Business Acquisitions and exit strategy

1. AdepitanFasoro
Universityof Houston,VictoriaTexas
EDEN 6354 Final Exam. GrowingSuccessful BusinessVenture
Guadalupe TechnologiesInc:
1. An Acquisitionisabusinessexpansionprocesswhereone firmsbuysanotherfirmwiththe
intentof more effectivelyusingacore competence bymakingthe acquiredfirmasubsidiary
withinitsportfolioof business. A subsetof anacquisitionisknownastakeoverora buyout.A
takeoverisanunsolicitedacquisitionof one firmbyanother.Inacquisitiontwo companiesare
combine togethertoforma newcompanyaltogether(Synergy).Itisthe mostcommon exit
strategythat entrepreneursuse tocash-outof theirbusinesses.
The two basictypesof acquisitionsare relatedandunrelated.A relatedacquisitionsindicates
that there isa fitbetweenthe firms.Fitscouldinclude similarmanagementrequirements,the
same market,compatible operations,andcomplementarytechnologies.Unrelatedacquisitions
have no obviousfitbetweenthe firms.The primarydriverof unrelatedacquisitionsisthe need
to findnewindustriesorbusinesssegmentswithmore potential.Overall,relatedacquisitions
have a higherprobabilityof successthanunrelated acquisitions.
A transactionwhere twofirmsagree tointegrate theiroperationsonarelativelyco-equal basis
because theyhave resourcesandcapabilitiesthattheircomingtogethermaycreate a stronger
competitiveadvantage isknownasmerger.
a. The benefitsandpotentialproblemsof acquisitions:
Benefitsof Acquisitions:
 Increasedmarket power: Acquisitionstrategiesmayincrease marketpowerbyproviding
marketdevelopment,productdevelopment,anddiversificationopportunities.All three are
revenue enhancingstrategies.
 Overcome entry barriers: Acquiringanotherfrimalreadyinothermarketslowersthe barriersto
marketentry.Lowerentrybarriersmayfacilitatesmarketdevelopmentanddiversification
revenue increasingstrategies.Inaddition,reducedentrybarrierswill lowerthe expenseof
enteringnewmarkets.Consequently,lowerentrybarrierswill increase revenueandreduces
expenses.
 Lower cost of new product developmentandincreasedspeedto market (economiesof scale):
Lowerproduct developmentcostsreducesexpensesandfacilitatesproductdevelopmentand
diversificationstrategiesforincreasedrevenue.Increasedspeedtomarketalsoaidsrevenue
enhancingandcost reductionstrategies.

2.  Lower risk compared to developingnewproducts:-A firmcan run itsownresearchand
development(R&D) programor utilize the existingproductsof anotherfirmtoengage ina
productor diversificationstrategy.Costsavingsandnew productavailabilitysave costsand
enhance revenue.
 Increaseddiversification-Obviouslyanyrevenueenhance resultingfromadiversification
strategywouldbe facilitatedbyacquisitionsactivities.Itiseasierandcheapertouse another
firm’sproductsandmarketsthan create and developyourown.
 Reshapingthe firm’scompetitive scope:- oftenthe existingcompetitive positionof afirmneeds
to be overhauled.Thisisanothercase where itmaybe cheaperandeasierto use the successof
anotherfirmthan yourownfirm.
 Learning and developingnewcapabilities:
ProblemsAssociatedwith Acquisitions:-
 Integrationdifficulties:Puttingdissimilarcultures,processes,policies,employees,managers,
etc.Oftenmake Acquisitionstrategiesdifficulttoimplement.The mostdifficultintegrationis
corporate culture.Completelycompatible corporate culturesare rare tofind.Twostrong but
dissimilarculturesmaybe virtuallyimpossible tomeldtogether.
 Inadequate evaluationof target firm:- “Due diligence”iscritical forsuccessfulacquisitions.Itis
importantto findany“skeletonsinthe closet”sotospeak,suchas pendinglaw suits,restrictive
debtcovenants,unresolvedcustomerproblems,financialconcernsetc.Mostfirmshave enough
problemsof theirown withouttakingonahost of problemsfromanotherfirm.
 Large or extraordinary debt:Much of the financingforacquisitionactivityisfinanced bydebt.
Nothingis“toogood to passup” if it meansputtingthe firm ina financial bindtoservice large
amountsof newdebt.
 Inabilityto achieve a Synergy:- Synergy isachievedwhenassetsare worthmore working
togetherthanseparately.The integrationof twofirmsmayprove difficulttoproduce anyreal
synergy.
 Too much diversification:- Diversification canenhance the competitive positionof manyfirms,
but intoday’sbusinessenvironment,there needstobe some relationtothe core businesses
involvedinaacquisition.Historyhasproventhatunrelateddiversificationhasa poorchance of
success.
 Become too large:-Increasingsize producesavarietyof problemssuchasstructure change,
culture pressure,financial concerns,andlackof sufficient managementattention,increased
expectations,andthe needfornew assets.Many firmsare tryingto findwaysto be big,but act
small.Unfortunately,there maybe apointwhena firmisjust toolarge to manage.
b. The acquisitionprocess:
i. Evaluate whetheran acquisitionstrategy is good for the company: Firmbust evaluate the
pros andcons of an acquisitionbasedontheirsituation.Anacquisitionstrategyisactually
not foreveryone,butitshouldn’tbe overlooked.Obviously,anyfirmthathas justopened

3. the door mustdevelopitscore businessbefore lookingforlookingtoacquire,butthe more
mature firmmay findthe acquisitionstrategyveryappealing.
ii. Positionyour firm to acquire another firm: The goal of a firmwantingto engage in
Acquisitionactivityistopositionitself aswhatpeopleinthe acquisitionindustrycall a
“platform”company.A platformcompanyisone that is well-positionedforacquisitionsand
has such characteristicsas managementthathassolidunderstandingof the market,systems
and proceduresthatare scalable (canbe usedin a largerfirmwithoutmuchchange),a well-
developedandsolidcore business,etc.The bottomline isafirmneedstobe well managed
and have a solidcore businessbeforeconsideringanacquisitionstrategy.
iii. Finda company to purchase: Many firmsfindfirmstoacquire ontheirown,butmore and
more are usingthe servicesof businessbrokers.FirmssuchasMerfeld&Schine,inc.provide
a varietyof servicestofacilitatesacquisitionsfromboththe buyer’sandaseller’s
perspective.A firmcalledBusinessBrokersmaintainadata base of businesssale bystate
and businesstypes.
iv. Value the deal:- A critical phase of the processisto put a value onthe firmto be acquired .
The value of a business tobe acquireddependsonavarietyof factors,such as:
 Nature and historyof the business
 Outlookforthe economy
 Bookvalue
 Future earningcapacity
 Evaluate paststock sales
 Market price of comparable firms
 Assessmentof goodwillandotherintangibles, suchasintellectual property.
Some valuationtechniques thatare commonlyused, includes:
 Earningsor cash flow value is10x EBITDA
 For smallerfirms,The multiple is5to 7 timesEBITDA
 Under certaincircumstancesthe multiple couldbe low as4
 Private heldfirmsmaysell fora30 to 35 percentdiscount.
 Hightech firmsmaysell for6 timesrevenue-notcashflow.
 Balance sheetdataor otherdata to determine value andcurrentsituationsof the
firm.
 Capitalize earningsusinganearningmultiplier.Earningscanbe statedina varietyof
wayssuch as netincome,operatingincome,orearningsbefore interest,taxes,
depreciationsandamortization(EBITDA).
 Presentvalue of future earningsmethod.
v. Structure the deal:The processstarts withacquiringfirmprovidinga“letterof intent”
statingthe buyer’sinitial commitmenttopurchase.The acquiringfirmconductsitsextensive
due diligence of the firmbeingacquired.Finally,the termsof the deal are finalized.
Obviously,the final termsof the deal will be determinedbynegotiationbetweentwo
parties.
vi. Financingthe deal:For a firmto be consideredtobe a platformfirm, theymusthave access
to deeppocketsforfinancing.ManyAcquisitionsare financedbyprivate equitygroups
(PEG) whichoftenbecome the deeppockets.Mostacquisitionsare financedona 50/50 split

4. betweendebtandequity.Oftenpartof the acquisitionprice isfinancedby“ownerwill
carry” where the ownerwill aseller’snote forthe partof the purchase price.
vii. Close the deal:- Closingthe deal isthe final stepinthe process.Notonlyare the final details
completedandpaperssigned,butitisthe time tointegrate the twofirms. Integrationislike
a marriage:duringthe courtshipeveryone isontheirbestbehaviors,butafterthe
honeymoon,the real jobof livingtogetherbegins.Ittakespatience andflexibilitytoforma
strongunion.
c. Conditionsrequiredfora successful acquisitions:
Conditions ResultsProduced
1. Acquiredfirmhasassetsor resources
that are complimentarytothe acquiring
firm’score business
Highprobabilityof synergyandcompetitive
advantage bymaintainingstrength.
2. Acquisitionsisfriendly Fasterand more effectiveintegrationand
possiblylowercosts.
3. Acquiringfirmconductseffectivedue
diligence
Firmswithstrongestfitare acquiredand
overpaymentisavoided.
4. Acquiringfirmhassufficientfinancial
resources( cash or favorable debt
position)
Financingbyeitherdebtorequityiseasierand
lesscostlytoobtain
5. Mergedfirmmaintainslowmoderate
debtposition
Low financingcosts,lowerriskof bankruptcy,and
avoidance of trade-offsassociatedwithhigh
debt.
6. Acquiringfirmhassustainedand
consistentemphasisonResearchand
Development.
Maintainlong-termcompetitive advantagesin
markets
7. Acquiringfirmmanageschange well and
isflexible andadaptable
Fasterand more effectiveintegrationfacilitates
achievementof synergy.
In conclusion:With thisdetailsexplanationsof benefitsandpotentials problemsof acquisitions,the
acquisitionprocessandconditionsrequiredforasuccessful acquisition.JohnBullockthe founderof
Guadalupe Technologiesshouldbe able toknow all he needstoaboutacquisitionanddetermine,if he
will goaheadwiththe acquisitionof otherfirmforhisbusinessexpansion. (MSEDEEDEN 6345 Course
learningmodule).

5. 2. Mr. Jim B. “Nutty” Rockefeller’sexitStrategy.
There are variousexitstrategieswhichMr.JimB. “Nutty”Rockefellermayconsideredforhispeanutoil
businessexit,forhimtoretire tohis ranch nearVictoriaTexas.The mostcommonexitstrategiesinclude
sellingthe firm,transferringthe ownershiptofamily,mergingwithanotherfirm, liquidatingthe venture,
and takingthe firmpublicusingthe initial publicoffering(IPO).Andthe mostcommonlossprevention
strategyisto seekprotectionunderfederal bankruptcylaws.
Developingabusinessexitstrategywill allowMr.JimB. “Nutty”Rockefeller,tohave a well thoughtout
planfor the successionortransferof ownershipof the business.
EXITS STRATEGIES:-
1. Sellingthe firm: There are a varietyof waysto sell a businessandthismayinclude:-directsale,
employeestockownershipplan(ESOP),anda managementleveragedbuyout(LBO).Before any
sale,however,the firmneedstoperformtwocritical activities-prepare the businessforsale and
establishafirmvalue.
 Preparingthe businessfor sale:-There isnosubstitute foradvancedpreparationand
planningtofacilitate aprofitablesale.The followinglistof activitiesand conditionsare
designedtopositionthe businessesforsale andmaximizevalue:
i. The businessmodel mustbe well-definedandworking,customersidentified,
and internal processesrunningsmoothly.
ii. The businessshouldconcentrate onkeepingcostsundercontrol andfocuson
highermarginsandprofits.
iii. The businessshouldconcentrate onkeeping costsundercontrol andfocuson
highermarginsandprofits.
iv. The financial statementsmustbe inorder,includingbudgetsandcashflow
projections.
v. Prepare documentationof the businessexplaininghow the businessis
organizedandhow it operates.
vi. Assessthe conditionof capital equipment.Up-to-date,state-of-the-art,andwell
maintainedequipmentincreasesfirmvalue.
vii. Get competenttax advice.The sale of a firmcan have significanttax
consequences.
viii. Get competentlegal adviceaboutpotentialsale contracts.
ix. Get nondisclosuresfromkeyemployees.
x. Try to maintainthe managementteam.Allow the managementteamtotake
overmajor responsibilities.
 Establishingthe Value:-The value of abusinessdependsonvarietyof factors,that
include:
i. Nature and historyof the business:Obviouslythe historyandsuccessof the firm
wouldinfluence valuegreatly.

6. ii. Outlookforthe economy:General marketconditionsinfluence valuebecause
value isnotonlybasedon past performance,butalsoonthe outlookforthe
firm.
iii. BookValue:Bookvalue isbasicallythe owner’sequityinthe firm.Whilenota
goodindicationof marketvalue,itdoesindicate the valueof the underlying
assets.
iv. Future earningcapacity.Oftenvaluesare inflatedbecauseof anticipated
earningcapacity,A positive earningsforecastisvaluable,butvalue isnot
maximize untilearningsprojectionsare realized.
v. Evaluate paststock sales.If the firmhasa previoushistoryof stocksalesto
eitherprivate investorsorVCs,the qualityandperformance of pastsaleswill
influencefuture value.
vi. Market price of comparable forms:-The stockprice of similarfirms(often
competitors) influencesthe value of afirm.Comparingvalue tootherfirmsisa
commonevaluationmethod.
vii. Assessmentof goodwillandotherintangibles:- Establishedbrandrecognition,
protectedintellectual property,andaqualityworkforce quality are justafew
examplesof intangible assetsthatmayincrease value.
Direct Sales:-The mostcommonformof exitstrategyisthe directsale of the firmto an investor
or as part of a merger.Most firmsemploythe servicesof professionalbusinessbrokersto
handle the sale.Firmssuchas Merfeld&Schine,Inc.provide avarietyof servicestofacilitates
businessessalesfrombothabuyer’sanda seller’sperspective.A firmcalledBusinessBrokers
maintaina data base of businessesforsale bystate and businesstype
(www.businessbroker.net).Thissite actslike abusiness “multiplelistingservice”.Itiscommon
to needfrom30 to 100 people perspective buyerstofindaqualifiedandinterestedprospect.
Usinga professional businessbrokerprovidesaccesstosufficientprospects.
There are several considerationsinsellingabusiness:-
 Time required:A commontime frame for a sale issix month.Thisisbrokendowninto
one monthof the brokerworkingwiththe ownerpreparingtoputthe businessonthe
market.Thisprocessismade easierif the firmhas done the pre-sale planning.Twoto
three monthstofinda buyer.Andtwo monthstoclose the deal.Closingthe deal is
measuredfromthe time thatthe “Letterof intent”spellingout the commitmentfrom
the buyerisreceivedbythe sellerthroughthe buyers andsellersdue diligence
assessmenttothe final transferof ownership.
 Deal Structure:-A commondeal structure is 50% debtand 50% equity(cash).Oftenthe
ownerwill carrya note (sellerfinancing) forhalf the value andrequirecashforthe other
half.The ownermayalso receive an“earnout” whichare paymentsbasedonthe future
profitsof the businessaftersale.The ownerdoesface ariskof nonpaymentif the new
ownersare unable tomake the businessprofitable.Oftenasprotection,the owners
may require non-businessassetsasadditional collateral.Muchof the cash is often
providedbyprivate equityfirms.
 Cost of Sale:-The costof sale can vary widely,butusuallyincludesanupfront
“engagementfree”plusfeesbasedonthe salesprice. “Businessbroker’sfeesmay

7. range as highas 10 to 12 percentof the salesprice fora smallerbusiness.Businesses
over$1 millionmaybe chargedusinga formulasuchas “5 percentof the salesprice up
to $1 million;4percentof the salesprice between$1millionand$2 million;and3
percentof any salesprice above $2 million.If yougoto a mergerand acquisition
professional,one maybe chargedforcosts andexpenses,andmayhave toagree to pay
a minimumfee.
 Confidentiality:The salesprocessrequiresthe release of sensitive informationtoa
varietyof concernedparties.Itisimportantthateach partythat is privytothe
informationsignaconfidentialityagreementtoprotect the firm’ssensitive information.
 Type of Buyer: Buyersare normallylookingforfirmstostrengthentheirstrategicplan
or improve theirfinancialsituation.The value of the firmforstrategicbuyersishowwell
it will fitandstrengthencurrentoperations.Theyare lookingformanagement,
customer,production,ormarketingfit.Financial buyersvalue abusinessthatwill
improve itsfinancial situationbyprovidingquickprofits,cashflow,orinvestment
opportunity.Knowingthe buyerwill make iteasiertopositionthe firmfora sale.
The successful directsale isprobablythe easiestandfastestwayforthe entrepreneurto
exitthe firm.
Preparinga SalesAgreements:
No matterwhichoptionsyouchoose,inordertosell yourbusinessofficially, there is
needtoprepare a salesagreement.
A salesagreementiskeydocumentinsellingthe businessassetsorstockof a
corporation.Itis importanttomake sure the agreementisaccurate andcontainsall the
termsof the purchase.
Itemsthat shouldbe addressedinthe salesagreementinclude;
i. Namesof the seller,buyer,andbusiness
ii. Backgroundinformation
iii. Assetsbeingsold
iv. Purchase price andAllocationof Assets
v. A non-compete clauseorCovenantnottocompete
vi. Anyadjustmentstobe made
vii. The agreementand paymentterms.
viii. List of inventoryincludedinthe sale.
ix. Anyrepresentationandwarrantiesof the sellerandbuyer
x. Determinationastothe accessto any businessinformation
xi. Determinationastothe runningof the businesspriortoclosing
xii. Contingencies
xiii. Fees,includingbrokerfees
xiv. Date of closing
Aftercollectedthisinformation,thenmeetwithattorneytodevelopthe formal salesagreement.
Havingall of the informationpriortosittingdownwithattorneywill helptomanage the costs.Thisis a
legal contract,so there isneedtowork attorneytomake sure that the contract iscomplete and
enforceable.

8. Employee Stock OwnershipPlans (ESOP):
 ESOP (Employee Stock OwnershipPlan)
As of 2017, the National CenterforEmployeeOwnership(NCEO) estimate there are roughly7,000
employeestockownershipplans(ESOPs) coveringabout14 millionemployees.Since the beginningof
the 21st centurythere hasbeena decline inthe numberof plansbutan increase inthe numberof
participants.There alsoare about2,000 profitsharingandstock bonusplansthatare substantially
investedincompanystockandare like ESOPsinotherways. Inaddition,itwasestimatedthatroughly9
millionemployeesparticipate inplansthatprovide stockoptionsorotherindividualequitytomostor all
employees.Upto5 millionparticipate in401(k) plansthatare primarilyinvestedinemployerstock.As
manyas 11 millionemployeesbuysharesintheiremployerthroughemployee stockpurchase plans.
Eliminatingoverlap,itisestimatedthatapproximately28 millionemployeesparticipate inanemployee
ownershipplan.These numbersare estimates,butare probablyconservative.Overall,employeesnow
control about 8% of corporate equity.
 Major Usesof ESOPs
Abouttwo-thirdsof ESOPsare usedto provide amarketfor the sharesof a departingownerof a
profitable,closelyheldcompany.Mostof the remainderare usedeitherasa supplemental employee
benefitplanorasa meansto borrowmoneyina tax-favoredmanner.Lessthan10% of plansare in
publiccompanies.Incontrast,stockoptionorotherequitycompensationplansare usedprimarilyin
publicfirmsasan employee benefitandinrapidlygrowingprivate companies.
 Employee Ownershipand Corporate Performance
A 2000 RutgersstudyfoundthatESOP companiesgrow 2.3% to 2.4% fasteraftersettinguptheirESOP
than wouldhave beenexpectedwithoutit.Companiesthatcombine employee ownershipwith
employeeworkplace participationprogramsshow evenmore substantialgainsinperformance.A 1986
NCEOstudy foundthatemployeeownershipfirmsthatpractice participativemanagementgrow 8%to
11% peryear fasterwiththeirownershipplansthantheywouldhave without them.Note,however,that
participationplansalone have littleimpactoncompanyperformance.TheseNCEOdatahave been
confirmedbyseveral subsequentacademicstudiesthatfindboththe same directionandmagnitude of
results.
 How ESOPs Work
Companiessetupa trust fundforemployeesandcontribute eithercashtobuycompanystock,
contribute sharesdirectlytothe plan,orhave the planborrow moneytobuyshares.If the planborrows
money,the companymakescontributionstothe planto enable ittorepaythe loan.Contributionstothe
planare tax-deductible.Employeespaynotax on the contributionsuntil theyreceivethe stockwhen
theyleave orretire.Theytheneithersellitonthe marketor back to the company.Providedthatan
ESOP owns30% or more of companystock and the companyisa C corporation,ownersof aprivate firm
sellingtoanESOP can defertaxationontheirgainsbyreinvestinginsecuritiesof othercompanies.S
corporationscan have ESOPsas well.Earningsattributable tothe ESOP'sownershipshare inS
corporationsare not taxable.

9. In otherplans,approximately800employerspartiallymatchemployee401(k) contributionswith
contributionsof employerstock.Employeescanalsochoose toinvestinemployerstock.Instockoption
and otherindividual equityplans,companiesgive employeesthe righttopurchase sharesat a fixedprice
for a setnumberof years intothe future.(Donotconfuse stockoptionswithU.S.ESOPs;in India,for
example,employeestockoptionplansare called "ESOPs,"butthe U.S.ESOPhas nothingtodo with
stock options.)
 How EmployeesFare
ParticipantsinESOPsdowell.A 1997 WashingtonState studyfoundthatESOPparticipantsmade 5% to
12% more inwagesand had almostthree timesthe retirementassetsas didworkersincomparable non-
ESOP companies.
Accordingto a 2010 NCEO analysisof ESOPcompanygovernmentfilingsin2008, the average ESOP
participantreceivesabout$4,443 per yearincompany contributionstothe ESOPandhas an account
balance of $55,836. People inthe planformanyyearswouldhave muchlargerbalances.Inaddition,
56% of the ESOP companieshave atleastone additional employeeretirementplan.Bycontrast,only
about44% of all companiesotherwise comparable toESOPshave anyretirementplan,andmanyof
these are fundedentirelybyemployees.
 Examplesof Major ESOP Companies
ESOPscan be foundinall kindsof sizesof companies.Some of the more notable majorityemployee-
ownedcompaniesare PublixSuperMarkets(182,500 employees),Lifetouch(21,000 employees),W.L.
Gore andAssociates(makerof Gore-Tex,10,000 employees),andDaveyTree Expert(8,260 employees).
CompanieswithESOPsandotherbroad-basedemployeeownershipplansaccountforwell overhalf of
Fortune Magazine's"100 BestCompaniestoWork forin America"listyearafteryear.
https://www.esop.org/
Leveragedbuyout (LBO) :
Whena group of employees,management,oranindividual usedborrowedfundstopurchase afirmfor
cash, a LBO has takenplace.The earningpowerof the firmalongwiththe firm’sassetsisusedas
collateral forthe loan.Banks,Venture capital firms,private equityfirms,andinsurance companiesare
oftenthe source of the loans.

10. 2. Transfer Ownershipto family:
Business ownershave several optionswhenitcomestotransferringownershiprights,itis
importantto considerall optionsbefore makingadecision.
The firstoptionto be consideris outright sale.By sellingabusinessinfull,youwill transfer
ownershipimmediatelyandreceivepaymentforthe assetsrightaway.
The nextoptionisa gradual sale.Thisisa flexibleoptionintransferringabusinessthattendsto
benefiteveryone.Aftertransferringbusinessownership,younolongerhave toworryabout
runningyourbusinessbutstill receive amonthlyincomefromthe gradual sale.
Anotheroptionis a lease agreement: By transferringbusinessownershipthroughalease,the
businessownercommittoacontract that detailsthe conditionsandpaymentshe will receive
for the temporaryrightsto the business.
The final transferoptionistransferringbusinesstoa familymember.Transferringfamily
businesscan be a little more complicated thanexpected.Additional tax implications,suchas
estate andgifttaxes,generallyarise forbothparties.The businesstypewillaffectwhatsteps
are requiredtotransferownershipaswell asthe tax implicationsof the transfer.
(www.sba.gov).
In orderto improve the oddsof success,effective successionplansneedtoconsiderthe
following:
 The role of the ownerinthe transitionstage
 Familydynamicssuchasthe abilityof the familytoworktogether.
 The form and amountof compensationforworkingfamilymembersandshareholders.
 The current businessenvironmentduringthe transition.
 The fate andfuture of loyal employees.
 Tax consequences,especiallyestatesandgifttaxes.
 The potential forinternal conflictamongfamilymembersandcurrentemployees.
 Developmentof managementcompetenciesformanagingfamilymembers.
The realityisthat a transferto familymembersneedstobe plannedfarinadvance.A successful family
successionwill occurwhenfamilymembershave the strategicvision,leadershipskills,andinnovative
mindsetrequiredtomanage andbuilda successful firm,.(EDEN 6354 course handout).
3. Liquidation of the firm:
Thisis anotherexitstrategyinwhichthe businessownerjustwanttoend the venture by
strippingthe free cashflowfromthe firmandmay be finallyliquidatingthe assets.Obviously
thisstrategyisrare for mature firmsthat are usuallysoldtoan outsiderortakenpublic,butit
doeshappenforsmallerfirmsalso.
The firm’svalue maybe harvestedbysellingoff the assetsof the firmandeventuallythe firm
will cease operations.A more commonscenarioisthatas the firmmaturesthe opportunityfor
future profitable investmentbeginstofade.The firmismakingmoney,butitdoes notmake
sense tore-investthe moneyatalow rate of return.The optionisto harvestthe value bytaking
the free cash flowoutof the firm.Free cashflow = operatingprofitsaftertax + depreciation –

11. cash needtomaintainthe firmandits currentrate of growth.The free cashflowsare passedon
to the ownersto investastheywish.
The primaryadvantagesto strippingthe free cashflow are thatit allowsthe ownerstoretain
control while the value isharvested,andthere isnoneedtofinda buyer. The downside isthat
cash that may be neededforlimitedgrowthormaintenance isnotavailable andthe double
taxationof the corporationmay make strippingcashexpensive.Finallythe strippingprocesscan
take a longtime torecoverall the full value the entrepreneurhascreated.Mostothermethods
are muchfaster.
Stepsin the asset liquidationprocess:
 Prepare an inventoryanddetermineassetsforsale
 Secure merchandize
 Setliquidationvalue of assetswithaqualifiedappraiser
 Use that value to estimate netsale processandre-evaluate decision
 Choose sale type:negotiated, consignment,internet,sealedbid,orretail
 Selectthe besttime andlocationforthe sale
 Hire an auctioneer,dealer,broker,orotherexperttoconduct
 Use a non-recourse billof sale sobuyeracceptsthe associatedrisks.(www.sba.gov).
4. Taking the firm publicusingthe IPO:
Whyfirms are not going public(BloombergBusinessWeek)
• Newlegislation,suchasSarbanes-Oxley,andSecurities&Exchange Commissionrules,sharply
raisesthe cost of beingpublic.Itisestimatedthatthe annual costof regulatorycompliance for
companieswithmarketcapsunder$900 millionhasdoubledsince 2002 to $2.3 millionperyear.
• Investmentbanksare cuttingbackon researchon smallerfirms.Unlessthe firmhasamarket
cap (value) inexcessof $200 million,theyfall underthe analytical radarof investmentbanks.If
investmentbanksdon’ttrackthe firm’sstock,the marketfor the stock islimited.
• Stockmarketsare increasinglybeingdominatedbyinstitutionalinvestorswhodon’tinvestin
smallerfirms’stockbecause theycannottrade blocksof stocklarge enoughfortheirpurposes.
• There isgrowingcapital inthe private offeringsegment.Thiseliminatesthe needforpublic
funds.
The resultof these factorsis illustratedbythe size of firmsgoingpublic.Overthe pastseveral
years,the medianannual salesprice of firmsgoingpublichasrisenfrom$15 millionin1999 and
2000 to $66.5 million today(in2016 latestdata – see 2017 IPOreportlinkedbelow).The
medianIPOofferingsizeis$94.5 millionin2016 downfrom$140.4 millionin2011. Infact, a
recentconference presentationsuggestedminimumsalesof $500 million(19% of all IPOs).In
addition,the minimumfirmmarketvalue shouldbe inexcessof $50 millionbutthe minimum
may needtobe as much as $200 millionasmentionedabove.Inthe final analysis,formost
firms,goingpublicisnotworththe hassle or expense(Inexcessof $3millionin2014). See 2017
IPOreport byWilmerHale forcurrent data) The IPOishandledbywhatare calledinvestment
bankers(managingunderwriter).These firmsmanage the IPOprocessforthe businessgoing
public.Inreality,the stockissuedduringthe IPOispurchasedbythe underwriterandthensold
to the public.Oftenthe underwriterwill solicithelpfromotherfirmsbyformingasyndicate to
helpsell the stock.

12. A. Goingpublic AdvantagesInclude:
i.Obtainingcapital withlessdilutiontofounders
ii.Enhancedabilitytoborrow
iii.Enhancedabilitytoraise equity
iv.Liquidityandvaluation(stockcanbe easilyboughtandsoldata marketprice)
v. Prestige
vi.Personal wealthtothe entrepreneur
B . Disadvantages (costs)
i.Expense – average $700K, butcan be muchhigher.
1. Accounting- ($200K)
2. Legal $150K – ($350K)
3. Underwriter- (7% -10% of IPO)
4. Filingfees$8K – ($30K)
5. Printing$50K – ($200k)
6. Annual follow-up($50K - $250K) {inrecentyearsthiscan be $2.3 million}
ii. Disclosure of information –everythingbecomespublicinformation
iii.Pressure tomaintaingrowth
iv.Loss of control
II.Are youready?
a. Is the firmbigenough?(Foran IPOto be profitable foraninvestmentbanker,there needsto
be a minimumof $20 millionof stockissued.If the ownerwantstomaintain60% ownership,the
value of the firmmust be at least$50 million.)
b. Have you done yourhomework?(i.e.three yearsof auditedfinancialstatements,properly
constructedboardof directors)
c. Doesthe companyhave a historyof strong earningsandearningsgrowth?
d. Isthe markettimingproper?
e.How quicklyisthe moneyneeded?(The IPOprocesscantake months)
f.What are the future needsof the entrepreneurs?
III. IPO Process
a. Selectthe managingunderwriter(The underwriteristhe investmentbankthathandlesthe
offering.) The selectioncriteriaare:
i.Theirreputation
ii.Theirabilitytoforma syndicate (Oftenthe managingunderwriterisnotlarge enoughtosell
all of the securitiesand will enlistthe helpof otherinvestmentbanks.The groupiscalledthe
syndicate.)
iii.Theirabilitytohandle anIPO(There are underwritersthatspecialize insmall offeringsand
othersthat concentrate onlarge IPOs.)
iv.Theirfee
b. File the registrationstatement(SEC - Full andFair Disclosure)
i.“All hands”meeting(establishthe processandtime table)
ii.Prepare andreviewthe initial registrationstatement(FormS-
1 or S-18)

13. 1. Prospectus – (detailsof the IPO)
a. Preliminary“RedHerring”prospects(allinvestorinfo.butpricing)
b. Final prospectus(Complete information)
2. Prepare final registrationstatement –supplemental information
3. Reviewof filingbyFinancialIndustryRegulatoryAuthorityFormallythe National Association
of SecuritiesDealers(NASD)
4. Reviewbyeachstate’s“Blue SkyLaws” (Nota fraudulentofferof securities)
5. Distribute tounderwritinggroups“The RoadShow” - potential investorpresentations
6. Observe the “QuietPeriod”(nopublicstatementcanbe made bymanagementthatcould
influencethe investingpublic)
IV.Approval andsale to individual investors.
V.Afterthe IPO
a. Keepthe price upevenitsthe underwriterhastopurchase the stock
b. Buildrelationswiththe financialcommunity
c. Annual reportingtothe SEC
i.10K (annual)
ii.10Q (quarterlyreport)
Comment:the IPO processislengthyandcostly(i.e.,inexcessof $3 millionaverage).The firm
needstobe large enough,needspubliccapital,andmusttime the marketcorrectlyto really
benefitfromanIPO.Foradditional informationonanypartof the processor otherareas
coveredbythe SEC, please use the SECtopiclist.
5. Bankruptcy:
Thisis anotherexitstrategywhichnoentrepreneurwantshisorher businesstofall into,buteveryday
theyfindthemselvesinit.The primarystrategyfora failedbusinessistofile bankruptcy.Whilesome
firmsmaybe able tosurvive bankruptcy,the oddsare againstit.The three typesof bankruptcyare
Chapter7,Chapter11, and Chapter13 (all three are namedforthe sectionof the bankruptcylaw where
theycan be found).Each isdesignedtodischarge (release) the debtorfromfinancial liability.The type of
discharge available variesbytype of bankruptcy.
Chapter7 - This isthe most commontype of bankruptcyand requiresthe firmtoliquidate all of its
assetsand use the proceedstopay creditors.The firmmaychose Chapter7 bankruptcyor be forced
intoit byits creditors.
Chapter11 – Chapter11 providesthe firmanopportunitytoreorganize and make the venture solvent.
Basically,creditor’sclaimsare putonholduntil the firmcan make a financial recovery.Thistype of
bankruptcyisoftenusedasa delaystrategytobuytime for the firmto recover.Asmentionedbefore,
the oddsof recoveryare quite slim.
Chapter13 – Thistype of voluntarybankruptcyallowsanentrepreneurwitharegularincome tohave
the opportunitytomake extendedtime payments.Chapter13 wouldbe appropriate whenthe
entrepreneurhasa full-time jobandafailingbusinessonthe side.Bankruptcyiscoveredunderfederal
lawand isadministeredbyfederal BankruptcyCourts.Checkoutbankruptcybasicsformore

14. information.Allthree formsof bankruptcycanhave veryimportanttax consequencesthatmustbe
considered.There isaninterestingsite maintainedbyMoneyManagementInternational called
bankruptcy.orgthatprovidesinformationtobothconsumersandattorneys.In2005 PresidentBush
signedintolawthe BankruptcyAbuse PreventionandConsumerProtectionActof 2005 ("BAPCPA").
BAPCPA made substantial changestothe BankruptcyCode.Manyfeel thatthe revisionshave made it
more difficultforindividualsandfirmstoreceive alenientdischarge.Because the bankruptcylaw is
complex,it’sagoodideato seekcompetentlegaladvice.Thereare some earlywarningsignsthatafirm
isin financial trouble.If yousee anyof these,be aware.5
• Managementof financesbecomessolax,thatnoone can explainhow moneyisbeingspent.
• Directorscannotdocumentor explainmajortransactions.(The Enronsymptom.)
• Customersare givenlarge discountstoenhance paymentsbecause of poorcashflow.
• Contracts are acceptedbelowstandardamountstogenerate cash.
• Keypersonnel leave the company.
• Materialsto meetordersare lacking.
• Payroll taxesare notpaid.
• Suppliersdemandpaymentincash.
• Customers’complaintsregardingservice andproductqualityincrease.
• Survivingbankruptcyisalong-shot,butthere are some suggestionstoimprove theodds.6
• The threat of bankruptcycan be a bargainingchipwithcreditorstoall to allow the entrepreneur
to voluntaryrestructure andreorganize the firm.
• File bankruptcybefore the cashrunsoutor income has stoppedsothatexpensesnotcoveredby
bankruptcycan be paid.
• Don’tfile forChapter11 unlessthere’sareal chance of firmrecovery.
• Be preparedtoletcreditorssee atleast12 monthsof detailedfinancial data.The firmmust
avoidanysuggestionof financial fraud.
• Maintaingoodrecords.
• Completelyunderstandhowprotectionagainstcreditorsworks andhow tokeepprotectionsin
place.
• Transferany existinglitigationtothe bankruptcycourt.
• Prepare a realisticfinancial recoveryplan.

15. Comment:No firmof any size wantsto face the realityof bankruptcy,butit can happen.Evenlarge
mature firmsare notexempt.The bestwayto survive istoavoidbankruptcybyprovidingthe strategic
vision,leadership,andinnovationtosustaingrowthandprofitability.
2 b. Recommendation:
I will recommendselling the firmoptiontoMr.JimB. Rockefeller,amongotherexitstrategies.A firm
witha revenue of approximately$100 million,thisisindeedaverythrivingandviable firmandwill
attracts a lotof good investors.Sellingthe firmwillgenerateabiggerprofitandwill be fastertosell
because itdoesn’thave anycumbersome processtosell.
Once he gotthe servicesof aprofessional businessbrokertohandle the sale.He cango and relax until
the deal isfinalize.Andwithaservice of afirmsuch as calledBusinessBrokersthatmaintainsadata
base of businessesforsale bystate andbusinesstype.Mr.JimB. “Nutty”Rockefeller’sfirmcanbe listed
on thissite,andthiswouldallowthe qualifiedandinterestedprospective buyerstosee itandnegotiate
on itwiththe professional firmhiredtohandle it.Thissavestime,reducedcostof sale,ensure
confidentiality
Andsince commondeal structure of directsale is50% debtand 50% equity(cash).Once the deal is
sealed,Mr.Jm B. “Nutty”Rockefeller, cangetthe 50% cash half deal and startedhisnew life inhisranch
nearVictoria,while enjoyingthe otherhalf of 50% financingproceed.The buyertakesoverthe startup
usingcash or stock as a compensation,andkeyexecutivesandemployeesfromthe startupoftenstayat
the companyfor a periodof time inorderto be able tocash out and vesttheirstock.Exitsprovide
capital to startupinvestors,whichcanthenreturnthe moneytotheirlimitedpartners(inthe case of
Venture Capitalists)orto the investorsthemselves(inthe case of businessangels).
Anotherpurestfriendlybuyoutoccurswhenthe businessispasseddowntothe family.Butwe
remember,the keyto"familybusiness"isthe word"family."Isthe familyfunctional?Nosoonerthan
youleave the familybusinesstothe kids,it'slikelythey'll endupfightingoverwhogotthe largershare,
whodoesor doesn'tdeserve the ownershiptheygot,andwhogetsthe final word.They'll finger-point
for a decade while the businessslowlydeclinesintoruin,thenblame himfornotleavingclearer
instructions.If he decide togothisroute,he has a lot of planningtodo before gettingout.Research
suggestthathalf of the attemptsto transferfromthe firstto secondgenerationsfailandwithonly14%
of successtothe thirdgeneration.SoIwill reallyemphasishe goeswithdirectsale of the firm.
IPOstandsfor ‘initial publicoffering’anditbasicallymeansthatacompanystarts floatingona stock
market,sellingasignificantnumberof theirsharesinthe processto institutional andnon-institutional
investors.These large companiesare thatVCsdreamof,as theyoftenprovide large sumsof capital toall
parts involved(founders,earlyemployeesandinvestors).Thisisnotalsoa goodoption forthisbusiness,
it ismainlyrelevantforbusinessesseekingexpansionorlookingforstartupcapital.
Otherexitstrategies,suchasLiquidationof the firm, Bankruptcyare notrelevanttothisfirmbecause
the firmis doinggoodwithsucha colossal revenueof $100 million,itisa profitmakingfirm.These two
optionsare onlyavailable forafailedcompaniesthatisgoingoutof businessdue toinabilityof meeting
currentobligations.

16. Of course,the buyerneedn'tcome fromoutside.Sellingbusiness tocurrentemployeesormanagers.
Ofteninthiskindof sale,the sellerfinancesthe sale andletsthe buyerpayitoff overtime.The owner
still makesmore thiswaythanhe wouldbyclosing,it’sawin-winforeveryone involvedinthiskind
sellingtransaction.
3. GoingGlobal SeminarOutline
GoingGlobal Seminars
GoingGlobal:
In today’scompetitive globalbusinessenvironmentmore andmore small andmediumsizedcompanies
are exploringinternationalexpansiontoincrease revenuesandwinnew customers.Thisgoingglobal
seminarbringssmall andmediumsizedenterprise(SMEs),industryandgovernmentleaderstodiscuss
the opportunitiesandchallengesof doingbusinessabroad.
Seminar Overview:
The Going Global seminarisa full-dayeventthatprovidesCEOsandseniorexecutivesof small and
mediumsizedcompanieswithvaluableinsightsondoingbusinessinternationally.
The seminarwill focusonstrategiestoexpandintonew regionaroundthe world.Thisseminarwillgive
that participantsthe opportunitiesof hearingfromthe industryexpertswhowilldiscusskey
opportunitiesandchallengesof goingglobal.Participantswill alsohave anopportunitytoengage in
interactive discussions,Q&A session andone-on-one meetingswiththe questspeaker.
Venue:
The seminarwill heldinUniversityof Houston,VictoriaStudentAuditoriumonThursday,21st
December,2017.
Duration: 6 hours
Seminar Agenda:
If you are lookingforanewways toidentifyandseize opportunitiesinlucrative overseasmarkets.Going
Global isfor you!Whetheryouare interestedingoingglobal oralreadyconductingbusinessoverseas;
thisseminarwill provideyouwiththe solutionsandpractical strategiestohelpmaximize successand
impactyour company.
Outlines:
i. Introduction:
• What isglobal market?(Conceptof globalization).................................30minutes

17. Thistopic will discussonthe emergence of global markets,conceptof globalization,andhow
technological advancementturnthe worldintoa global villageandfacilitateinternational businesses.
Thistopic will enablethe participantstounderstandthe conceptof globalization.
• Why go global?(ThinkingBeyondthe DomesticMarket.)...........................30 minutes
Thiswill enable the participantstohave deepperspectiveof the reasonsof goingglobal withtheir
businessesandthe possibledesiredresultsontheirfirms.Participantswill learnof the reasonstogo
global andthe desiredresultsthiswill have onthe firms.
ii. Determinantsof firm desire to globalize:………………………………………………………….1hour
Thistopic will discussonhowthe size of domesticmarketandfirmsize wouldfacilitatesthe decisionsof
a firmto go global: we shall be lookingatenthusiastic,follower,andoccasional internationalizer
factors.The topicwill letthe participantssee how the firmsize andmarketconditionsdetermine the
desirabilityof global expansion.
12 pm- 1.00 pm…………………………………………………………………………………………….Breaktime
iii. SelectingGlobal opportunities…………………………………………………………………………….:1hour
Selectingcountriesforglobal expansionisanimportantdecisionthatshouldbe done withcarefuldue
diligence:We shall be lookingattwoprimarydriversof the selectiondecision,whichincludefirm’s
strategicgoalsand the differencesbetweenculture andbusinessconditions.We shall review some
global marketconditions;suchascultures,marketsize,currency,state of economy,Regulatory
environment,Trade barriersandpolitical environmentsandhow theyimpactglobal business.Thistopic
isveryimportantinhelpingfirmstomake decisiononwhichcountrytheydobusiness.
iv. DecisionProcess:…………………………………………………………………………………………1hour
Decisionanalysishelptomatchthe conditionswith the desiredglobal strategyandcome intoan
acceptable balance of commitmentandriskversuspotential return.While Decisionprocessisbestdone
inorderlyfashion,followingthe fivestepsof decisionprocess.Thisanalysisisimportant,asithelpsthe
firmsto match theirstrategicgoalswithothercountrycritical conditions.Thiswill thenuse todecide
withcountrybestsuittheirfirm.
v. How to enterglobal market………………………………………………………………………………..1hour
Thistopic will lookentrymodes,suchas equityandnon-equitymodesandmatchthese modeswiththe
level of commitmentandrisksinorderto decide whichmode isgoodforthe firm.Thisisimportantin
decidingthe mode of entryintoglobal markets,takingintoconsiderationthe level of commitmentand
risk.

18. 4. A. CORPORATE SOCIAL RESPONSIBILITY
There are a numberof validreasonsforthisquestion,thatCSRisa goodbusinessEthics.
Businessethicsregardswhatismorallyrightandwrongwitha company'sactivitiesand
behaviors.
I am insupportof the socioeconomicproponentsthatmaintainthatabusinessmustbe
more than simplyseekprofitstosupporttheirpositionandtheyofferthatbusinesses
cannot ignore social issuesbecause abusinessisapart of our society.Moreover,a
businesshasthe technical,financial,andmanagerial resourcesthatare neededtotackle
today'scomplex social issues.Thisismore ethical view. Additionally,byhelpingresolve
social issues,businesscancreate amore stable environmentforlong-termprofitability,
and that thisdebtisgreaterthan the debtof the individual membersof society'.
Corporate Social ResponsibilityisWayCompanygivesbacktoor improvesthe
community.Organizationscanshow CSRin manyways,includinginthe formof
donationstocharities,employee volunteering,environmentallyconsciousproduction
processes,ethical laborpractices,andmore.
. Overthe decades,there have beennumerouscontroversial reportsof social and
ethical issuesbusinessorganizationsfaced.A few of the visible exampleshave included
accusationsagainstH.B. FullerCo.thatit hasbeensellingglueinHondurasthathas
beenabusedbythe Honduranstreetchildrenforglue sniffing,lawsuitsagainstDow
Corningforits salesof defectivesilicone breastimplants,andaccusationsandlawsuits
againstthe tobacco industryformanufacturingandmarketingwhatpeople considerto
be an dangerousproductwhichmay be harmful tothe society.
Although,the Corporate Social Responsibility(CSR) isaself-regulatorymechanism
incorporatedbycorporationsintheirbusinessmodel.The termCSRis alsousedfor
activitiescarriedoutbycompaniesaroundthe globe togive backto the society.The
conceptof CSRhas beenacknowledgedbycompaniesaroundthe world anditis
consideredtoanessential partof the operationsof the companies.Inthe recentpast,
there have beenseveral advancementsinthe corporate worldwhichhave necessitated
the needforincorporatingCSRinthe core businessmodel,specificallyforlarge scale
corporationswithoperationssituatedinmultiple territoriesall aroundthe world.
Many corporationshave acknowledgedthatcarryingoutCSR activitiesreflectspositively
on theirbrandimage.Incase of financial reporting,companiesare requiredtofollow
strict standardizedrequirements;howeverincase of CSR, there are no strict regulations
whichmake CSR mandatory.Despite the lackof regulations,the regulatoryauthorities

19. encourage companiestoengage inCSRas expensesincurredunderCSRare deductible
for tax purposesdependinguponlocal laws.Inthe race to outruntheircompetitors,
corporationsconductbiggerandbiggerCSR activitiestoearnhighergoodwill among
consumers.CorporationsbenefitfromCSRaswell because consumerprefercarrying
out businesswithcompanieswhichhave apositive image inthe market.
There are manydifferentwaysacorporationcansupporta social initiative andstill
make profits.A goodexample isthe MarriottCorporation(ref),whowasmotivatedbya
desire tohelpthe communitywhile still helpingthe bottomline,bytrainingandhiring
6000 personsonwelfare.Marriottwasstill able tocut costs andincrease productivity.It
can be ina company'sbestinteresttoprovide aneededservice withinalow income
area.By incorporatinga service thatimprovesthe resourcesandinfrastructureof a
community,itcan offeraneconomicreturnforthe organizationthroughrecognitionor
directcommunityinvestments.Inthissense,abusinesshasanobligationtobothprofit
and serve the community,forall stakeholdersinvolved.Thisshowsthatwhena
companypractice in goodCSR, itgainsbetterreputationandbrandimage meaningan
extensionof bettersales,more investorsandcustomerloyaltyplate form.Thisis
supportedbythe surveydone byHill & Knowlton/Harris(2001) showedthat91 % of all
customersurveysaidthattheywouldswitchtoothercompanies,if the corporationhad
a negative image. -(www.essay.uk.com/essays/business/corporate-social-
responsibilty/).
4B.
.1. Although,(CSR) doesnotgenerate anyprofitsdirectly,itdoeshelpthe organizationinstrengthening
itsgoodwill inthe marketwhichstabilizes,andattimes,expandsthe consumerbase of the organization
resultingingreaterrevenuesandtherefore largerprofits.
. 2. Despite notbeingarevenue generatingactivity,ithelpsthe corporationsstrengthentheirbrand
image andstabilize theirconsumerbase inthe market.
3. When an organizationfunctionswith CSR,itsendsamessage tothe greatercommunitythatit
recognizesitisina positiontohelpsociety,andisactinguponthat acknowledgement.
4. Through thisprocessof do-goodwork,companiesnotonlyhelptheircommunity –theyalsoreapa
fewbenefits.Here are three majorbenefitsof practicingCSR.Considerthemasyouthinkabouthow
your organizationcanbe an active playerinthe community,beyonditstraditional businessmodel.
I. Engagedemployees
The way an organizationtreatsthe communitysuggestsgoodthingstoitsemployeesabouthow it
perceivesandrespectsthem.Employeesthatfeelrespectedbytheiremployerfeelmore comfortable
bringingtheirmostauthenticself toworkwhich,studiesshow,leadstoincreasedengagement.

20. Additionally,accordingtoa surveyproducedbyApparoin2017, organizationsthatencourage their
employeestovolunteerthroughprobonoworkduringpaidbusinesshourscreate motivatedemployees
whofeel thattheircompanyrespectstheirpersonal development.These employeesalsofeel energized
by the opportunitytobe creative withtheirskillsetforagood cause.
Ii. Loyal customers
Consumersthinkconsciouslyaboutthe productsandservicestheybuy.InaNielsonsurvey,66percent
of participantssaidtheypaymore forproductsand servicesfromsociallyresponsiblecompanies.When
examiningthe populationof participantswillingtopaymore,56 percentsaid“a brandbeingknownfor
itssocial value”wasa toppurchase driver.Anotherpurchase drive,“abrandwithcommunity
commitment,”wasmarkedby53 percentof those will topaymore.Customerswill be loyal toyour
companyif your valuesalignwiththeirs.
ii.Active CSRpositionsyourorganizationasa leaderinthe community,andapositive role model for
othersto followsuit.Besides,whencompaniesstandoutforthe goodworkthey’re doinginthe
community,the mediagainsinterest.Withanabundance of not-so-pleasantstoriescirculatinginthe
papers,it’snice havingapositive newsstorytoshare.Notto mention,there are plentyof awardsupfor
grabs forcompanieswhopromote goodinthe community.Take,forexample,ConsultingMagazine’s
national Social andCommunityInvestmentAwards(threeof whichwere wonbyCharlotte companiesin
2017, includingApparo).
4. Corporate sponsorshipsare anotherwaytosupporta goodcause,as these allow forthe continuation
of capacity-buildingprojectsfornonprofitsinthe Charlotte area.