.

While the recession led to a brief dip in business, Weatherly says the service is not as sensitive to economic conditions as some home remodeling companies.

“If somebody’s got a problem, they’ve got to fix it, whether it’s now or down their road,” he says. “It’s their house, and it’s one of their largest investments. You can’t put off foundation repairs like a kitchen or bathroom remodel.”

Customers appreciate the longstanding company’s services. Dry•Pro has an average 4.8 of 5-star ranking among 125 Google reviews, and has received the Angie’s List SuperService award in 2005, 2006, 2008, 2011, 2012, and 2013. It has an A-Plus Better Business Bureau rating.

In 2006 and 2007, Weatherly was named Business Person of the Year by the National Association of the Remodeling Industry (NARI).

“We’re out there and people see us,” Weatherly says. “They want to use somebody they can trust.”

BizXperts

In early August 2014, on the first Sunday of my new life as a commercial diplomat at the U.S. Embassy in New Delhi, India, I struggled out of a four-seat taxi with my wife and four children in the heat of the summer in the bustling neighborhood of Vasant Vihar.

There were no sidewalks, and horns seemed to honk from all directions as we cautiously crossed the street among the cows and street vendors that glanced at us. In the coming weeks, we would learn to drive ourselves through those streets, notwithstanding the cows, lack of sidewalks, and chaotic traffic patterns that always make for an interesting ride.16.01-02_IndiaTrade_Paul Frost_S

Our experience was perhaps emblematic of India today—overwhelming and bewildering at first, but dynamic and full of potential for those that adapt and form lasting relationships in this huge, fascinating country.

Although I had always been interested in international affairs, I had never anticipated moving to India. After earning a master’s degree at the University of California San Diego, I spent a few years in Washington, D.C., where I worked at Georgetown University, and afterwards, the Export-Import Bank.

In 2007, we moved to Charlotte where I was in commercial lending and international trade finance at BB&T and Bank of America until 2014, when I joined the Foreign Commercial Service and was assigned to serve in India.

U.S. Commercial Service in India

Presently, I work as one of 10 American Commercial Officers in India within the U.S. Commercial Service, a division of the U.S. Department of Commerce’s International Trade Administration.

The U.S. Commercial Service employs more than 260 Foreign Service Officers in 75 markets around the world, including seven offices throughout India. Our primary purposes are to promote the export of U.S. goods and services to India; advocate on behalf of U.S. business interests with government entities; and recruit investment from India into the United States.

Opportunities and Challenges in India

 The last 16 months have been a terrific time to be at the Embassy in New Delhi. The United States and India are strengthening their commercial partnership as never before. President Obama is the only U.S. President to visit India twice while in office, including attending India’s Republic Day celebrations in January 2015.

India’s Prime Minister Narendra Modi and President Obama have also met twice in Washington D.C., most recently during the two countries’ first-ever Strategic and Commercial Dialogue. President Obama said in January, “India and the United States are not just natural partners—I believe that America can be India’s best partner.”

With more than 1.2 billion people, India is the most populous democracy in the world. The country is governed under a parliamentary system comprising 29 states and seven union territories, and has more than 22 official languages. Since gaining its independence in 1947, India has passed through many struggles with a strong desire for sovereignty and independence that leaders such as Mohandas Gandhi and Jawaharlal Nehru fought so hard to achieve.

India is currently experiencing some of the world’s fastest economic growth rates and is attracting impressive amounts of investment, but it also has its challenges, considering:

  • Every month, roughly one million job seekers enter the job market. In response, the central government is pushing a “Make in India” initiative to spur manufacturing and job creation.
  • More than 300 million Indians live with no or little electricity, especially in rural areas. While there is a big push to build new energy capacity, utilities are consistently hampered with a lack of capital and abundant red tape.
  • About 500 million Indians have no indoor toilets, which has serious sanitation and public health ramifications.
  • India ranks 130 out of 189 in the World Bank’s annual “Ease of Doing Business” ranking. Although the business-friendly Prime Minister Modi wants to improve India’s ranking, it is difficult to combat the webs of bureaucracy and corruption that have contributed to this low ranking.
  • It is estimated that India needs $2 trillion to spend on infrastructure improvements—roads, bridges, ports, and more. But national and state budgets cannot come close to these figures, causing the government to explore public-private partnerships and look for ways to attract long-term investment.

Positive Trends in India

Given these challenges, what does India offer U.S. companies? There are many positive trends and tremendous potential.

First, U.S.-India bilateral trade has increased fivefold since 2000 to $103 billion today, with a projection to increase to $500 billion by 2025.

A look at North and South Carolina’s export figures to the BRICS countries (Brazil, Russia, India, China and South Africa) indicates there is room for U.S.-India trade to grow, especially compared to our trade with China. Although the populations of India and China are nearly the same, North Carolina’s exports to China are more than six times higher than India, and South Carolina’s exports to China are 11 times higher than India.

Second, the demographics of the BRICS indicate the growth potential for trade with India.

India’s population and national savings rates are second only to China’s among the BRICS, and its population is forecast to surpass China’s by 2025. Although India’s GDP per capita is the lowest among the BRICS, its middle class is rapidly expanding.

Third, despite India’s diversity of cultures and languages, English is commonly spoken throughout the country, making business activity easier for Americans. Also, there is broad familiarity with and affinity for the United States throughout India. Roughly three out of every 100 Americans is of Indian origin, which has formed a powerful commercial and familial network.

The sectors in which I specialize are indicators that the future is bright for U.S.-Indian trade:

  • Tourism: In 2015, the U.S. consular sections processed a record-setting one million visa applications for visitors from India. And the number of visitors from India to the United States has increased by 20 percent in the last year.
  • Education: More than 130,000 Indians are currently studying at universities across the United States, a 30 percent increase since 2014 and its highest rate ever.
  • Investment: At nearly $11 billion, India is the fifth fastest-growing source of business investment into the United States. Indian firms in the U.S. have created nearly 44,000 jobs and export nearly $2 billion from the United States. Sven Gertzer of the Charlotte Chamber of Commerce recently visited India to scout for more investment leads.

A recent investment by an Indian firm in North Carolina is worth highlighting.

In 2014, a company from southern India named SG Mills invested $40 million to open a yarn spinning facility in Eden, North Carolina. This investment initially started when one of my colleagues in Chennai, India, referred SG Mills to the U.S. Department of Commerce’s SelectUSA office, which promotes foreign direct investment into the United States.

SG Mills is a third-generation, family-owned business. It is the largest spinner in India with a total installed capacity of 1.1 million spindles and a workforce of 30,000 employees. SelectUSA, through the U.S. Commercial Service post in Chennai, India, worked closely with the team members at SG Mills as they considered their approach to the U.S. market.

SelectUSA introduced SG Mills to several economic development organizations in a variety of U.S. states. Ultimately, Governor Pat McCrory’s office persuaded SG Mills to establish their U.S. operations in Eden, resulting in the company’s investment of more than $40 million and the creation of more than 80 new jobs.

Finding Opportunities in India

How can Charlotte companies find opportunities in India?

We often share the following advice:

Remember the Three P’s: Persistence, Patience and Partners. India has its challenges, but the right partners combined with a long-term commitment often leads to success. The U.S. Commercial Service offers matchmaking and partner-selection services for a small fee to American firms in any of our 100+ Export Assistance Centers throughout the United States, including one in Charlotte.

Because India is so vast and diverse, it is wise to consider a regional strategy. Our seven offices located throughout India can advise Americans on ways to develop such strategies. Companies should not overlook ‘Tier 2’ cities that are each home to millions of people and often have abundant trade opportunities.

Be prepared to offer customization and after-sales services in order to maintain and grow relationships.

These are just a few areas in which the U.S.-India commercial relationship is growing and deepening. For Charlotte-based companies, India offers much in cultural and commercial opportunity.

Content contributed by Paul Frost, a Foreign Commercial Service Officer at the U.S. Embassy in New Delhi, India. The Foreign Commercial Service is the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration. The role of a Foreign Commercial Service Officer is to promote the export of U.S. goods and services, attract foreign investment into the United States, and defend U.S. commercial interests abroad. Frost can be reached at paul.frost@trade.gov. For more information, visit www.export.gov/india and www.buyusa.gov/india.

Content contributed Shumaker, Loop & Kendrick, LLP, a full service law firm founded in 1925 with more than 240 attorneys practicing in Toledo and Columbus, Ohio; Tampa and Sarasota, Florida; and Charlotte, North Carolina.     Our Charlotte office is sharing in the fast-paced development of the Carolinas by providing representation on corporate, securities, real estate, tax, litigation, immigration, employment, creditors’ rights, international business transactions and litigation, financial transactions, health and all other business specialty areas. For more information, contact Scott M. Stevenson, the Charlotte Managing Partner, at 704-945-2180 or sstevenson@slk-law.com or visit www.slk-law.com.

 

Today, more and more of the 10,000 aby boomers—those born from 1946 to 1964—reaching retirement age are exiting their businesses and listing their companies in the business-for-sale marketplace. The number of small businesses listed for sale nationwide is at a six-year high according to data compiled by BizBuySell.com, and analysts expect that number to reach unprecedented levels.

The vast majority of these owners will be looking to exit their businesses through a sale to outsiders (a third party) or a sale or transfer to insiders (co-owners, key employees or family members). This movement is predicted to soon result in a glut of companies for sale, driving down valuation and creating a buyer’s market.16.01-02_Legal_Shumaker_image_S

In over 25 years of assisting closely-held businesses and their owners in the exit planning area, I have never seen more business owners who are beginning to understand how critically important it is for them to create a successful exit plan in order to reach their personal and financial objectives by maximizing the value of their business upon their exit.

Let’s assume you are currently a 65-year-old founder and sole owner of a successful business. You have worked hard all of your life but are experiencing the first signs of losing some of the “fire in your belly” for driving your business’ continued growth and would like to soon be able to take some “chips off the table” and create a liquidity event which will allow you and your spouse to travel and do all of the other things you have always talked about while you are still young and healthy.

As you understand it, your business will probably sell for at least $8 million which constitutes approximately 80 percent of your personal net worth.

You would like to retire in the next three to five years and realize you can’t do your exit plan alone. However, you’re wondering who, exactly, are the professional advisors that have the qualities, expertise, experience, and training to help you plan in order to make your transition successful?

My experience has been that the most successful exits have occurred when the business owner has assembled an advisor team, usually including at a minimum a CPA, attorney, financial planner, and insurance professional, to help him/her create and orchestrate a successful exit.

Why an advisor team? Why not just one advisor who can assist in creating an exit plan?

The answer is simple: No single profession or professional possesses all of the necessary skills, expertise and experience to single-handedly lead an owner through all steps of the ownership-transition process. Also, some professionals are not comfortable cooperating closely with professionals from other disciplines for the benefit of their common clients. As a result, the process can stall before it really gets started.

Your current advisors, whether CPAs, attorneys, financial or insurance professionals, may or may not be familiar with some of the important issues which you should address in any well-designed exit planning process.

Instead, they may be more focused on compliance-type activities (general business matters, contracts, employee matters, tax returns, financial statements, etc.), which simply are not planning-oriented. In addition, financial and insurance professionals often focus on a subset of overall planning—investment planning or life-insurance planning—in order to help meet income needs or estate-tax costs.

Having said that, there are of course many advisors who are exceptions to these generalizations. You should certainly discuss these issues first with your current advisors as they may be well-qualified to help you accomplish your exit planning objectives.

At least one member of your advisor team should be trained and possess the knowledge to act as a facilitator of your exit planning process. This facilitator should use a written, detailed and systematic process which covers all the important issues which need to be addressed for a particular owner’s exit.

This facilitator must also be able to work with you and your advisors to create and agree upon a written exit plan and action item checklist for you and for each member of your advisor team. This will shorten the process and reduce considerably the time you should have to spend creating the plan.

A written exit plan is based upon your goals and objectives so it provides a road map that can be understood and followed by you and all members of your advisor team. In most cases, once you have chosen your facilitator, many (or all) of your other current advisors will likely be suitable members of your advisor team, unless they tell you otherwise.

Now that the stage has been set, our next installment will discuss in detail the eight prerequisites for creating and implementing a successful exit plan.

Content contributed Shumaker, Loop & Kendrick, LLP, a full service law firm founded in 1925 with more than 240 attorneys practicing in Charlotte, North Carolina; Columbus, Ohio; Sarasota, Florida; Tampa, Florida; and Toledo, Ohio. Content written by Robert Norris, Partner and co-chair of the firm’s Emerging and Middle-Market Practice Group. For more information, contact him at 704-945-2926 or rnorris@slk-law.com or visit www.slk-law.com.

Family business owners face both emotional and financial challenges when preparing to exit their business—and many do not have a formal succession plan. Key aspects to consider include understanding goals and objectives; analyzing options for gifting, selling and/or donating; and developing a plan that is appropriate for both the family and the business.

Being Succession-Ready

According to the Baker Tilly International Succession Reset: Family Business Succession in the 21st Century (2014) report, four out of five U.S. family business owners are not succession-ready.

Key challenges faced by family business owners include being ready for transition or market sale, and ensuring that the business has the financial capacity to support both retirement and the next generation.

Sandi Thorman
Sandi Thorman

The study points out that succession today is just as much about the transfer of knowledge and skills as it is about the transfer of wealth, because the level of skills required to effectively run a business in today’s environment is far greater than it was in previous generations.

According to the PWC Global Family Business Survey (2014) report, only 16% of family firms have a succession plan that has been discussed and documented.

The terms of the plans were varied: 40% would pass both management and ownership to the next generation; 32% would pass only ownership; 18% would sell to another company including a private equity (PE) firm; 5% would complete an initial public offering (IPO); 4% would sell to their management team; and the remaining 9% didn’t know or had other plans.

Developing a Plan

 The first step in succession planning is identifying your goals and objectives. The next step is developing a plan that achieves your goals and objectives without doing harm to the family or the business. Fundamental considerations include those listed here.

Fundamental Considerations:

  • Retain control?
  • Engage the next generation?
  • Continue the business?
  • Appreciation anticipated?
  • Stability and good cash flow?
  • Type of entity?
  • Children active and non-active?
  • Equal distribution among family members?
  • Concern for employees?
  • Key employees that are non-
    family members?
  • Commitment to the community?
  • Transfer or sell? To whom, when, how much, future appreciation
    only?
  • Require income?
  • Healthy?
  • Need liquidity?
  • Charitable intentions?
  • Prefer tax minimization?
  • Simple or complex?
  • Risk averse?

Gifting, Selling and/or Donating

 Options for keeping the business in the family include transfers as outright gifts, gifts in trust, private annuity, Grantor Retained Annuity Trust (GRAT), Intentionally Defective Grantor Trust (IDGT), and Beneficiary Defective Inheritor’s Trust (BDIT).

It may be appropriate to examine a spin-off with each child being given a separate business or division. It may also be appropriate to perform a simple tax-free recapitalization of the business so that voting stock (control) could be retained while nonvoting stock could be transferred.

Keep in mind that valuation discounts may come into play, both minority and marketability discounts. The IRS may soon publish regulations limiting use of these discounts for transfers involving family-controlled entities; therefore, for those transfers currently being planned, it may be advantageous to finalize such transfers sooner rather than later.

Options for selling the business include outright sale, partial sale, installment sale, Self-Cancelling Installment Note (SCIN), redemption, and Employee Stock Ownership Plan (ESOP). A family business owner may prefer a sale for reasons including: no leadership or entrepreneurial talent, irreconcilable conflicts among family and management, some family not in the business, liquidity needs, or lack of confidence in future of the business.

Irrespective of to whom, when, and how it is to be sold, there are steps to get the business ready to sell, including maximizing the value of the business, maintaining good business records, obtaining non-compete and confidentiality agreements from key employees, and designing and implementing incentive structures. Consider including vesting and forfeiture provisions and linking the benefit to “x” years of service, the sale of the company, or some other performance variable.

Options for transfer by charitable contribution include a Donor- Advised Fund (DAF) and split-interest vehicles such as a Charitable Lead Trust (CLT) and a Charitable Remainder Trust (CRT). While CLTs help cut estate and gift taxes, CRTs are primarily income tax planning vehicles.

In summary, the succession process will guide you in gifting, selling and/or donating your business. Based on your goals and objectives, you will be able to develop a robust plan that is appropriate for both your family and your business.

Content contributed by GreerWalker LLP, a Charlotte-based accounting and business advisory firm offering assurance, accounting, tax, and consulting services primarily to privately held middle-market companies, their owners, and their executive management teams, as well as a range of consulting services directed to publicly traded companies. Content written by Sandi Thorman, CPA, Partner and leader of the firm’s Estate, Gift & Trust Planning Services. For more information, contact Sandi at sandi.thorman@greerwalker.com or 704-377-0239 or visit www.GreerWalker.com.

 

Make 2016 the year where you keep an important business resolution. We suggest you focus your efforts on LinkedIn, for it’s a pretty safe bet that your prospects and clients are already there.

Whether you are seeking a new position or looking to grow your business, there are several simple steps to take to reach these goals.

Freshen Up Your LinkedIn Profile

Get a new professional headshot that makes a great first impression. Use a solid, or preferably white background. Too many people have unflattering or inappropriate photos on LinkedIn.

Enhance your personal brand with a background image. This really makes your profile stand out from the crowd.BX Bass_Ira_Linda_S

Update your contact information. It is really frustrating to call or email a connection to find that the phone number is incorrect and the email has bounced back.

Add media of all different types. For example, add photos, videos, presentations, certifications, audio clips, etc. This makes your profile more searchable and offers the reader a greater understanding of you and your organization.

Add optional sections to your profile such as Honors and Awards, Organizations you support, Publications, Projects, etc. These sections round out your profile by exhibiting to the reader who you are beyond your title and job description.

Monitor Your LinkedIn Homepage for Hidden Opportunities

Regularly check to see who has viewed your profile. These are potential new clients who might be checking you out.

Keep in touch with your network by congratulating your connections on milestones in their life and career.

Share an update on a regular basis to keep you top-of-mind with your network.

Become a Thought Leader in Your Industry

Publish insightful posts about your industry that your connections would find of interest.

Contribute thoughts and comments within your strategic LinkedIn groups on a regular basis.

Prospect for New Connections

Set a goal of connecting with a certain number of prospects on a regular basis to expand your network and to develop valuable relationships.

Advanced search is an area where you can set the parameters to search for people, jobs, articles, companies, and universities. If you are seeking to connect with CEOs in your region you can set the search to do so and come up with hundreds of results based on the size of your network. Save the searches you create to get notified of any new results on a regular basis.

Follow Companies That You Want to Do Business With

Keep up to date on the latest developments within targeted companies with little effort by following them on LinkedIn.

Learn who is inside that company of interest who might be a lead for you or introduce you to a specific individual.

Stay updated about jobs that may be of interest to you.

Educate Yourself About LinkedIn Premium

LinkedIn offers several options to upgrade to a premium account. This can result in a more targeted experience depending on your specific goals. Free LinkedIn users may test drive premium accounts for one month. Here are the four versions:

  • Searching for a job this year? If so, then LinkedIn’s Job Seeker premium account may be right for you. This premium version presents you as a featured applicant when you apply for a job through LinkedIn. You are able to see salary data when searching for positions and have the ability to send 15 Inmails per month to recruiters or individuals inside organizations you are interested in.
  • Power up your sales efforts with LinkedIn Sales Navigator. This version allows you to receive targeted leads and makes prospecting much simpler. It is possible to integrate Salesforce to create a seamless and more efficient experience.
  • Seeking to grow your workforce in 2016? Find the right talent on LinkedIn with Recruiter Lite or Recruiter Corporate premium versions. Track candidate activity with smart notifications and automatic organization.
  • Enhance your overall LinkedIn experience with Business Plus or Executive. This version includes additional advanced search filters as well as more saved search alerts. Your profile is displayed more prominently with a larger profile photo and background image.

Make it a great year! Take 15 to 30 minutes each day to check your inbox, make connections, review connection requests, join and monitor groups and search for prospects or jobs. If you stay motivated and are consistent, you will see results.

“Ambition is the path to success. Persistence is the vehicle

 you arrive in.” ~ Bill Bradley

Content contributed by Ira and Linda Bass of Connect To Success, specializing in LinkedIn individual and group training for corporations, associations and networking groups along with communication coaching. For more information, please contact Ira Bass at IraBass@ConnectToSuccess.biz or 704-989-3790. Learn more at www.ConnectToSuccess.biz.

Publisher's Posts

In May of 2006, the Brookings Institute published a working paper titled Case Closed: The Debate about Global Warming is Over. It set forth three basic findings with regard to climate change.

First, the consensus of the scientific community has shifted from skepticism to near-unanimous acceptance of the evidence of an artificial greenhouse effect. Second, while artificial climate change may have some beneficial effects, the odds are we’re not going to like it. Third, reducing greenhouse gases may turn out to be much more practical and affordable than assumed.

While many people to this day remain skeptical about global warming and climate change, many nations around the world are worried enough that they have continued to seek further consensus as well as formal agreement and an actual business plan that addresses global warming and reducing greenhouse gases.

It’s hard to overstate the importance of what happened at the 2015 United Nations Climate Change Conference (the yearly session of the Conference of the Parties or COP21) in Paris in December 2015. Basically, official representatives from 195 countries adopted the first-ever universal, legally binding agreement to fight climate change. The Paris Agreement or Accord, as it has come to be called, aims to help the world abandon fossil fuels in this century and, specifically, stop global warming “well below” 2 degrees Celsius and, if possible, below 1.5 degrees.

And while the Paris Agreement will be dissected and discussed every way imaginable, it represents a key shift in the climate movement: A global consensus that something significant needs to be done, and a pathway to do it.

One of the most respected voices on climate change is James Hansen, a former NASA scientist now climate activist that has been studying changes in the Earth’s climate since the 1970s. At a benchmark Congressional hearing in 1988, he described the “greenhouse effect” where heat-trapped gases are released into the atmosphere causing global warming with a 99 percent certainty. He advocated the radical suggestion that there should be a “sharp reduction in the burning of coal, oil and other fossil fuels that release carbon dioxide.”

It was Hansen and 16 others who released a report in July 2015 announcing that the Earth’s huge icebergs and ice sheets, such as those found in Greenland, are melting faster than expected. It stated, “The sea level could soon be up to five meters higher than it is today by the latter part of this century, [if] greenhouse gases aren’t radically slashed. This would inundate many of the world’s cities, including London, New York, Miami and Shanghai.”

As these scientists describe it, there is a great deal of excess energy already in the “system.” So far, the oceans have been absorbing a huge amount of this excess heat. However, this will not continue forever, and when it stops, the heat will go into the atmosphere.

Evidently, the Arctic has been heating up much faster than other places. The volume of sea ice has been drastically reduced, so that there is less and less multi-year ice. Sometime in the next few years, there will likely be a period late in the summer when all the sea ice will disappear.

The ice reflects most of the sunlight that hits it regardless of whether it is 3 inches thick or 3 meters. So, when light reflection is diminished by melting ice, the oceans warm. The next great fear is that as the oceans warm, methane that is now held in ice crystals deep on the ocean floor will be released. This is especially true at the Siberian continental shelf. Methane gas has a much stronger greenhouse effect than carbon dioxide.

Virtually every aspect of climate change that we have seen has occurred much, much, much faster than previously predicted. This is true of the Arctic sea ice melting, glaciers shrinking, sea level rising, and ocean warming. There’s no reason to believe any of this will slow down. In fact, it is only likely to accelerate.

Of course, many big questions remain, but having the Paris Accord in place is a collective first step. Implementing the agreed-upon assessment mechanisms and action plans will be essential to meet the longer term challenge. Making sure that nations fulfill their obligations under this agreement is also vital to the prospect of slowing and reversing the greenhouse effect.

What is most important is to learn all we can to take individual ownership of climate change. This is not an effort won by any one person or any one nation. It will only be won with every effort we can put forward. Even if you refuse to accept these concepts for your own generation, then make it your commitment for future generations.

As Chief Seattle is frequently quoted, “Take nothing but memories, leave nothing but footprints!”

I believe that we need to apply that same premise to our lives here on this earth. I challenge you to follow that fundamental premise.

First, the consensus of the scientific community has shifted from skepticism to near-unanimous acceptance of the evidence of an artificial greenhouse effect. Second, while artificial climate change may have some beneficial effects, the odds are we’re not going to like it. Third, reducing greenhouse gases may turn out to be much more practical and affordable than assumed.

While many people to this day remain skeptical about global warming and climate change, many nations around the world are worried enough that they have continued to seek further consensus as well as formal agreement and an actual business plan that addresses global warming and reducing greenhouse gases.

It’s hard to overstate the importance of what happened at the 2015 United Nations Climate Change Conference (the yearly session of the Conference of the Parties or COP21) in Paris in December 2015. Basically, official representatives from 195 countries adopted the first-ever universal, legally binding agreement to fight climate change. The Paris Agreement or Accord, as it has come to be called, aims to help the world abandon fossil fuels in this century and, specifically, stop global warming “well below” 2 degrees Celsius and, if possible, below 1.5 degrees.

And while the Paris Agreement will be dissected and discussed every way imaginable, it represents a key shift in the climate movement: A global consensus that something significant needs to be done, and a pathway to do it.

One of the most respected voices on climate change is James Hansen, a former NASA scientist now climate activist that has been studying changes in the Earth’s climate since the 1970s. At a benchmark Congressional hearing in 1988, he described the “greenhouse effect” where heat-trapped gases are released into the atmosphere causing global warming with a 99 percent certainty. He advocated the radical suggestion that there should be a “sharp reduction in the burning of coal, oil and other fossil fuels that release carbon dioxide.”

It was Hansen and 16 others who released a report in July 2015 announcing that the Earth’s huge icebergs and ice sheets, such as those found in Greenland, are melting faster than expected. It stated, “The sea level could soon be up to five meters higher than it is today by the latter part of this century, [if] greenhouse gases aren’t radically slashed. This would inundate many of the world’s cities, including London, New York, Miami and Shanghai.”

As these scientists describe it, there is a great deal of excess energy already in the “system.” So far, the oceans have been absorbing a huge amount of this excess heat. However, this will not continue forever, and when it stops, the heat will go into the atmosphere.

Evidently, the Arctic has been heating up much faster than other places. The volume of sea ice has been drastically reduced, so that there is less and less multi-year ice. Sometime in the next few years, there will likely be a period late in the summer when all the sea ice will disappear.

The ice reflects most of the sunlight that hits it regardless of whether it is 3 inches thick or 3 meters. So, when light reflection is diminished by melting ice, the oceans warm. The next great fear is that as the oceans warm, methane that is now held in ice crystals deep on the ocean floor will be released. This is especially true at the Siberian continental shelf. Methane gas has a much stronger greenhouse effect than carbon dioxide.

Virtually every aspect of climate change that we have seen has occurred much, much, much faster than previously predicted. This is true of the Arctic sea ice melting, glaciers shrinking, sea level rising, and ocean warming. There’s no reason to believe any of this will slow down. In fact, it is only likely to accelerate.

Of course, many big questions remain, but having the Paris Accord in place is a collective first step. Implementing the agreed-upon assessment mechanisms and action plans will be essential to meet the longer term challenge. Making sure that nations fulfill their obligations under this agreement is also vital to the prospect of slowing and reversing the greenhouse effect.

What is most important is to learn all we can to take individual ownership of climate change. This is not an effort won by any one person or any one nation. It will only be won with every effort we can put forward. Even if you refuse to accept these concepts for your own generation, then make it your commitment for future generations.

As Chief Seattle is frequently quoted, “Take nothing but memories, leave nothing but footprints!”

I believe that we need to apply that same premise to our lives here on this earth. I challenge you to follow that fundamental premise.

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