Join us for our next CEO Workshop

“How to Gain Access to Capital Markets”

Thursday, Nov 17, 2011 from 7:30am to 9:30am

Register Today!

According to our recent Annual CEO Survey, the biggest challenge for CEOs is getting access to capital markets and how to maintain liquidity in a volatile economy.

In response to this urgent challenge, the upcoming workshop will explore two areas:

1. How to organically manage your cash flow
2. Hear first hand from Key Lenders how to access capital

The exceptional line up of Key Lenders will share how to optimally pursue debt and/or equity financing in a fragile economy.

• Skip Kelly, Silicon Valley Bank
• Katherine Brand, Monroe Credit Advisors
• Patricia Conry, Middlesex Savings Bank
• Joan McArdle, Mass Capital Resource Company

Learn from these Key Lenders:

• Who is lending?
• What industries and why?
• How can you make your company more attractive to lenders?
• What NOT to do and why?

Join us for this important panel to discuss the current credit market climate for early stage, growth and middle market companies.

M&A activities are picking up?  How should you prepare?  NSS conducted a survey last year with a diverse group of M&A EXPERTS about the internal and external approach a business needs to consider to end up with a successful exit.

By Rudi Scheiber-Kurtz, CEO of Next Stage Solutions. Inc.

Growing a company takes all the energy of a CEO and Exit Planning is mostly on the periphery.  Developing a long-term approach is essential in achieving a successful exit.  This will be the biggest game you will ever play and you want the end result to reflect that.  With this survey summary we want to showcase the necessary steps for you to consider.  Mitigate risk up front and consider early on an advisory team.

The EXPERT survey takers included prominent Investment Bankers, M&A Advisors, Attorneys, CPAs and Financial Advisors|CFO, Valuation and Management Consultants from the greater Boston area.

The summary and Benchmark Report represents the overall sentiment from the EXPERTS. Click to get the report: M&A Guidelines 2011

Are you a CEO or  President of a company? If so, take this survey and be done in less than 4 minutes!!

We want your participation in our Annual NSS CEO Survey. The survey is anonymous, so your privacy is completely protected. The information collected from this survey will be aggregated and only the collective data will be shared.

We are conducting this survey to better understand how you view the current and future state of your organization and what is of importance to your company in moving forward.

We have experienced one of the worst economic cycles in the nation’s history.  From today’s afflictions to tomorrow’s aspirations, the annual NSS CEO survey presents a number of options that will contribute to overcoming challenges. Rank what priorities you think are most important and then find out what your peers are thinking.

How will you prioritize the next steps for your organization?

Within the framework of present state, future state, challenges and resources, please review and rank the following questions. It is a forced rating, meaning that we ask you to choose from most to least.

To take our survey, please go to:  http://www.surveymonkey.com/s/NLHHBP2

**********************************************************************************
Next Stage Solutions, Inc. 2011- Proprietary & Confidential

On May 11, 2011, NSS held a CEO Workshop concerning Budgeting and Forecasting.  The group discussed the different measurement criteria, value drivers and how to lead an ongoing budget process within your business. Flexible budgets, annual budgets and rolling forecasts were compared.  Here are two articles you may want to read that are relevant to this topic.

Contact Ben Weller, BD & CFO of NSS at weller@nextstagesolutions.com or call at 617-449-7728 ext. 710 for a consultation.

1. Let It Roll: Why more companies are abandoning budgets in favor of rolling forecasts by Russ Bangham of CFO Magazine, May 2011
2. Use a Rolling Forecast to Spot Trends by Harvard Business School Working Knowledge, March 13, 2006

Budgets and Forecasts represent two parts of a business management continuous improvement process. A successful enterprise must first have a clear understanding of its strategic plan. In fact Budgets and Forecasts are the financial GPS tools that carry strategy through to implementation.

How do you communicate and manage the goals for your team?

The workshop posed the following questions to our CEO participants;

• Do you see a budget as a Strategic or a Tactical tool?
• How can your budget reflect your strategy?
• Do you see your budget as more of a tactical tool, i.e. the performance yardstick for annual goals and compensation plans?
• Is the budget made up of strictly financial metrics?
• Where do you capture operational goals and performance measurement metrics?
• Is your budget implementation process a reflection of your company’s culture or is it a process within itself?
• Do you recognize your business and industry drivers within your budget?
• Does your budget have an expiration date, or do you keep it alive through continuous improvement forecasting?

Ben Weller, BD & CFO for Next Stage Solutions compiled the following check list as a hand out:

The measure of how you execute strategy is captured in the topic of Budget. But different areas of your business require different measurement criteria.

Budgets can refer to:

• Marketing Strategies
• Sales Plans
• Operational performance
• Human Resource development
• Capital Investment
• Financing Strategy
• Ownership Return

And can take on many measurement dimensions

• Fiscal
• Continuous Improvement goals
• Key Performance indicators
• Strategic Planning Milestones
• Benchmarked Metrics
• Customer Satisfaction

Budget Implementations can take on the personality of the organization

• Size of Company and distribution of authority
• Top Down versus bottom up management style
• Fiscal Micro management vs  Strategical Macro management
• Cash Flow is Primary Focus
• Performance vs External Expectations is a Priority

And all methods and uses need to focus on Business Drivers

• Variable Sales and Cost (Marginal Profitability)
• Fixed Costs
• Project Costs (New Product Introduction)
• Occupancy Costs
• Variable Energy Costs
• Headcount
• Average Selling Prices (Competitive Positioning)
• Efficiency (Labor and Machine Operations)
• Productivity

What Profiles of budget design fit with various industries

• Software
• Life Science
• Medical Device
• Manufacturing
• Food Production
• Professional Services

What are the various focuses of forecasting and where do they apply

• Traditional Rolling 12 Month forecast
• Sales Driven Top down vs trend based
• Cash Flow vs P&L
• Analysis vs Plan
• Current State vs Future State (This involves lean accounting and is a whole other topic)

If you are interested in this topic and would like to explore rolling forecasts further for your business, NSS provided a customized one-day workshop.

Contact Ben Weller, BD & CFO of NSS at weller@nextstagesolutions.com or call at 617-449-7728 ext. 710

By Lauriston Taylor, Controller Consultant, Next Stage Solutions, Inc. (NSS)

Summary:

The IRS has implemented two new tax breaks under the HIRE (Hiring Incentives to Restore Employment Act) program that will provide new incentives for employers to stimulate their staffing efforts.  Employers may qualify for the following two tax exemptions:

1. Payroll tax: 6.2 percent payroll exemption of social security tax on wages, effective dates are 2 February 2010 through 31 December 2010.
2. New Hire Retention credit: $1,000 per additional new worker that is retained for at least one year with no significant wage reductions during the later part of the year

Qualified Employees:

Those employees beginning employment after 3 February 2010 and before 1 January 2010 for a period of 60 days have been previously unemployed or worked 40 hours or less.  The following situations will qualify:

-  hiring a replacement for an existing position that has become vacant due to termination for cause or voluntary resignation

-  staffing of a new company and its initial staff

-  hiring for public colleges and universities

The staffing additions listed below will not qualify:

- State, local and federal positions

- House hold employers

- Independent contractors

- Employees who are related to the employer or who directly or indirectly own more than 50 percent of the business

The new hire should supply a signed Form W-11 and this should be kept on file for record keeping purposes.

Additional information:

For further details please refer to the IRS website

Form W-11 can be downloaded from this link

NSS Workshop Series for CEOs and Business Owners

Private Equity Transactions: From Raising Growth Capital to Making an Exit | What you Need to Know.

Date: Tuesday, November 9, 2010   7:30am – 9:30am

Host: Wolf & Company | 99 High Street | Boston, MA 02110

Who Should Attend?

This workshop is exclusively for any President/CEO or Business Owner of a mature company with greater than $10MM in sales. If you are not a candidate of the above criteria, please forward this email to clients and colleagues who are.

Attention: This workshop will be strictly confidential. Names and contact information will not be released.  No solicitations.

Moderator:

Frank Leibly, Partner, Alcon Partners

Panelists:

John Fernsell, CEO, Ibex Outdoor Clothing

Ethan Flaherty, Partner, Pabian & Russell

Laura Kevghas, Partner, Mirus Capital

Discussion Topics:

• What is Private Equity, and how is it relevant to my business?
• What kinds of transaction structures are common?
• What questions should I be prepared to answer?
• What types of companies are good candidates to work with Private Equity firms?
• Should I hire an investment banker or business broker?
• What are the steps towards a capital raise and an eventual exit?
• What does a due diligence process look like?
• Why a private equity transaction instead of a strategic sale?
• What to expect after a transaction is complete?
• Is now a good time for a private equity transaction?
• Horror stories and how to prevent them.

Sponsored by Next Stage Solutions, Inc

Attendance is complimentary, but registration is required

Call today 617-449-7728 or send an email info@nextstagesolutions.com to save a space

By Mark Ott, CFO Consultant, Next Stage Solutions, Inc. (NSS)

Previously I talked about How to Prepare Your Company for Sale and the need to get your historical financial information in order.  While potential buyers are certainly interested in how well your company has performed in the past, they are even more interested in how well you will perform going forward as this is what they are truly buying.  While no forecast is guaranteed, nothing will make a potential buyer more nervous than a rosy forecast that doesn’t hang together.

Prepare a Credible Forecast

Many things go into a sound financial forecast but here are a few key things to focus on:

• Sound historical financials – the past is often times a good indication of the future.  Dramatic changes in trends from the past to the future need to be explainable and believable.
• Detail your assumptions – capture each and every assumption and test them before you employ them in your forecast.  Be able to explain the assumptions and defend them.
• Test the logic built into your model – test it yourself, give it to a trusted colleague to test, give it to your accountant/financial advisor to test.  After you’re satisfied, give it one more test.
• Consider buying or subscribing to a forecasting tool – Many companies rely solely on Excel models.  I can almost guarantee you that there are flaws in any such models.  Using a forecasting tool can eliminate many of these flaws, make it simpler to import actual data, and make it far easier to do what-if scenarios.
• Presentation – Simpler is better. Prepare materials that are easy to read and understand and have supplemental charts, graphs, and more that drill down into more detail should questions come up.

Working on these points will go a long way to developing better forecast, budgets, and long range plans.  One other thing to keep in mind:  make sure you and your financial partner understand the projections thoroughly and can talk about them easily and freely.  No matter how sound they may be, if you’re unsure of yourself in front of potential investors, they will be wary of what you are telling them.

Next time we’ll talk a bit about why it may be helpful to enlist the help of professional people to help you sell (or buy) a company and when it is appropriate to do so.

If you are contemplating to sell your business, make sure to join our next NSS CEO Workshop on this topic on Tuesday, Nov 9, 2010

The workshop was sponsored by NSS and hosted by WilmerHale Venture Group. The NSS CEO Workshop Series is intended for CEOs of revenue producing companies.

The board room was chuck full at the WilmerHale Venture Group office in Waltham. The invited speakers were Joan McArdle of Mass Resource Capital, Jane Braun of Silicon Valley Bank, Robin Lockwood of Flybridge Venture Partners and Christopher Mirabile of RacePoint Capital LLC.  The panel discussion was led by Lee Schindler of WilmerHale.

The focus was around changes in the funding arena and how that has affected each group.  We then opened it up to a dialogue with the CEOs.

Here are some interesting facets of this discussion (loosely defined by NSS):

• Significant changes in activity around Angel Groups, almost a flip side between VC and Angel funding.
• More syndications between Angels and VCs.  Angels are valuation centric.
• Huge migration in the VC world and closing of funds from 800-900 down to 600-700 VC funds
• Because of high multiples among some VCs,  Angels are filling some of that gap
• With uncertainties in economy it has been hard for companies to commit to expansions
• Lots of Re-Capitalizations are happening.  Good timing.  With lower interest rates it is advisable to reconsider a re-cap with the layers of debt and the different view from lenders a company may have.  Mass Capital Resources provides this type of re-cap with a 2-3yr interest only financing.  Mass Capital is currently doing deals in the $1M to $5M range and at an interest rate typically between 10% and 12%.
• Companies are starting to invest again.  All agreed that they are seeing an uptick in business activities.
• There is a huge Global push
• More VCs give smaller checks
• VC’s today are investing in companies that are capital efficient or not at all.
• It’s more difficult to get investment in a product or services business than it is in a software business.
• How do you get a highly leveraged company to an exit in today’s market?  Not really any differently.
• How can an entrepreneur know how much money to raise?  Determine what the life of an investment is and then try to match it with the right investor.  For example, an investment of $500K to $2.5M over the life of the investment probably won’t be appealing to a typical VC.  Putting in $30M over the life of the investment would be more appealing.
• How often do Angels and VC participate in similar events?  There are some forums when a mixture of investors is present.
• How about grants as a way to get some funding?  That may be a good thing (it’s non-dilutive) as long as it fits your business strategy.  Do not lose focus.
• Whether or not an angel or VC invests in the company depends in large part on how good the entrepreneur is.  “Can he/she do it?”
• Best thing to do if you’re raising money – Don’t go around town asking for money.  Instead, spend your time building relationships with investment community, asking questions like “what would you do if you were me?”
• M&A activity is picking up and deal flow is up

Our next CEO Workshop will be Tuesday, November 9 from 7:30am-9:30am and the topic will be around “Merger & Acquisitions”.  Save the date!

Laurie Taylor joined the NSS team recently.  He has over 20 years of experience and has worked with multiple start-up as Controller. We are delighted to have him on board.

Most Satisfying: In your CONTROLLER work you have done in the past, what is the most satisfying feedback you got from the CEO?

Nineteen out of twenty client companies have offered me a full time position during the engagement.

Most Inventive: Given that as CONTROLLER we understand the importance of providing our clients with more than just accounting and financial reporting, share with us a project that truly made you a value creator.

I began a two person project to determine why a major bank’s ATM conversion had an out of balance total of $19M after the merger of the two banking systems.   The bank booked a 200k reserve to cover this reconciliation exposure.  I requested a Bank Tiger team to assist my current consulting team and at the end of the project we had completely reconciled the account and were only unable to account for $9k in bank funds.  We also discovered a major systems glitch that was the result of the systems merger and trained the banking staff to recognize the problem and how to correct the system if it occurred again.

Most Positive: CONTROLLER’s have different skill set, yet often we are viewed as one of the same.  Tell us a story where your actions made a powerful positive change and why.

I was assigned a project to take over for a Director of Finance at a specialized moving van company.  I first determined that there was a massive amount of misspending going on and no one was managing the AR accounts.  In 6 weeks we were able to make enough corrections that company was stable enough for sale to a much better funded and staffed regional carrier.  The sale of this business unit saved 250 staff member’s jobs as a result of the merger instead of a company closure due to prior management neglect.

Best Business Book: What should every CEO be reading going forward in this tepid economy?

The Why of Work: How Great Leaders Build Abundant Organizations That Win by
David Ulrich and Wendy Ulrich

Funniest Fact: Tell us something funny about you.

I am crazy about WWII aircraft that have massively supercharged engines that “go fast, stay low, and turn left!” also known as the National Championship Air Races held each fall in Reno, NV.  The only rules are that these planes must have a prop and straight wings.

Last month the Wall Street Journal published an article For Rent: Chief Financial Officer by Raymond Flandez, commenting in how more and more firms are outsourcing this high level function of management. For businesses small and large, especially companies that want to grow, the finances do get more complex. He points out that many of these ‘Rent a CFOs’ are also Certified Public Accountants.

I agree wholeheartedly with Flandez’  assessment  that an outsourced interim or part-time CFO is a capital efficient way to access this expertise and an outsourced CFO can be more objective and give a reality check. I also agree that many of the CFOs are indeed CPAs and this is partially due to the Sarbanes-Oxley Act of 2002 (SOX)  that has driven businesses and their CEOs more to the compliance and technical side of finance enforcing the common belief that if you have a controller and an accountant your financial needs are covered.  That may apply to life style companies who do not intend to grow but simply run a sustainable business.

From this juncture, however, is where I begin to differ.  A company with expansion and growth in their forecast, the paradigm has to shift drastically from technical to strategic. In fact, not recognizing the importance of strategic finance and solely relying on your controller’s risk aversion, you may be holding your company back from that growth.  Here is why I think so.

For a fast growing company, the financial spectrum has to be broader and therefore more complex as pointed out by the author of the WSJ article.  You want to consider a broad based and strategic CFO, one that picks up where the CPA or controller leaves off.  The CFO is your business partner and brings a strategic organizational mind set to the discussion and understands the importance of mapping out the corporate strategy into multiple roadmaps.  Given uncertain economic times, this is more important than ever.  Finance for emerging businesses brings a complexity that is more than accounting and number crunching.

The CEO needs to fully understand the financial ramification and bottom line each decision triggers. SOX compliancy has driven us too far towards the tactical aspect of finance forgetting the importance of looking forward, checking your Financial Headlights.  The CFO plays an important role acting as conduit to growth and walking the fine line between the risk-averse controller and the visionary CEO.  Your future CFO needs to have average appetite for risk, not too little and not too much, understand how to translate the corporate strategy and be a true value creator and not a gatekeeper of growth.

Rudi Scheiber-Kurtz, CEO
Next Stage Solutions, Inc.