Grow Your Business Through Acquisition

Be Smart About Selling Your Business

Essential Skills For New Managers

Corporate Angels

Donate Please

Real Estate Stats

Pharma Training

Corrections or additions?

This article by Kathleen McGinn Spring was prepared for the July 17, 2002 edition of U.S. 1 Newspaper. All rights reserved.

Getting Green For Building Green

Business is run by traditionalists and won by innovators.

Tradition tells us that our energy needs can be met only by raping

more wilderness and damming more streams. But innovation now is making

it abundantly clear that by directing a little bit of human brain

power toward conservation we can spare the ravaging of our resources

— and our corporate pocketbooks to boot. So says Smart Start Buildings,

an energy-efficiency consortium of the Garden State’s utilities.

Smart Start’s massive energy saving incentive program is explained

in a detailed workshop "Building Energy Efficient Buildings"

on Thursday, July 25, at 4 p.m. at PSE&G’s Edison Training and Development

Center in Edison. Several representatives of PSE&G’s Smart Start outline

the available financial, technical consulting, and equipment incentives,

as well as long term cost-saving paybacks. A thorough preview of the

program can be found on the organization’s website: www.njsmartstartbuildings.com

This event is sponsored by the New Jersey Technology Council.

It is no secret that New Jersey’s power providers have been unable

to meet growing demands for over two decades — a deficit they

only see growing in the future. At the same time, conservation incentives,

specifically and prudently applied, have already made major dents

in energy demands. A series of programs that stagger peak usage in

summer and winter has cut the Garden State power drain by as much

as 18 percent.

Now New Jersey utilities are going directly to the source: the structures

that draw all this energy. The Smart Start Buildings Program consists

of Jersey Central Power and Light, Connective Power Delivery, PSE&G,

New Jersey Natural Gas, Rockland Electric and Gas, Elizabethtown Gas,

and South Jersey Gas, all in a single conservation alliance. For new

builders, Smart Start aids in the configuration of energy-wise plans

and encourages the adoption of higher efficiency equipment. For existing

plants, cost-effective, energy-saving retrofit methods are available.

A three-pronged approach of direct incentives, planning assistance,

and reduced payback time allows Smart Start to individualize each

program to customer needs.

Basic design assistance. Each customer applying to the

Smart Start Program receives up to eight hours of technical assistance

in design planning — more if the consultant authorizes. The consultant

will walk through your plant and come up with a list of energy saving

items. He may work with your architect to produce a more efficient

layout or building configuration. Lighting selection and placement

— typically a source of great savings — will be analyzed.

All power equipment, including chillers, motors, HVAC, gas boilers,

heaters, and varied frequency units will be examined with an eye for

overall cost. Various renovation and remodeling options will be discussed.

Initially, Smart Start consultants meet with your firm’s engineers

and architects for a brainstorming session. A design simulation is

then created and checked over. Finally a thorough analysis of all

energy efficient measures is made both in existing and new parts of

the structure.

Buildings of over 50,000 square feet qualify for a three-step comprehensive

support program each with its own cash incentive.

Financial incentives. Despite simple math, which points

to the benefits of energy efficient construction, many firms are justifiably

hesitant. High-efficiency equipment frequently costs more. And even

a quick three-year payback can seem awfully far down the road to a

startup firm desperate to pinch every dollar until the eagle yells.

In answer, Smart offers upfront cash incentives and discount purchases

for most pieces of power-driven equipment. Electric chillers (air

or water), geothermal units, motors, air and water pumps, natural

gas water heaters, and prescriptive lighting all carry rebates. In

addition, the program will link you with low cost suppliers and installers.

Those seeking alternative power sources also are eligible for rebates.

Beyond these basics, the Multiple Measures Bonus, applied to firms

employing two or more conservation efforts on a single project, adds

another 10 percent to the incentive package. Larger builders, entering

the Comprehensive Design Program, can claim a $1,000 incentive on

the brainstorming stage, $5,000 for the design simulation, and another

$5,000 for the final analysis stage.

Even for the small business, the incentives alone become considerable.

For a building under 50,000 square feet, Smart Start customers are

typically receiving $5,000 in incentive funds before any energy payback

comes in. Such savings range from the $50 incentive for installing

a 0.6 energy factor gas water heater; to the $300 for the 92 percent

AFUE gas furnace; to the $3,400 rebate for more efficient and better-placed

lamps.

Payback time. The larger the project, the more evident

the energy payback. The FAA’s William J. Hughes Training Facility,

located just outside Atlantic City, plunged into Smart Start in l999,

and is already saving thousands of kilowatts and bucks. Ahmad Hazaveh,

the plant’s engineer, joined architect Barry Hinkle with Connective

Power Delivery’s program manager Jim Cinelli to make their expanded

facility as low-energy as possible.

In the expanded section of the Hughes facility, they made a $21,000

investment in lighting modifications, with an admittedly paltry $1,267

upfront incentive. The result? 49,896 kilowatt hours saved annually.

In retrofit, the $178,000 investment in new lighting (mitigated by

a Smart Start $50,000 incentive) saves the FAA 1 million kilowatt

hours annually of your tax dollars.

Many businesses still labor under the ancient misconception that for

business to rise, our environment must fall. Recycling, which is a

$22 billion industry in the Garden State, is silly in their view.

Conservation, they assure themselves, is a costly frill. If these

are the rumblings coming out of your accounting department, call Smart

Start (800-854-4444) and have the experts come out for a quick audit.

You may just find that investing in a little efficiency now can crunch

out to a lot of savings by the end of fiscal year.

Top Of Page
Grow Your Business Through Acquisition

One of the best ways to get star employees may be to

buy them. The same is true for customers. Acquiring a competitor nets

you both, and this is an unusually good time to look into doing just

that. Beware, though, a business marriage is not without risks.

John Harmon, founder of West Chester, Pennsylvania-based Knoxbridge,

an education and consulting company, speaks on "How to Make Money

by Acquiring Companies Right" on Wednesday, July 31, at 8 a.m.

at the Princeton Hyatt. Cost: $149. Call 866-836-5669.

Harmon attended the University of Maryland (Class of 1993) on "the

10 year plan," working as he studied. He holds an M.B.A. from

Florida State and has extensive experience in acquiring companies,

in integrating them into larger companies, and in reversing the process

through the sale of business units. His first experience was in the

latter field. As controller of retailer Georgetown Leather Design

in 1993, a period he recalls as "the last recession," he was

responsible for selling that business out.

He took that experience and went to work for Encompass, a publicly

traded company that buys businesses in the construction services field

— plumbing concerns, janitorial services, HVAC companies, and

the like — and combines them into larger companies. Doing this

work, he observed that large public companies like Encompass did not

always get a good price for their acquisitions.

"The goal of business is to make money," Harmon says, "but

the goal of a public company is not as much to make money as to report

making money." There has been ample evidence of this preoccupation

of late, and it is one of the reasons Harmon thinks the little guy

can home in on acquisitions better than his behemoth business brethren.

His concern should center solely on whether a particular acquisition

will up his profits. He has no need waste sleep worrying about where

to put it on his books so that it has maximum appeal to shareholders

or analysts.

Besides, says Harmon, acquisition "is not rocket science."

His five years at Encompass taught him how to spot a good acquisition

target, and how to bag it at a good price. His company specializes

in passing along this wisdom to others.

Why this is prime acquisition time. It is no secret that

all but the most hapless public companies saw their value skyrocket

in the late 1990s. Neither is it a secret that the rocket has fallen

to earth. In some cases, it has even nosed right into the turf. Small

business went through the same cycle, albeit more quietly, says Harmon.

In building services, for example, he says that companies that had

traditionally fetched two-and-a-half to three times earnings were

pulling in six times earnings at sale. Now, the multiple has fallen

back to three, or less. Through last year, sellers clung to hope,

and tried to fetch more for their companies, but, says Harmon, most

are now more realistic.

At the same time, the cost of capital is hovering at historic lows.

Banks may be cautious, he says, but they do have money, and are willing

to lend it. Low-cost money combined with sellers who finally believe

the ’90s are over equals the possibility of acquisition bargains.

How to spot the best targets. Look for the 60 to 65-year-old

business owner who has made his money, but has no relative or manager

ready to take on his company, and you may find the ideal seller. The

less time this business owner has spent preparing an exit strategy,

the better. Getting out from under his responsibilities — rather

than reaping the best possible price — may be his top priority.

Whether to use a broker. Brokers save you time by doing

the leg work, but, obviously, they charge for their services. Hart

says a broker may not be necessary if you have an acquisition target

— perhaps a longtime competitor — in your scopes. If, however,

you see acquisition is the right way to grow your business, but have

no idea what complementary companies are out there, a broker could

be an invaluable asset. If you do choose to use a broker, Harmon says,

"make him earn his money."

How to retain your target’s customers. There are two main

reasons to acquire a company: to get its best employees and to reel

in its customers. Do not assume that every customer will automatically

go with your company, says Harmon. Find out what your target is charging

customers and what kind of service he is giving them. Are your prices

and service offerings as good — or better? If not, the customers

may not stick around long.

How to integrate your target’s employees. You may not

want to keep every employee, but are bound to find at least one or

two "diamonds" among them. These people exist in every small

business. "If they didn’t," says Harmon, "the business

would have failed." Making these key people happy, while at the

same time keeping your existing employees and customers happy, can

be a balancing act. Never underestimate the force of company culture,

he advises.

Gaining employees through acquisition is different from gaining employees

through hiring, he says. Employees generally are hired one at a time

and are fully aware that they are expected to adapt to their employer’s

culture. The same may not be true for employees who arrive en masse

from a newly-purchased company. They may tend to hang together, and

to cling to their former employer’s way of doing things.

The best way to prevent this mindset, says Harmon, is to let the newcomers

know that they are, in fact, new hires, and are expected to conform

to their new company’s culture.

How long to keep the owner around. In most successful

acquisitions, says Harmon, the owner of the newly-purchased company

does not stick around long. If he is involved in operations, his former

employees are likely to cling to him, making their integration into

their new company more difficult.

But while the former owner may hamper operations, his short-term presence

can be invaluable in sales, and especially in binding his customers

to the company.

These customers are one of the main reasons for the acquisition,

and the former owner is in a unique position to retain them. While

his salary may be a drain, it can be a trifle compared with the cost

of winning new customers any other way. "Think what it takes to

attract a new customer," says Harmon. And think what it takes

to find a star employee. An acquisition can deliver both, and the

time to grow a company through one has rarely been better.

Top Of Page
Be Smart About Selling Your Business

Lots of times, owners of small businesses think the

only exit strategy is to liquidate assets and turn off the lights,

says John Harmon. After he finishes speaking to business owners considering

making acquisitions (see above), he turns to the other side of the

equation and offers advice to business owners considering a sale.

On Wednesday, July 31, at 1 p.m. at the Princeton Hyatt Harmon speaks

on "How to Make Money When You Exit Your Business." Cost:

$149. Call 866-836-5669.

"There is no reason to sell dirt cheap," he says. But neither

is getting a good price a no brainer, especially in this economy.

The businesses that fetch the best prices are those whose owners have

spent something on the order of five years preparing an exit strategy.

But even without that lead time, there are steps that make it more

likely that the owner can negotiate a fair price.

Put in less time. Ironically, the very element that grew

your business into a success is the element that devalues it most

at the time of a sale. And that element would be you — the owner.

Buyers, says Harmon, are purchasing future sales. They want assurances

that those sales will be there. If it is obvious that the company

can not function without the presence of its owner, there is a good

chance that future sales will decline.

Assemble a competent management team. Let potential buyers

see that operations are under the control of managers who know the

business.

Create a strong sales team. Buyers look for a constant,

continuous sales effort that does not depend on you. It is very common

for the owner to be the top manager and the top salesman, too. Drop

those roles well before putting your company on the market, says Harmon.

Look at all options. An outside sale may be the way to

go, and attracting the interest of a publicly-traded company may net

the best price, but there are other options. It is possible, for example,

that an employee, or a group of employees, might be interested in

buying the company.

Connect with downsized executives. Business owners with

more than 100 employees are better able to create a company that can

function well without them. Below that level, it is hard for the owner

to extricate himself completely from day-to-day operations. Where

that is the case, says Harmon, a sale to "a downsized executive

looking for his next adventure" may be the answer. If this is

the scenario, the owner can expect to stay around for a while training

his replacement.

Be flexible with payment arrangements. If the sale is

made to an individual — whether an insider or a recently laid-off

executive — there is a good chance that the owner will have to

hold a note for at least part of the sale price.

Entering into this type of sale is not unlike getting hitched,

says Harmon. It is essential to take the measure of the buyer’s integrity

and personality. "There is quite a bit of drama," says Harmon.

But that is better than the alternative — just shutting off the

lights and walking away.

Top Of Page
Essential Skills For New Managers

New managers who lack experience can get themselves

into financial and administrative difficulties, says Christopher

J. Lahoda of GrowthQuest Management Training LLC. "That’s why

it’s important that new — and prospective — managers learn

essential skills early in their careers." He quotes statistics

that 42 percent of today’s managers have fewer than three years experience

and that fewer than one-fourth of new managers receive any training

in basic management techniques and responsibilities.

Lahoda’s company has landed a contract to offer sales management and

officer development training to 253 banks in the network of Atlantic

Central Bankers Bank. One of 18 "bankers banks" nationwide,

Atlantic Central provides comprehensive banking services to community

banks in Pennsylvania, New Jersey, Maryland, Delaware, and New York.

Its clients include Hopewell Valley Community Bank and Grand Bank.

One set of courses is for those who have recently entered the management

ranks, and another for newly-appointed sales managers who need to

build, motivate, and coach sales teams. The training will be conducted

at Atlantic Central’s Camp Hill training facility near Harrisburg,

Pennsylvania, in September and October.

Lahoda majored in accounting at Northeastern University, Class of

1982, and has an MBA in finance from New York University. A certified

cash manager, he has done training for the American Institute of Banking

and held positions at American Express and Summit Bank. At Summit

Bank, as senior vice president and director of Treasury Services,

he ran the commercial cash management division. He founded his firm

in July, 2001. He offers these pointers for new managers:

Communicate up, down, and sideways. Continuously ask your

employees for input and advice while reserving the right to make critical

decisions.

Accept the fact that you are part of management and that

your employees view you as such. You can be cordial with your former

peers but you shouldn’t maintain personal friendships with them. To

do so will affect your ability to make objective decisions.

Recognize that everything you don’t do sends a message.

If you don’t communicate, don’t delegate, don’t administer discipline,

or don’t provide coaching, you’re sending the message that these things

aren’t important. Your employees will react accordingly.

Understand that as part of management you have an obligation

to promote your organization’s strategy and to help make it work.

To do otherwise causes your employees distress.

Learn how to coach. Managing means getting things done

through other people, and it only works if you spend time developing

your employees.

GrowthQuest Management Training LLC, PMB 242, CN

5256, Princeton 08540-5256. Christopher J. Lahoda, president. 609-844-9883;

fax, 609-844-9886. Www.growthquesttraining.com

Top Of Page
Corporate Angels

<d>Yardville National Bank is the first major sponsor

of Mercer County Community College’s $9 million corporate conference

center, which is supposed to be finished by November. The lobby will

carry the bank’s name. A room at the center will be named for Jamil

E. Faridy, an architect who has been a longtime supporter. His firm,

Faridy Veisk Fraytak, joins GBQC of Philadelphia as architects for

the project.

"Yardville National Bank may be scheduling a future shareholder’s

meeting there," says Patrick M. Ryan, the bank’s president and

CEO. "We view this facility as providing us with new opportunities

to interact with MCCC and its student body."

The 9th Annual RE/MAX Tri County Golf Tournament raised $92,000

for Children’s Miracle Network and attracted more than 130 golfers

and professionals to held at Olde York Country Club in Chesterfield.

Don Tollefson, Fox Philadelphia sports anchorman and Phil Neuman of

KYW Newsradio were the live auction MCs. RE/MAX Tri County ranks

as the second largest CMN contributor among more than 4,200 other

offices. Contributions will be made to Children’s Hospital of Philadelphia

and Bristol-Myers Squibb Children’s Hospital at Robert Wood Johnson

University Hospital in New Brunswick.

Top Of Page
Donate Please

The state chapter of the National Association of

Industrial & Office Properties is planning its third annual community

service project — developing a playground for the residents of

Perth Amboy. The 350 member firms of NJ-NAIOP will partner with the

New Jersey Department of Community Affairs Adopt-A-Neighborhood Program,

government agencies, and businesses in developing this year’s playground.

Build Day is scheduled for Wednesday, October 16. Individuals interested

in volunteering time, providing financial support and/or supplies

should contact Susan Lipton, chapter administrator, at 732-729-9900.

The Mercer County Bar Foundation seeks program book advertisements

for its fourth annual gala, set for Saturday, October 26, at the Lafayette

Yard Marriott in Trenton. Entitled "Laisse rouler les bon temps,"

the evening will include the presentations of the Michael J. Niozolek

awards to Sahbra Smook Jacobs of Brotman Graziano & Hubert. The county

prosecutor’s office will get the Community Partner Award.

Ads cost from $125 for a business card add to $500 or $600 for a full

page. Sponsorships are available from $100 (for a flower centerpiece

for one table) to $5,000, which includes tickets for 10 people. Funds

generated from the program book will go to Kids Instructed in Tolerance

through Education and Support (KITES), a foundation charity that educates

children and their parents about conflict resolution and violence

prevention. Call 609-586-6200.

Top Of Page
Real Estate Stats

Get statistics on the northern and central New Jersey

office market from the June edition of "Office Market Trends New

Jersey," published by commercial realtors Grubb & Ellis. Vacancy

rates in the first quarter of this year, says Doug Petrozzini,

have increased to close to 20 percent. "This represents a level

that has not been seen for seven years." Sublease space continues

to rise and represents 40 percent of total space available. For a

copy of this report call Stephen Jenco (E-mail: stephen.jenco@grubb-ellis.com)

or call 973-786-2538.

Top Of Page
Pharma Training

Online training programs that were formerly available

only to Food and Drug administration investigators are now being offered

to corporations, says Janice McFarland, executive vice president

of Eduneering on Campus Drive.

"The Basics of Investigation" curriculum has 10 modules, and

the Food Drug & Cosmetic Law curriculum has five modules. For information,

call McFarland at 609-627-5300.


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