“Happy New year”
shouted the CEO of a middle market manufacturing company on his year-end Zoom
call to employees. And for a moment there was pure joy, then a silence,
followed by a collective gulp.
No doubt history will record the many haunting echoes of a
2020 Auld Lang Syne like few before. But before the final chapter of the year
of the pandemic is keyed into digital stone, we still have to get through the first
half of 2021.
The good news is that not one but two Covid-19 vaccines have
the green light and are already being manufactured and distributed to critical
first responders and healthcare providers across the country. And that’s great
news. Light at the end of the tunnel. But what about your company, your
workers, your family… who may not be “essential
workers” or frontline first responders? When can they get vaccinated?
First at hand in the new year now that Congress has passed
a new supplemental $900 Billion-dollar Covid economic stimulus package is how to
get back to normal as soon as possible. And hence the importance of getting
immunized from shop floor to executive suite cannot be underestimated. Covid-19
has killed more than 340,000 people in the U.S. and temporarily shut down
several manufacturing facilities across the country costing millions in losses.
But even as Covid cases rise, so has the vaccine cavalry at last been mobilized
and en route to save us.
Meanwhile, you may be surprised to learn that all the while
a Covid-19 vaccine was being developed so was a Covid-19 vaccine roll-out recommendation
plan created by the Center for Disease Control,
the CDC. The plan is called the Phased
Allocation of Covid-19 Vaccines. This is a risk-based assessment timeline based
upon its virus tracking research that lays out a two-phase priority schedule for
states to help identify, categorize, prioritize and immunize citizens and
workers. This is essentially a federal recommendation to identify who gets the jab
At the moment there are only two approved vaccine
suppliers in the USA, Pfizer
and Moderna both are purportedly already distributing an estimated 70
million doses (35 million vaccinations) since late-December 2020, and both say
each can make another 1 billion doses before the end of 2021. Moreover, there
are still several additional corona virus vaccine candidates in various stages
of development, the point being made to the public not to worry, there will be
enough to go around, eventually. But you’ll also have to get in line according
to CDC guidelines, and that’s causing some concerns.
It starts with leveraging the credibility of the Center for Disease Control at this stage to
prioritize the population despite its heroic efforts to lead, and on day one be
a fundamental resource and contributor to President Trump’s Operation Warp
Speed, which helped create a Covid-19 vaccine in a record time. A real life-saving
victory. But the real challenge remains in how best to immunize the country.
And to that end the CDC developed its two-phase plan, which is really a 4-phase
plan as you can see.
Here’s the suggested vaccine rollout plan:
The fundamental idea behind the CDC efforts to categorize
people into vaccine priority groups is driven by Covid-19 death and exposure
rate research in each group. For example, in phase 1 of the plan, first-responders
and front-line workers in healthcare and those living at adult facilities will
be vaccinated first, if state governments follow CDC guidelines. There are
approximately 24 million people in this first phase, each require 2-doses which
is about equal to the number of currently available doses and each are being vaccinated
as you read this and watch on tv news. But who goes next is the problem.
The overall plan is expected to have started in late
December 2020 and to continue for at least 6 months through June 2021 (25 weeks
as shown in the diagram below). Each phase will overlap until we reach “herd
immunity” roughly 60-70% of the U.S. population (200+ million vaccinations) in
less than 6 months. A tall order for any administration. But where does this
To start, it might be a good idea to take a closer look
at the updated CDC
rollout plan and locate which phase your company workers will likely fall
into. From there count the weeks from Christmas and you can roughly plan when
your staff will qualify for that much needed shot in the arm. Who gets to be
vaccinated first across different but connected industry groups could prove a
sticky issue and jockeying for pole position has already started.
For example, in the FOOD INDUSTRY speaking up has already
made a big difference in timing. According to the Food
Institute analysis of the CDC plan “Workers in the food and agriculture,
grocery store, and manufacturing industries have been designated as frontline
‘essential workers’ set to be vaccinated in Phase 1b,” weeks ahead of other
My advice is to get ahead of this. If you can make the
argument to your city Mayor or state Representatives that your workers are at a
higher risk of contracting or spreading Covid and should be vaccinated asap,
now is the time to make those calls. They are the ones mostly in charge of
making the rules and need your input.
And lastly don’t forget. Tell them that however they
prioritize vaccine immunizations it needs to be completely transparent, and
fair. And maybe then with luck and God’s help history will record 2021 the year
Covid died, and the whole world got back on its feet.
About the author:
Rick Andrade is an investment banker at Janas Associates in Pasadena, Ca, where
he helps CEOs and business owners buy, sell, and finance middle-market
companies. Rick earned his BA and MBA from UCLA, along with his Series 7, 63,
& 79 FINRA securities licenses. He is also a CA Real Estate Broker, a
volunteer SBA/SCORE instructor, and blogs at www.RickAndrade.com on issues important
to business owners. He can be reached at RJA@JanasCorp.com. Please note this
article is for informational purposes only and should not be considered in any
way an offer to buy or sell a security. Securities are offered through JCC Capital
Markets LLC, Mem
They say that in late November 1621 in Plymouth, Massachusetts the first American Colony held the first American Thanksgiving to celebrate a bountiful harvest with the local Wampanoag Indian tribe. What you might not know is that of the nearly 100 who attended the first feast only 4 were women settlers. The reason so few attended is tragic and reflective in a modern Covid world. Of the 20 women Pilgrims who gallantly made the trip across the Atlantic to Plymouth on the Mayflower in 1620, all but these last 4 succumbed to either starvation, harsh winter cold, or more familiarly an infectious viral plague that struck the colony the year earlier. Still the idea to eat well and give “Thanks” after such an ordeal set promise to a brighter future in honor of those sacrifices, and to covet God’s word in scripture across much hope and prayer.
Today, 400 years later this Thanksgiving 2020 finds us all adding a
bit more hope and prayer to the menu but this time we not only face a
long cold winter and virulent plague, but also the dire prospect of a
new plethora of increased economic pressures from a Democratic Party new
president. Sound too harsh? Depends on which side of the fence you’re
on. But if the electoral votes from each state are indeed certified
accurate, Joe Biden is our next president, the 46th. And should that be
the case, and a left-wing anti-business agenda takes hold of the U.S.
government, the next big question from business owners and investors
alike will be: Yikes! Now what…?
Like others before him President-elect Biden carries with him a full
bag of sweeping democratic changes he wants to implement across the
board including the Green New Deal, Medicare For All, and new Taxes.
For starters however, the first priority will be how to manage
through the Covid pandemic. As cases surge across the country so does
the race to roll-out two new vaccines each with 95% effective rates. My
hope is that Biden who has been a politician all his adult life does not
shut down the economy which in my view amounts to economic mass
The second will be Biden’s executive actions January 20th 2021,
day-one. Recall the hundreds of Executive Orders issued by President
Trump. Many orders changed industry regulations across the table
including in politically sensitive areas like global warming, U.S.
military engagement in the mid-east, fracking in Pennsylvania and
lobster fishing in Maine. Dozens of changes made under Trump could
easily be reversed under Biden with the stroke of a pen. But perhaps the
biggest impact to small and medium size businesses that survive Covid
through next year will stem from increased taxes and changes to
Business Taxes – Under a President Biden the proposal
on the table is to roll-back the Trump tax cuts and increase them from
their current 21% back to 28% according to the latest report from the
not-for-profit Tax Foundation.org.
Personal Income taxes – Top bracket personal income tax
rates are expected to increase from 37% back to 39.6% on income over
$400,000, with few places to hide. Moreover, the plan in fact according
to the Tax Foundation would actually reduce after-tax income for the
average American worker by 2% by 2030. And while these are just the
high-level figures, it gets much uglier if the Senate majority flips
from Republican to Democrat (see Jan 5th 2021 Georgia Senate run-off race).
Capital Gains tax – The Biden plan will nearly double
the tax on long term capital gains from 20% to 39.6% on income over $1
million (add another 3.8% net investment income tax if your adjusted
gross income tops $250,000 for married couples). The Foundation also
notes that raising the capital gains tax is less likely to increase
federal revenues rather it will likely delay the sale of those assets
until taxpayers find a less costly method. As a result, if the long-term
capital gains tax rates do double as proposed the Tax Foundation
further calculates an actual loss of $2 billion in annual revenues to
the government, making this a bad idea.
Estate & Gift Taxes – Under Trump’s Tax Cuts &
Jobs Act the gift & estate tax exemption threshold was $11.5 million
for singles and $23 million for married filers. That will change. Under
a Biden plan a dramatically lower exemption threshold for the first
$3.5 million and a whopping 45% tax on assets above that is being
proposed. Notwithstanding the step-up in “basis” the value after which a
tax is imposed is eliminated, meaning new estate owners will pay higher
taxes on the current market value of their assets. Yikes… Should
democrats win a majority in Congress… it will be open season for Wealth
& Estate planners to come door knocking, and rightfully so.
Employee Health coverage – The Affordable Care Act (ACA- Obamacare) The Public Option – In 2019 the Census Bureau reported an estimated 30 million in the U.S. were without healthcare. These figures among others have compelled the Biden-Sanders task force
to propose that the U.S. government take center stage and majority
control over citizen healthcare. Essentially the Biden plan wants to
socialize medicine in the U.S. similar to Senator Bernie Sanders’ “Medicare for All,”
while leaving in place private health insurance. The key changes will
expand the ACA to allow everyone including undocumented workers access
to federal premium subsidies to acquire health insurance on the ACA
provider websites. The Biden plan also proposes to reinstate the
“individual mandate” (case to be heard by the Supreme Court this winter)
which was eliminated by the Trump administration, however at the same
time the Biden plan will also increase federal subsidies to the poor who
can’t afford it. Biden says the new ACA will cover an additional 25
million of the 30 million people uninsured.
But to make this all happen the Democrats would need to negotiate
with a Republican Senate, unless the expected Senate race run-off in
Georgia January 2021 as mentioned flips the Senate to a Democrat
majority. What this means for small business and all business is obvious
to me. Changes in healthcare are inevitable and usually end up costing
small business owners in one way or another. In this case putting
pressure on private insurance plans to stay competitive absorbing
pre-conditions and doctor choice in the face of a giant new
government-sponsored health system. This may leave many small business
employers who like their current health insurance plans and who wish to
keep high employees happy in the lurch with higher premiums, and with
fewer affordable competitive private insurance plan choices than before.
Employee Minimum Wage – Under the Biden team economic
plan there will be a strong push for a national minimum wage increase to
$15/hour over the next few years. This despite outcries from small
business owners in lower wage U.S. states and many economists who argue raising minimum wages
will increase the burden on struggling small business profits creating
fewer job openings at a time when we need more of them, not less.
And Finally: First things first – Where is the next Covid Stimulus & Response package?
As of mid-November, the outlook for a Covid vaccine has abruptly
improved given both bio firms Pfizer and Moderna each separately
announced their vaccines are ready, and are nearly 95% effective. Each
compliments Trump’s Operation Warp Speed
initiative for getting us to this point. Meanwhile, post-election there
remains little evidence of yet another helping tranche (aka 4th
stimulus package) estimated at another $2 Trillion including
supplemental employment benefits, recovery rebates, and the popular PPP
(Paycheck Protection Program) is emerging from Congress or the White
House, as shutdowns loom and millions of small businesses and workers
are still suffering this Thanksgiving. This makes welcome the spirited
news that a Covid vaccine distributed over the next 6 months will likely
help stem the tide of increasing Covid infections. Still, it seems
unlikely any stimulus plan will get passed in an upcoming lame-duck
session. But the general consensus among most reports is that Democrats
are preparing a new measure that will be ready in January for the Senate
and President Biden to sign, which unfortunately may be far too late
for many businesses on the rocks and needing help.
Summary – Impact under Joe Biden
It seems almost inevitable that personal taxes, business taxes,
capital gains, and estate taxes are all going up to some degree under a
Joe Biden Presidency. Many promises were made, and new taxes appear the
only way to pay for them. But that won’t happen until new laws are
debated and passed next year. The good news is that in most cases any
tax increase will not be retro-active giving you some time (likely until
June 2021) to calculate the impact and make hard decisions. Many
businesses may not survive Covid this winter, especially if harsh
federal mandates further restrict business activities and push fragile
business owners into a fatal financial tailspin. Other long-term asset
owners will need to reshuffle their retirement plans including when and
how to sell assets, transfer equity in a business, or cash out now and
benefit from today’s substantially lower rates.
In either case, the key message is not to sit on your hands. These
proposed Biden team tax increases if left unplanned for in the coming
months could amount to tens of thousands or millions of dollars in added
tax burdens for you or your heirs. My advice? Have your feast, but
don’t get caught on the wrong side of the plate. After you read this,
push back from the turkey table, grab your phone and schedule a call
with your tax advisor, estate advisor, or wealth advisor. You’ll be glad
And lastly, if you own a business and need advice on buying or
selling call a trusted investment banker, he or she can help talk you
through some of the options we are seeing in development and what other
business owners are planning to do before year’s end. Getting
professional advisors on board now can help you navigate the landscape
well before the cold Biden left-overs leave you with a bad taste in your
In 1859 the English naturalist, geologist, and biologist we all know Charles Darwin published his most famous and influential work, On The Origin of Species based upon his study and research of the evolutionary traits found in nearly all plants and animals. He defined it as the “principle by which each slight variation [of a trait], if useful, is preserved.” And from this was coined the expression “Natural Selection” whereby in time even a slight random chance alteration to a plant or animal’s physical characteristics (aka genetic code) could essentially come to dominate the environment and displace the inferior genes of the same species.
Before Darwin’s book, most people didn’t pay much attention
to how or why plants and animals physically changed in their attempts to thrive
in an endlessly competitive life or death struggle to survive. But to Darwin
the link between random genetic variants and their abundant success over prior
generations left no doubt that under the right conditions nature would select the
most adaptable and fittest of the group to thrive. Which got me thinking.
What’s most interesting about Darwin’s theory of Natural
Selection is how twisted it compares to the unnatural artificial selection by
governments, politicians and the media today, whereby only certain businesses are
allowed to stay open while others face the dire consequences of an unmitigated
shut-down and the prospects of extinction.
Of course, in Darwin’s research, Natural Selection took root
over time as the genetic superiors with more adaptive traits displaced the
inferiors. That makes sense. But today in the world of business, the pressures
from politics and social media groups, rather than taking thousands of genetic reproductive
lifecycles to bring into effect a species’ new advantage have instead amounted
to a fait accompli for thousands of small business owners in a matter of
More urgently, right now in the face of the global pandemic nearly
every business is facing some form of existential review. CEOs and business
owners are not only busy surviving but also evaluating the big question. “Is this
Covid-19 response thing going to put us out of business for good?” The short
answer is… It could. So now what…
Redefining Natural Selection in a Post-Covid World
To Darwin, Natural Selection boiled down to a simple concept
I can adopt and translate to the business world as Advantage vs Disadvantage.
Essentially as any plant or animal that adapts faster or better accumulates
more significant advantages to succeed, others unavoidably accumulate
disadvantages and are left behind. We see this for example most distinctly
every day in the Leisure, Hospitality and Food Industries fighting to survive.
Fast food and quick serve venues for instance can use drive-thru and delivery
services all the while accumulating Post-Covid customer advantages as social
distancing rules reign. However, full-service sit-down restaurants that were forced
to close in order to comply with social distancing rules continue to accumulate
disadvantages, and are thus most un-naturally de-selected from the group, and
from making a living, a distinction prospectively in violation of their Constitutional
rights. Nevertheless, the question then becomes: Is forced extinction avoidable?
And the answer is Yes. But it requires more fortitude. And here’s what I mean.
After World War I, American Gi’s returning from Europe
brought back with them a vicious unseen enemy, The Spanish
Flu. Like Covid-19, it too was highly contagious and infected nearly 500
million people and killed 50 million people worldwide according to reports. But
despite 3 waves of Spanish Flu from 1918-1920 mostly concentrated in larger U.S
cities at the time, by the summer of 1919 the pandemic had already largely run
its course. Sound familiar? In fact, by the spring of 1920 Babe Ruth started
playing for the New York Yankees to a packed stadium, and by mid-decade F.
Scott Fitzgerald had published The Great Gatsby which would usher in the
“Roaring Twenties” leaving far behind any permanent artifacts of a deadly virus
that killed millions only a few years earlier.
By contrast Covid-19 today while deadly is a mere fraction
of the Spanish Flu in every way. As of this writing less than 900,000 people
have died from this disease globally, and less than 200,000 in the USA. Is that
Bad? Yes. But tragically historic it is not compared to the 1918 pandemic
according Covid Tracker. And if
Americans can quickly recover from the Spanish Flu in 1918 with little medical
help, we can certainly conquer this disease even faster one hundred years later,
Meanwhile there are abundant signs everywhere that people
are venturing out and about especially in states that are re-opening, albeit
wearing masks in most. But that too I
suspect will pass as it did a century ago. This leaves us in a post-Covid world
of humans that will likely most desire to expeditiously return to the way
things were before if they can, and not become mask-wearing plexiglass-protected
anti-socialites. But that won’t happen if state and local governments don’t
come to their senses and immediately allow businesses to re-open. Because if
they don’t, it may turn out that the “cure” for Covid was the real killer, and
not the disease.
In their recent Covid-19 economic impact report the small
business listing service Yelp reported
more than 72,000 businesses out of 132,000 that temporarily closed across the
country have now shuttered permanently due to unnecessary forced closures and
social distancing rules. But what the report also shows is that customers are lining
up, eager to return to normal when businesses re-open given the chance. This
lends credence to my view that governmental and media reaction to Covid continues
to drive home a precipitous over-reaction to this disease, which has
consequently put far more industries, small businesses, and millions of good
jobs unnecessarily at risk.
Still, none of this addresses the time value of the problem.
And in many cases the media and big business want us to believe that the
Coronavirus is here to stay, forever. And that all businesses must comply and change,
as if the Sun will never rise again, Yankee stadium stays dark, and “resistance
is futile.” But forced to adapt and evolve to accommodate a pretentious and unaccountable
exaggeration of what was normal so as to permanently redefine our economic and
cultural reality overnight is off the charts to me. Because by allowing redundant
voices to contemporize this disease as a “permanent pandemic,” leaves you and
thousands of other CEOs and business owners with only one reckless option, to keep
up and spend all you can to permanently invest and protect your customers from
Covid, regardless of the costs or prospects for a vaccine on the horizon, or else
be targeted, shamed and most un-naturally de-selected?
After 9-11 we all asked the question “should there be
changes?” And the right answer was Yes. But not under the rulings and
regulatory over-reach of big city governments and social media pressures to
conform to the highest levels of safety or else! That type of draconian
shut-down approach gives little thought to the real impact of the virus on
small business finances and employment in this country, which will in time more
likely result in the death of more jobs than people. In other words, instead of
the virus becoming another forgotten pandemic piece of history, today the media
and government prefer to artificially create their own Covid-19 un-Natural Selection
committees to then select which businesses will survive, and which go under. This
is still America, isn’t it?
So how do you avoid becoming Extinct?
Unnatural or not, there is a way to beat the odds stacked
against you. While some industries may need to permanently change like the
Airline industry did post 9-11, most industries in my view will return to
pre-Covid conditions and consumers will appreciate that return to normal
including sit-down restaurants and baseball games. Having said that, with several bio-pharma companies feverishly competing
to swiftly formulate a global Covid vaccine, in the meanwhile the best thing any
business can do is to simply SCALE BACK your business activity to BREAK-EVEN,
look to find products that will sell during a pandemic, preserve cash flows,
and remediate for Covid compliance and customer safety. But only as much as
needed to sustain the business on a temporary basis. The more you consider this
pandemic as a business interruption event, the more your chances of survival
will improve. The key is to get through the event as the “re-opening process” continues
and things return to more normal conditions, which is happening. Even at this
writing, passenger air travel has doubled from an average 400,000 passengers in
June/day to 800,000, its highest level since the pandemic began despite being
only 1/3 normal.
Which brings us to the bottom line. Survival of the fittest.
As long as your customers remain Covid-happy and understanding you should too.
And together we’ll all get through this. In the meantime, guard your checkbook.
Because you don’t have to re-invent the wheel, and you don’t have to hysterically
over-spend on “everything that must be Covid-compliant” or comply with every
social media reflex. Don’t let survivability be dictated to you. Now is the time
for strong leaders to make sensible plans, not to fall prey to hyperbole.
If we can simply remind ourselves that in 1918 the Spanish
Flu trailed off quickly, as Americans soon developed herd immunity and the antibodies
needed to end the pandemic in less than two years. The Covid virus even without
a vaccine has the same pattern, but is nowhere near as deadly as the Spanish
Flu. So, let’s rightfully take charge of this Chicken Little event and remove
fake news hysteria from the equation. Tell them to return Darwin’s theories
back to the pages of evolutionary natural selection where they belong. Maybe
then given the freedom to control our own destinies and decisions we can lift
our companies back up on our feet, regain our balance, and like the Great
Gatsby hit the dance floor like it’s the “roaring twenties” again.
Who’s with me?
About the author:
Rick Andrade is an investment banker at Janas Associates in Pasadena, where he
helps CEOs buy, sell, and finance middle-market companies. Rick earned his BA
and MBA from UCLA, along with his Series 7, 63, & 79 FINRA securities
licenses. He is also a CA Real Estate Broker, a volunteer SBA/SCORE instructor,
and blogs at www.RickAndrade.com on issues important to middle-market business
owners. He can be reached at RJA@JanasCorp.com. Please note this article is for
informational purposes only and should not be considered in any way an offer to
buy or sell a security. Securities are offered through JCC Advisors, Member
“Energy and persistence conquer all things.” -Benjamin Franklin
At the height of the
Great Recession back in 2007-2009 the financial crisis that precipitated the economic
decline and market sell-off was largely driven by a collapse in real estate mortgages
and other financials derivatives linked to bank lending. And while some link
the recent Corona Virus of 2020 to The Great Recession they are not the same. And
here’s why it’s important if you considered selling your business this year but
have pulled back.
The Great Recession was a financial crisis causing a near
collapse of our banking system, and when banks fail, the economy is not far
behind, we all know this. But this
crisis as we also all know is a health scare crisis, not a financial one, and
before the government and states closed down our economy, we were the envy of
the globe, a shining star leading with record low unemployment, and record high
private business asset valuations. To say the least, things were good. But then
everything changed, or so we thought.
What’s interesting is that while we have seen an initial slowdown in 2020 M&A deal activity at the beginning of the crisis as many unknowns lingered, most of the slowdown was brief. Once buyers and sellers got familiar with working remotely together using Zoom for meetings and real-time online software for data exchange, the market demand for M&A deals swiftly returned. What we now see is an explosion of new buyer inquiries greater than the post Financial Crisis period which ended more than 10 years ago. In fact, to our surprise in the last 3 months since the initial pandemic lockdown Janas team associates have collectively received hundreds more emails, newsletters, phone calls and texts from well-funded buyers each looking to eagerly compete for seller opportunities.
But how can the market turn up so quickly?
According to recent industry studies from respected sources
like Axial, Pitchbook and Bloomberg,
that tract M&A activity regularly Private Equity funds are sitting on a
record $1.5 Trillion dollar pile of cash coming into 2020 with every dollar looking
for a home. And what makes it so sticky is that if equity funds don’t deploy
that cash, they may lose access to it permanently. Greater still, and unlike
the Financial Crisis in 2008, bank lenders today are far healthier and eager to
assist PE firms, and us with deal flow lending adding even more fuel to the
market fire. So, what does this mean to you?
It means that seller Exit Plans which included selling a private business this year but got put on hold during the pandemic are each welcome back to the table, with buyers lined up waiting to make a competing offer like never before for a chance to acquire your business. And that’s the surprise no one had expected during this health crisis. Many sellers who delayed plans to engage their investment banker and Exit the business until after the Covid-19 pandemic subsided, didn’t expect the current market’s bursting buyer demand would make their business more attractive not less in the months ahead. And the reason as we are told is simple. Buyers understand that most businesses took a Corona Virus hit to sales and profits this year.
But they also understand that most businesses will stage a comeback in early 2021. This means you can still engage to sell your business starting now at a higher price. For example, when you engage Janas to market your company we will work with you step by step to specifically identify Covid-related expenses and isolate them. Buyers will gladly look forward to future sales and profit run rates as if the virus never happened.
In summary, our point is simple. Despite the pandemic, with
the growing abundance of investment capital looking to acquire your business,
it makes perfect sense to take a closer look at your Exit plan, if you have one,
and give us a call. If you trust good advice check your calendar, and let’s set
up a quick Zoom call or phone chat. We can tell you in 5 minutes exactly what
we’re seeing and hearing from the field and why our firm believes Exiting a
business now is still the golden ticket for you and the important stakeholders
in your life. Because it’s like Ben Franklin said; “Energy and persistence
conquer all things.” So, let’s do this
About the author: Rick Andrade is an investment banker at Janas Associates in Pasadena, where he helps food CEOs buy, sell, and finance middle-market companies. Rick earned his BA and MBA from UCLA, along with his Series 7, 63, & 79 FINRA securities licenses. He is also a CA Real Estate Broker, a volunteer SBA/SCORE instructor, and blogs at www.RickAndrade.com on issues important to middle-market business owners. He can be reached at RJA@JanasCorp.com. Please note this article is for informational purposes only and should not be considered in any way an offer to buy or sell a security. Securities are offered through JCC Advisors, Member FINRA/SIPC.
day everything’s normal, the next we’re in the middle of a global
pandemic. Not since 1918 has the world mobilized to fight such a common
invisible foe. And back then as now many would-be leaders were compelled
for the first time to dig deep, step up, and lead with the strength of
an intrepid warrior.
Today, whether you are the CEO of a Fortune 500 company or CEO of your home and family we’re all in the same fight against this Great Virus. And given the uncertainties of our decisions we will undoubtedly question ourselves, doubt ourselves and search for ways to manage our daily affairs better. But we may also recognize that in troubled times we can also learn important things about ourselves, and in turn use this challenging opportunity to reflect, adjust and emerge a better, more insightful person and leader. And the best way to see the forest through the trees and help improve upon your personal performance in a crisis according to experts is to get in touch with your inner self-expression by keeping a Personal Journal.
self-expression is nothing new. There are many forms from art to
science. Personal self-expression via clothing, jewelry, footwear and
body-art have been a hallmark of mankind since the dawn of human
existence. But what of the mind of the creators of written
self-expressive forms? Do creators of personal literary artifacts learn
from their creations? How does it matter really? Have you ever wondered
what people who self-express in written form truly gain from it? You be
By the time of his death in 180 AD Roman Emperor Marcus
Aurelius had long learned and appreciated the benefits of writing down
his personal thoughts as a conscientious leader, soldier and philosopher
of his day. His posthumous 12 books of the Meditations
are well studied for their keen observational insights the introverted
emperor pondered and recorded over the many campaigns he waged during
his 20 year reign. Perhaps like many great leaders today Aurelius was a
complex blend of deep influences. As a Stoic Philosopher common of the
day he imbued as an acute and persistent inner quest a rare yearning for
self-development. And he learned that finding quiet time to journal his
thoughts provided a therapeutic activity of mind and hand to reflect
and to take note of his most poignant perspectives, even when they
conflicted. Far ahead of his time the Roman conqueror saw the benefits
to inscribing his thoughts as an essential part of understanding and
developing who he was as a man and a leader. To Marcus Aurelius
admittedly keeping a personal diary (or journal) was his way to
perpetually self-evaluate and improve himself, a form of hand-written
Of course, the earliest known written personal form of self-expression is still the ubiquitous Diary.
Historically, the diary by definition is a simple daily scribing of
chronological events. Over time as personal observations were naturally
added as narrative to the text a diary became a personal diary, and from
there a Personal Journal which is less about chronology and
more about jotting down personal feelings to accompany observations of a
particular event or subject.
The earliest known personal diaries
with commentary narrative tended to be travelogues. The first written
travelogue ever identified and to have survived as such came from the
Chinese philosopher and writer Li Ao in the year 809 AD while on a trip through southern China with his then pregnant wife, a detailed account which survives today.
However, in western culture the earliest English written account as a chronological personal record is from Thomas Beckington
in 1442 as King’s emissary documenting his 6-month journey from England
to France to help arrange the marriage of King Henry VI to the niece of
King Charles VII of France. A dreadful endeavor we now know from
extraneous personal letters. Flipping through the text you immediately
take note of its chronological nature and limited personal reflections.
That made this personal diary an effort hardly the self-reflective
learning tool it could have been. While Beckington was keeping his
personal diary, he was also composing letters wherein he struggled to
express and alleviate his truer deeper frustrations during the trip.
Given the chance to self-address and work through persistent personal
and political ambiguities his keeping of a diary missed the golden
opportunity to settle his mind and arbitrate his opposing views.
contemporary times… wherein the best of both diaries and journals have
combined into one blended form. Of the most notable accounts in modern
history we benefit from today include the written words, drawings,
figures and formulas of Albert Einstein, Charles Darwin, Lewis &
Clark, Madame Curie, Winston Churchill, Thomas Edison, Nelson Mandela,
Richard Branson, and of course, Oprah Winfrey who started journaling
when she was 15 years old and claims “Keeping a journal will absolutely change your life in ways you’ve never imagined.”
The Personal Journal as a Personal Learning Coach
its rich history and promising rewards, however, journaling seems to be
a lost art for most people. But not for everyone. Virgin Group founder
Richard Branson has long been journaling and carries a little notebook
with him as he goes about his day to make regular hand notes of his
thoughts and feelings as they occur to him. The idea is to learn from
your own thoughts. “Don’t just take notes for the sake of taking
notes,” he says, “go through your ideas and turn them into actionable
and measurable goals.” Good advice.
Dan Ciampa a former CEO
of his own consulting firm kept a 12-year personal journal and has
authored 5 books on CEO leadership. He advises CEOs today on how
important it is to replay events in your day. Because “while the
brain records and holds what takes place in the moment…the learning
happens after the fact during periods of quiet reflection.” And
Marcus Aurelius would agree if only more people everywhere kept a
personal journal and referred to it frequently, perhaps we’d have a
higher understanding of the importance and positive effect this form of
self-expression provides to advancing personal development and enabling
better decisions across all of humanity, especially in times of crisis.
So why is keeping a personal journal so effective?
to research there are many tangible benefits to journaling as
mentioned, but other benefits while less tangible are more significantly
ethereal. Experts cite three such benefits commonly overlooked to
It provides a chance to slow things down, meditate and be contemplative.
It provides a chance to ask yourself insightful questions like: What biases might be influencing my actions and decisions?
It provides a chance to allow the connection between mind, body, and spirit to add voice to your introspective opinions.
Once you commit to keeping a personal journal the steps to getting started are super easy:
Buy a paper journal. While digital-online journals are handy. They are not always better.
a Personal Quote on your title page that summarizes your reason for
keeping a journal eg) I write this journal to myself and no-one else
with the intent to document and explore my observations as…
Find a quiet place to settle your mind regardless of where you are.
Start with the basics of your observations – who, what, where, when, and add the ‘why.’
Try to get in the habit of journaling as often as possible and within 24hrs of an observation.
How to approach your writing
Be self-reflective – consider how you feel emotionally & why.
Be balanced in your evaluation of people, and projects, not too critical not too kind.
Discuss how things are developing good vs bad, pro vs con.
And finally ask yourself — How can I get better at this?
summary, what I’m trying to communicate to you is that keeping a
journal or personal diary is a proven self-awareness, self-evaluation
tool any person can adopt and benefit from. The chance to organize your
thoughts into a written narrative that pulls together all aspects of
experience and expression is a key best practice these days. The
thinking is that while the stresses of a Covid-19 world create lingering
unknowns, keeping a personal journal provides a way to not only quietly
reflect, but also blow off steam and help relieve the stresses of the
day. It’s helped me. Keeping a personal journal allows me to summarize
my observances more cerebrally from many points of view, un-edited. And
by doing so I can develop new points of view, and often discover new
paths through critical problems and that has made me a more confident
and actionable leader in my view.
Lastly, when you think about it… now
is when the people who count on you the most need the most from you.
And so, when you think of the bright side what better time than a global
crisis is there to learn another way to reach deep inside yourself and
pull your inner voices together and down onto a waiting page. Or as
Emperor Marcus Aurelius put it “Our life is what our thoughts make it.” And journaling is our thoughts. So, grab your pen… and let’s journal-down on this crisis.
the author: Rick Andrade is an investment banker at Janas Associates in
Pasadena, where he helps CEOs buy, sell and finance middle market
companies. Rick earned his BA and MBA from UCLA along with his Series 7,
63 & 79 FINRA securities licenses. He is also a CA Real Estate
Broker, a volunteer SBA/SCORE instructor, and blogs at www.RickAndrade.com on issues important to middle market business owners. He can be reached at RJA@JanasCorp.com. Please note this
article is for informational purposes only and should not be considered
in any way an offer to buy or sell a security. Securities are offered
through JCC Advisors, Member FINRA/SIPC.
Six weeks ago in mid February 2020 the world was different. The bright economic prospects in the U.S. for another year of expansion and growth seemed inevitable. Employment was at record highs, business and consumer confidence was strong, and GDP was forecast to grow at a healthy 2% for 2020. The expectation was that the roaring 1920s were back!
But then came the Corona Virus (Covid-19) which lurked in the wings, and has in 6 weeks spread across the world and turned a robust global economy into dust overnight, and has left in its wake thus far more than 2.2 million people infected, 147,000 dead, and it’s not over according to daily live tracking statistics.
To make matters worse as of today, mid-April 2020 if you haven’t been living on Mars, maybe you should be. Because most U.S. state orders are for businesses to close and citizens to stay at home, work from home, and not go out unless you have a darned good reason to. And as a consequence the U.S. went from gaining 200,000 jobs per month to losing nearly 22 million in the last several weeks alone. Nothing like this has ever had such an enormous impact on labor since the Great Depression. It’s unreal, or surreal like a zombie apocalypse movie. And regardless of how many times I try to wake up, I can’t because it’s not a dream. And for now this new reality for CEOs and business owners may not forecast increased sales, but rather increased bankruptcies.
Enter the US Government to the rescue
In response to this health-driven crisis many governments around the world have braced for impact, all hoping to ease the economic crash by injecting trillions of dollars into their respective economies. The U.S. in response recently passed the $2 Trillion dollar Coronavirus Aid, Relief and Economic Security Act (CARES) … to help fund payrolls and other operating expenses for 2.5 months for small businesses. The hope is to help shore up small business until the crisis passes. Sounds scary, and it is.
As a consequence, managing or owning a business has thus gone from approaching a paradise in February 2020 to Hell in March and going forward a living nightmare if your business was forced to close until further notice.
To help, I already reviewed dozens of webinars, newsletters, articles and websites over the past 3 weeks and found a few that I believe can really help cut through the haze and focus on how to specifically get aid to your business and keep you afloat. Check these out:
How to Obtain an SBA Coronavirus PPP Loan and Have It Forgiven:
CEO Coaching Int’l group: Navigating the Crisis with access real-time CEO advisors:
This CEO Coaching Int’l group brings together CEOs offering free time to discuss your particular Covid-19 situation and offer some resourceful tools and ideas.
From my experience the key performance exercise is creating a detailed CASH FLOW PLAN for the next 6-12 months. Minimizing outflows and using the government loan and forgiveness programs to ease the pain. So if you haven’t taken advantage yet, better get started asap. Many will qualify for relief, but fewer if you don’t act fast. Second is to gather your executive team and external advisor including your CPA, Attorney and Banker. Everyone needs to be on the same page and follow your business crisis & continuity plan. This is your moment to shine through as a strong leader with a keen foresight and a keen ability to communicate to your staffers how the company will navigate through this existential crisis like no other. Until then… please stay well, stay strong, and stay together. There is light at the end of the tunnel.
Switzerland – World Braces for Climate Doom.
On January 21st, 2020, 3000 attendees including top leaders from governments, institutions, and industries from around the world gathered at the 50th World Economic Forum(WEF) in Davos, Switzerland to share and influence the trajectory of humankind. Once again as they have for the last 5 decades these leaders came ready to tackle this year’s topic: Stakeholders for a Cohesive and Sustainable World. And this time the lion’s roar centerstage was climate change, including Sustainable Development Goals (SDGs) inclusive within a broader spectrum framework known as ESG (Environment, Social, and Governance). Like the World Economic Forum itself, ESG is essentially an amalgamated group of key stakeholder issues that demand remediation, especially given the impact human endeavors are having on the planet and each other up to now. So, let’s take a closer look at what’s working, and what isn’t.
ESG as a concept is not new. In theory it stems as far
back as human ethical behavior goes. One could argue that among the very first notable
rules governing good Social behaviors are ages old. The idea was to teach us
how to live together and prosper without destroying ourselves. The basic rules
of Social life. The Ten Commandments were among the first proliferated as such I
could argue, mostly S and G, but still an early endeavor to curb the temptation
of human vice, including sex, alcohol, gambling and usury among others. But a
lot has changed. While ‘Western’ religions of old warned that to indulge in
these vices earned you a one-way ticket to the gates of Hades, today’s regulatory
sanctions out of Washington and elsewhere have a bit less bite, and certainly not
the gruesome feared spectacle of life in the underworld just yet. But that too
is changing as more stakeholders demand accountability and measurement progress
The latest in the race to Measure ESG
Unlike ‘Scoring ESG’ companies, discussed later, what and how to ‘Measure ESG’ comes first. And to date like Scoring ESG there is no standardized agreement across the board to agree on. Still, despite these challenges organizations are trying to pull together a framework. The International Integrated Reporting Council (IIRC), the Global Reporting Initiative (GRI) and the Task Force for Climate Related Disclosure (TCFD) are each working to help enterprises identify and measure specific accounts, but they aren’t working closely enough together. Enter the US-based Sustainability Accounting Standards Board (SASB). The SASB is a non-profit adjunct to the Financial Accounting Standards Board which in this case serves as a provider of materially significant measurable and reportable ESG category “standards” for 77 industries to 3rd party ESG scorers like State Street Global Advisors and MCSI Research.
But while the SASB makes headway to identify and standardize
ESG impact metrics and disclosure standards across the board, the majority of
the calls for action to-date are driven by climate change, aka the E in
Environmental issues as notably exemplified by rising waters in Florida, poor
air quality in China, and the catastrophic fires raging in Australia to name a
few. These among others altogether, perpetuated by news and Social Media reporting
over the last few years are now the central investment thesis for a growing list
of climate and sustainability-minded investors looking to identify and
differentiate ESG-signatory from non ESG-signatory companies. But despite all
the pressure and ambitious talk the pace of adoption is horrendously too slow for
climate-change activists like 17yr-old Swedish climate-change activist and Davos
Thunberg who lambasted:
“From a sustainability perspective the Right, Left and
Center (political landscapes) have all failed… or worse empty words that give
the impression action is being taken.”
Voices like Thunberg’s magnify the urgency to act, not on
which SDGs should be met, but rather over what period of time. Time being the
most important component of any key decision or choice at hand. But despite the
urgent need to take action by all stakeholders to stem the tide from climate
change aka global warming, even the World Economic Forum’s own request that each
attendee at Davos this year commit to becoming a net-zero carbon emitter by
2050 is way too late for the likes of Ms. Thunberg, who is calling for the end to
fossil fuel emissions now. Adding lift to the growing warning signs CEO Larry
Fink of investment firm BlackRock declared in an open letter to all CEOs recently
that his firm has committed to dis-invest from thermal coal producers by the
end of this year. BlackRock manages more than $7 trillion in assets for clients
which puts Fink’s statement noticeably on the front page of financial news
sites across the globe, marking a significant milestone to the climate impact
of E in ESG at Davos.
So then what’s the hold up? Why can’t governments and
companies all agree on ESG standards & goals?
The Devils in the Scoring
A few firms have undertaken the enormous task to measure and
score ESG impacts at the company level. Some look at Risk, some look at
actual spending and savings if available. But all are trying to make an effort
to quantify that which can be measured effectively at this stage. Three good examples
of monitors and ESG data tracking scorers are:
Street global – uses SASB framework to create a Responsibility (r)- factor
for each company analyzed, and uses the r-factor as a score-measure of ESG
engagement vs exposure.
ESG Research – (Morgan Stanley Capital International) calculates a risk profile
scale spread from AAA (ESG Leader) to CCC (ESG Laggard). This score card helps
investors understand where a particular company is on the spectrum.
– Impact Weighted Accounts – new
accounting measurements and reporting standards in development to translate all
ESG categories into measurable currency that can consistently, across all
industries, measure the ESG accounting impact on a company’s financial
For each of these notable data collectors and scoring
companies there are many more looking to cash in on the ESG (Measurement & Disclose)
bandwagon. High Scoring ESG companies tend to have greater flexibility in
overall macro industry risks like less exposure to higher future energy costs,
human capital, and waste. At the ground level early reports indicate companies
with high ESG scores have less staff turnover, a lower cost of capital, and tend
to save more money via operating efficiencies, reduced input/output waste and
reduced overhead costs. By contrast lower Scoring ESG companies may (for a time)
operate more profitably as measured by their quarterly EPS, but in the next
decade ahead the 2020s may see them fall significantly behind the cost curve as
compared to their higher ESG scoring competitors,
and potentially force them to close up shop, or merge with a higher-scoring ESG
how to measure the financial impact of ESG issues on a company’s financial
performance. Currently only two methods are gaining traction, one is the R-Factor (Responsibility Factor) created by State Street
Global Advisors for fund sponsors like Bloomberg ESG indices. It uses the SASB
framework of ESG categories per industry and weights each company subjectively
on how it responds to the SASB outlined issues. The other is Harvard’s Impact-Weighted Accounts
(IWAI). The approach here is to standardize an accounting process that adds an
impact measure of risk to each company’s accounting system to produce a second
set of books that reflects the monetized impact of ESG efforts, rather than an
ESG scoring method. It all seems to be coming together, right?
But there are Skeptics
Because the troubles with ESG measuring and monitoring is getting
agreement on such things. Everyone is working on the E-Environment because it’s
frontpage news, and more straightforward. As it stands now, however, given the
several dispersed ESG-related groups and the breath of the ESG landscape for
what and how to measure the financial impact on a particular company over
another is still considered the wild west frontier out there. Measuring S &
G issues is far from identifying a coherent path forward because Social and
Governance issues are less directly connected to a company’s financial
performance, and thus by no means a slam dunk for CEOs to implement. So why not
just lay low? Berkshire Hathaway CEO Warren Buffett has remained on the ESG sidelines
for example, averting any material commitment thus far. Perhaps because heavy
industry and manufacturing companies in general have the deck stacked against
them at the outset, especially to reduce their carbon footprint, a far harder
effort at a large refinery like Chevron burning off waste fumes than at a large
retailer like Walmart, re-stocking shelves. This ESG industry impact gap and
the underlying mismatch of ESG data collected, measured, and disclosed is what
mostly troubles adopters across the globe at Davos.
In fact, in its ESG
Guidelines report BlackRock for example identifies (3) key challenges ESG
data collectors & monitors face including:
Reliance on self-reported data to questionnaires and
industry bodies. Company disclosed information is sparse and disparate across
industries and regions. The reliance on self-reported data to private
aggregators allows companies to disclose favorable data or opt out completely.
Furthermore, there is no accountability or overarching governing body ensuring
accuracy of reported information.
Inconsistent collection, management, and distribution of
ESG data. ESG data is collected, managed, and dispersed by multiple data
providers and is not easily accessible to all investors in a standard form.
This creates a challenge for investment professionals attempting to
systematically compare companies across industries and regions, either in real
time or over historical time periods.
Disparate approaches to measure and report ESG information
to investors. Due to different methodologies and disclosures, index providers
and asset managers report ESG considerations inconsistently, creating
challenges for investors seeking to compare ESG investment strategies,
objectives and outcomes consistently.
This disconnect between investors’ desires for reliable ESG
disclosures and how to do it has corporate boardrooms on edge and a little
uneasy. In fact, according to a recent PwC
Annual Corporate Directors Survey roughly 1 in 3 corporate board directors
think institutional investors should devote less attention to some ESG
issues, like Board Ethnic, Gender & Racial Diversity, Environmental, and
Social & Sustainability Issues. Directors argue they are already handling
ESG issues as components of Risk Management, Business Continuity or IT Security
plans. Hence many enterprises feel they already have many of these ESG issues
under control, and don’t need to extend their transparency for any good reason.
And there’s the rub. On the one hand investors want to see ESG metrics far more
than corporate executives want to show them because corporates are concerned
that ESG measures could negatively impact the value of their capital stock in
the public markets. Thus, begging the age-old question; ‘why introduce another
layer of competitive performance metrics unless you’re forced to’? Still
however, CEOs are eager to stay ahead of the growing populist ESG movement and
to engage the sustainability culture sweeping across the globe.
So. What should CEOs do now?
The answer depends on your appetite for short termism vs long
termism. And that’s the message from Davos, BlackRock and the new Business Roundtable announcement last
August. Wherein the leaders of nearly 200 US-based corporations pledged to
include their “stakeholders” as well as their “stockholders” in their profit
motives going forward.
Nonetheless, if ESG is a new concept to you. Yikes! You’re
behind the curve. So start with an ESG Assessment. Don’t sit on your hands and
wait for it to go away. It won’t. If you wait around, eventually investment
dollars will dry up as investment funds (public and private) add layers of benchmark
ESG rankings & scores to compare companies to one another. Fall too far
behind (public or private company) and it will catch up to you at some point,
and when it does there will be few places to hide anymore. So Step one: review
your industry guidelines in the Sustainability
Accounting Standards Board (SASB).
Step two, hire a Chief ESG Officer to create and champion an ESG effort and roll-out plan sending a strong message to show the public and all stakeholders of your elevated efforts to embrace ESG issues, and to concentrate your metrics-tracking and disclosure/reporting functions into a single head. The new C-ESG executive can report directly to the CFO’s office or the Board of Directors to ensure proper accountability and disclosure. The idea is to provide investors with more transparency into your progress on ESG issues asap.
Q: What will ESG Cost?
A: It’s all about the ‘Long Term Value Creation Story’
At the company level ESG implementation costs obviously vary widely from tens of thousands for Solar installs, to tens of millions to remediate a coal-burning power plant. But cost is relative to time. Pay now or pay later. When is later? According to climate change advocates and activists of the same mind costs are in the trillions so the time is now, while there’s still a good story to tell. In support, former IBM CEO Sam Palmisano said recently that ESG has to be part of your brand, “not just a timely project initiative.” The value creation story argument is that in the long run value is increased as consumers and stakeholders only patronize brands synonymous with ESG, and won’t patronize non-ESG firms. And over time those left behind will suffer a huge catch-up investment requirement potentially causing a significant valuation-decline from their industry peers. Can you measure that? It won’t be easy or straightforward. Best advice is simply to get started down the path and learn from others along the way.
Walmart Case Study
Safe to say that recent concerns about abrupt climate change
issues largely focus on contemporary pressures to reduce greenhouse gases by
lowering a company’s fossil fuel energy use aka carbon footprint. For example,
a transportation trucking firm should buy all electric vehicles, a large
manufacturer and heavy coal consumer should add more solar/wind resources, and food
industry packaging providers should recycle their own packaging, and pledge to
clean up the growing plastic waste problem, etc. And there is a good story to be
told there. But ESG goes far further, into the future, and offers far greater
rewards to ESG adopters who can gain the public trust telling a compelling
a good example of taking ESG seriously. The company has a CSO (Chief
Sustainability Officer) who manages a Working Group (as shown) the hub of several
corporatewide ESG initiatives that impact many corporate functions across their
entire enterprise ecosystem, and externally as well across their stakeholder
landscape from supplier sustainability mandates to power consumption. And given
its $500 Billion in global annual revenues and 2.2 Million employees (1.5M in the
U.S.) implementing an institution-wide ESG program has a corresponding
widespread network influencer effect. In their 2019 ESG Report Walmart
cites the importance it gives to ESG issues:
practices can enhance customer trust, catalyze new product lines, increase
productivity, reduce costs and secure future supply, while simultaneously
improving livelihoods, advancing economic mobility and opportunity, reducing
emissions and waste, and restoring natural capital.]—
Now that’s a mouthful. The company not only clearly
recognizes and embraces its leadership role to set a good example for other
companies to follow, but also actually moves the needle on specific measures
for employees, customers, suppliers and all stakeholders, which by order of
magnitude includes millions of people across the globe. Being a first mover, or
early adopter incorporating ESG into the fabric or the business whose growth
strategy embraces rather than side-steps ESG is likely a successful approach.
Are ESG-embracing Companies like Walmart “worth” more?
Is Walmart stock worth more as a direct measure of their ESG
programs? It’s too early to tell. But probably not. Nor should it be, until
Wall Street and Main Street agree on the “why.” Walmart itself cites this
dis-connection among their challenges when addressing stock analysts for
example who question if short term ESG costs will pay off in a long-term
strategy, especially as it relates to stockholders’ earnings expectations. And
this gap between cost of adopting ESG broadly and earnings performance may keep
many CEOs on the sidelines until they are either forced to comply or
appropriately incentivized. But the writing is still on the wall. ESG is here.
Deal with it!
a CEO Point of View
my company worth more if I embrace ESG? This is a tough question to say yes to.
Worth more can mean higher profits, or multiple expansion for public companies.
Currently ESG engagement remains an important cost center, not a profit center.
And until that changes higher costs drive earnings down in the short term. But
as mentioned ESG is not a short-term investment play, hence the multiple
expansion option anticipating higher earnings down the line is more likely a
reason for any valuation premium. How far down the line? Unknown. Each industry
is unique and each CEO’s approach is different in timing and commitment. But
the argument is that one day soon access to funds, and the cost of capital will
be higher for non-ESG companies, especially as more ESG-targeted investment
funds and managers assert their “sustainable investment” mandates.
From an Investment Fund Manager point of view
to Jim Rossman Lazard head of shareholder advisory, CEOs who avoid ESG do so at
their own peril. In an interview on January 17th, 2020 on Bloomberg
tv Rossman said “I think the movement of ESG from the periphery to the
center stage over the last two years is probably as significant as the rise of
activism. I think it’s going to fundamentally disrupt asset management and the
way not only passive managers, but also active managers think about
prioritizing ESG in their Investments… yet another agenda the board and the management
team have to take into account…”
Brian Deese, Head of Sustainable Investment for BlackRock, said in an interview
on PBS Newshour that same day January 17th, 2020 regarding the
increase in climate change activity:
risks are not fully appreciated in financial markets and so we believe we are
going to see a massive re-allocation of capital…”
again timing is everything. And nevertheless, as it stands ESG-investment funds
are a nascent piece of the overall investment pool available to companies.
Today ESG funds still do not outperform non-ESG investment funds, however, some
say that will change. As ESG-compliant companies begin to take investment
centerstage, they will eventually have access to cheaper investment capital and
thus potentially lock-out or restrict capital to serial polluters for instance.
But to be fair, ESG has a bright future and is likely to compel most every
company to show some level of engagement and commitment starting soon.
the end of the day until a global comparative set of consistently measurable
and reportable ESG financial metrics becomes the rule rather than the
discretionary exception for public market valuation, it’s still Corporate
Earnings aka “the mother’s milk of the stock market” that will drive stock
prices up or down for some time ahead. For now, however, CEOs who avoid ESG do
so at their own peril. Because the message is clear, get started now on your
ESG planning, or face the consequences later. And that is the real
take-away from Davos, Switzerland this year.
About the author: Rick Andrade is an investment banker at Janas
Associates in Pasadena, where he helps CEOs buy, sell and finance middle market
companies. Rick earned his BA and MBA from UCLA along with his Series 7, 63
& 79 FINRA securities licenses. He is also a CA Real Estate Broker, a
volunteer SBA/SCORE instructor, and blogs at www.RickAndrade.com on issues important
to middle market business owners. He can be reached at RJA@JanasCorp.com. Please note this
article is for informational purposes only and should not be considered in any
way an offer to buy or sell a security. Securities are offered through JCC
Advisors, Member FINRA/SIPC.
The first CEOs in history, or rather pre-history were clan and tribal leaders thousands of years ago, notable Greek, Roman and Persian leaders like Alexander the Great, Julius Caesar, and Persian King Xerxes the Great were all the rage. These heads of state were also CEOs, responsible for the successes and failures of the actions and decisions they made each day while in control. Similarly, as is the case today these ancient leaders often confided in a select few advisors: personal, military, and political to help them craft a winning plan. Today we call these advisors the Board of Directors, a body originally designed to advise, monitor and champion the CEO. Later as public SEC rules matured the BOD became focused foremost on maximizing shareholder wealth and has become like the Oracle Temple at Delphi the historic corporate institution leaders must look to for wisdom and guidance.
Nevertheless, as time passed into modern history it was the Monarchs and Czars essentially who inherited the conquests and properties of their forefathers taking the reins of power and responsibility to acquire more. Most ruled from the time they became top dog until their death, which was by most accounts violent and synonymous with regime change and significantly more unpleasant than early retirement of CEOs today as a rule of thumb. Nonetheless, back then CEOs were far more in control of their own destiny, and to stay on the job meant stacking the deck in your favor.
In the early days of American capitalism, the icons of the day aka Robber Barons also ruled the roost of empires and for good reason, they created them. For these ruling class business tycoon-elites the thinking was simple. Many will benefit from their creations hence such rare birds should be left alone. This translated the idea that maximizing ownership-wealth was the very essence of western capitalism, the American Dream. A CEO decision then was thought to be always in the best interests of the business and its workers. And if workers are happy, the community is happy. If the community is happy, the politicians are happy, and when politicians are happy there are fewer rules, fewer regulations, and a boundless field of opportunity for industry and their leaders to grow and control massive wealth and power. In fact, the US government had to ask JP Morgan to help bail out the US treasury in the bank Panic of 1907, exemplifying that such concentration of wealth and power in a single corporation meant something had to change. And by mid century US corporations, while still big and controlled by dynamic commanders-in-chief, began to face growing concerns about who the real winners were in their world. In the 1950s a typical CEO earned 20 times the average worker salary. That might not seem fair to some. But today, that gap is more than 360 times average worker wages according to Executive Paywatch reports.
CEO Job Pressures Build
As CEO compensation continued higher through the 1970s the average tenure turn-over rate for the top gun was still 10% of Fortune 500 companies, 11% in the 1980s according to Kaplan & Minston research, at Chicago Booth, and the main focus through the 1990s was the same. CEOs would be measured by stock performance. And stock performance was measured by (3) things according to Kaplan & Minton
1) Stock performance of the firm relative to the industry, 2) the stock performance of the industry relative to the stock market, 3) stock performance of the overall stock market.
In the 2000s, a disparity in tenure-ships by industry was evident. While finance and insurance CEOs lasted the longest in the job (13 yrs), manufacturing company CEOs had even less time. Part of the pressures came from Sarbanes Oxley Act (2002) after the corporate fraud accounts and collapse of notable icons Enron, Worldcom and Tyco required independent Board of Director members, not just friends and allies, which in turn caused a significant drop in tenure the following year in 2003. Five years later the financial crisis and Great Recession (2008) hit after the collapse of the real estate loan market caught banks off-guard and resulted in both a recession and a bevy of new regulations on our financial and lending practices in America. And when all was considered many thought the game was up for CEOs whose collective tenures in 2009-10 dropped to 7 years. But like a spring rose after a cold winter they bounced back. Over the 17 years from 2001 to 2017 the average CEO tenure for large public companies was 9yrs according to the Conference Board CEO Succession Practices annual report on CEO Tenure.
This means that over the last 50 years CEO tenure has not trended downward for long, rather it’s become more stable as the chart shows, even considering the impacts over the last 20 years.
Still, while many long-term CEOs have been on the job for decades including Les Waxler of L Brands (55 yrs), Warren Buffett of Berkshire Hathaway (48 yrs), Al Miller of Universal Health (39 yrs), Jeff Bezos (21 yrs), despite the increase in lifespan, CEOs today face even greater pressures.
Today CEO tenure is still principally based on delivering the goods, that is profits and higher stock prices. According to 2019 Equilar research on CEO Pay Trends since 2014 CEO performance-based incentives have risen from 52% to 58% of total compensation today. This increasingly myopic short-term focus on stock performance makes for happy shareholders, and has rewarded CEOs with millions in executive pay for a long time. But there is a growing new question hitting the streets from activists, institutional shareholders, and independent directors these days all asking the same question. Are “shareholders” still the most important constituents in corporate America?
This past August 2019 the Business Roundtable (a group of 200 CEOs from America’s leading companies representing $7 Trillion in annual sales) issued a new Statement on the Purpose of a Corporation that pledged to include “stakeholders” alongside shareholders in their collective bond to recognize more fundamentally the wider swath of contributors to their success over the long term. For the last 20+ years the Roundtable mission was to generate “economic returns” to its owners. That has now changed.
In response to the new announcement CEO Alex Gorsky of Johnson & Johnson said “This new statement better reflects the way corporations can and should operate today.” In a separate interview (Nov-2019) with CNBC tv commentator Jim Cramer, the CEO of Salesforce.com Marc Benioff said the new CEO mandate can no longer just focus on the “stockholders,” rather the new model must include “stakeholders,” essentially everyone that has a stake in the success of the business including those in the business, in the community, and on the planet. And that also means to take “sustainability” as a core product message. Because it’s no longer just about ‘earnings per share,’ it’s about ‘impact per share,’ noted Bank of America CEO Brian Moynahand and Nestle CEO Mark Schneider. But, as to how they would be measured by the new statement… Crickets.
Nonetheless, this unprecedented acknowledgment by the CEO Roundtable may reflect times to come. And while it has yet to trickle down or across the business landscape, it’s too early to see how it will impact CEO tenure rates going forward. Critics argue there was no mention of ESG.org (Environmental, Social & Governance) issues specifically, no targets, no measurements, and no time commitments specific to more contemporary concerns like the lack of diversity and the personal and ethical behavior of senior leaders these days. Nevertheless, the revised statement could make its way into the compensation calculus measures for CEOs in the years ahead. At the moment 60% of CEO comp is stock-driven or time-based option incentives. And adding a new layer of cost not tied to performance is a significant push-back. ESG is nice, but no one doubts that profits must still come first. Without those caring more about stakeholder concerns won’t hold much weight in the boardroom, or the corner office.
At the private company level, CEO tenure is even more of a bumpy ride, and turnover is less predictable. According to Mike Keeland a Vistage CEO Group Advisor, CEOs are under the gun more today than at any time in history. He sees causes for turnover to be widespread including personal accountability for nearly any business mishap, a focus on short term success & profits, high-performing CEOs being recruited away, and companies being sold or merged. What then is the future to behold?
The Future of CEO Tenure
Today there seems to be fewer places and ways to hide from the echoing voices that were in the past mere siloed distractions. And while CEO tenure is still all about earnings & stock PERFORMANCE ahead of all else, until that piece is secure little worry about stakeholders vs stockholders will likely come into play, as long as CEO’s are compensated by a narrow financial slice of the growing panoply of important numbers. However, as we move into the next decade large institutional investors, out of concerns that corporations need to start taking on a more uniquely accountable role in environmental, social and internal governance, are making their voices heard. Today, more pension funds and endowments are directly and indirectly pressuring stock performance by investing more and more in higher ESG-scoring companies. And as these headwinds add more layers of constituency concerns for Boards and CEOs the bottom line is that change is coming fast to how CEO performance will be measured. Out with the old and in with a new basket of equally important performance metrics tied to compensation over a longer horizon, perhaps overlapping CEO tenure-ships cumulatively for the benefit of all stakeholders. All the same as they say, adapt or die. CEOs today know all too well as did many of their forefathers in the great history of empire, the clock is always ticking.
CEO Tenure Questions to ponder
Is history my guide or my Achilles heel?
What are the right measures for my tenure, the true drivers of my success?
Who are my constituent groups, am I communicating the right message often enough to them?
How can I beat the odds?
How long do I have left, realistically?
About the author: Rick Andrade is an investment banker at Janas Associates in Pasadena, where he helps CEOs buy, sell and finance middle market companies. Rick earned his BA and MBA from UCLA along with his Series 7, 63 & 79 FINRA securities licenses. He is also a CA Real Estate Broker, a volunteer SBA/SCORE instructor, and blogs at www.RickAndrade.com on issues important to middle market business owners. He can be reached at RJA@JanasCorp.com. Please note this article is for informational purposes only and should not be considered in any way an offer to buy or sell a security. Securities are offered through JCC Advisors, Member FINRA/SIPC.
In 1990 in his new book Mind Sights, Stanford professor Roger Shepard first introduced this image and called it, Turning the Tables. Shepard was fascinated by why humans perceive the same objects differently simply based upon their physical orientation to us. He argued the reason the average human brain thinks they see different sized tables in these images is because as humans we tend to “generalize” our understanding of what’s in front of us from past experiences. It’s the way our evolutionary brains seem to work. And that was our advantage back in the day when we were being chased across the great savannas by large ravenous beasts looking for a meal. But in modern times, the same skill-set can have far less successful ramifications.
A faulty generalization for example is a conclusion based on limited sample size. For example, let’s say you go to Vegas and bet on lucky 7 at the roulette table, they spin and you win $10,000. Chances are good that given that single victory you will immediately generalize that your lucky streak has arrived and bet again. To Shepard over time these innate human behaviors “have become so deeply internalized, implicit, and automatic in their operation as to be largely inaccessible to our conscious awareness.” In other words, humans simply can’t walk away from the table, and as a result over time develop dozens of unhealthy biases to support our knack for creating generalizations.
Decision Biases in Business
In his widely popular 2011 book Thinking, Fast & Slow, author Daniel Kahneman (notable decision theory expert) linked our tendency to generalize with the concept of Heuristics in decision-making. Heuristics are like rules of thumb we humans learn and use over time as short-cuts to making quick decisions and moving on. Learning and teaching these heuristic (rules of thumb) especially from elders and leaders undoubtedly enabled humans to survive and thrive because they helped us identify a safer way to live such as which plants to use as medicine, or when and where to hunt for food, build temporary shelters, and anticipate weather patterns and seasons. But while many Heuristics can prevent calamity others, which accumulate in our psyche over time as these authors suggest, become biases, and it’s these deeply rooted biases that can cause great harm when making key business decisions.
Perhaps the most damaging of all biases is not what you might first think, it’s not race, religion, gender, or social status that tops the deadly list, it’s actually “Overconfidence,” aka executive hubris. And in business and life we see it everywhere because it’s synonymous to being a “risk-taker,” a person who takes a chance that the expected outcome they perceive will occur is greater than any other. But that’s not all. Coupled with that overconfidence bias is “speed.” Speed alone is not a bias, but when combined with overconfidence it’s like mixing drinking and driving making fast decisions particularly damaging or even deadly. And as humans no matter how many thousands of years have passed, we can’t seem to turn it off.
For example, on January 27th 1986, the night before the Space Shuttle Challenger was scheduled to launch from the Kennedy Space Center in Florida, the temperature out at launchpad 39A was unusually cold that morning, below freezing for the first time in a long time. Still, under pressure from NASA to keep the program on schedule the contractor who built the solid rocket boosters, Morton Thiokol, proclaimed their rockets could handle the freeze as senior program managers gave NASA the green light. The hubris had come from the simple idea that no other rocket had failed to launch in the cold weather before. Consequential, neither would this one the executives told NASA. That overconfidence, which killed seven astronauts is “the mother of all biases” according to Max Bazerman & Don Moore authors of Judgement in Managerial Decision Making (2013) and is responsible for much of the world’s worst human-driven preventable disasters whose rival is only that of mother nature herself.
The same can happen in mergers & acquisitions, which are notorious for not working out as intended. And it was hubris and overconfidence that were center stage when in January 2000 CEOs Gerry Levin of Time Warner and Steve Case of then giant online access provider AOL decided to merge. AOL actually acquired TW using its overvalued stock at the time. The deal was estimated at $165 billion, still among the largest ever. But only a few short months later as the dot-com boom collapsed, so did the hubris and confidence at which time AOL was forced to write-off $99 billion of the deal value the following year which in turn helped to collapse AOL’s market valuation from $225 Billion to $20 billion, essentially laying off hundreds of workers and wiping out 90% of the company’s market value. It remains among the leading M&A disaster case studies of all time.
I use these two extreme examples to showcase that there is no size limit to how deadly the impact that overconfidence can have. Small companies are equally at risk as large ones whose CEOs jump to conclusions heuristically believing their own personal insights and successful tract records will never lead them astray on their road to Vegas. And they may be right most of the time, but when they are wrong, the fallout can put everything on the line. So how do we attack this problem?
How to Overcome your Biases
According to Kahneman, the best way to avoid making a bad decision that might be driven by one or more of your personal biases as a leader is to block your biases at the outset. The way to do that is to “recognize the signs that you are in a cognitive minefield, slow down, and ask for reinforcement,” which simply means to step back and give your biases a chance to reveal themselves and their prospective positions and impact on your decisions. This is the concept behind Kahneman’s thinking fast vs slow. Thinking fast is how we all got here, but thinking slow is how we make the most of it better, not the other way around.
It is believed by many in retrospect that had history’s most eventful decision-makers understood this deep human flaw and taken measures to step back from their heuristic biases and generalizations beforehand, dozens of history’s most bias-driven damaging decisions could have been avoided. And for most of us having that ability to step back and pre-judge our decisions objectively might help us avoid pulling the trigger at the wrong time, and in turn suffering the consequences we never expected.
About the author: Rick Andrade is a Food Industry investment banker at Janas Associates in Pasadena, where he helps Food CEOs buy, sell and finance middle market companies. Rick earned his BA and MBA from UCLA along with his Series 7, 63 & 79 FINRA securities licenses. He is also a CA Real Estate Broker, a volunteer SBA/SCORE instructor, and blogs at www.RickAndrade.com on issues important to middle market business owners. He can be reached at RJA@JanasCorp.com. Please note this article is for informational purposes only and should not be considered in any way an offer to buy or sell a security. Securities are offered through JCC Advisors, Member FINRA/SIPC.
It’s mid-year 2019 and the U.S. unemployment rate is at a record low of 3.7%, the lowest in 50 years. And the food industry, which employs more than 20 million workers, is struggling to keep them. While a tight labor market is great news for job seekers, it is tough finding and keeping food workers happy these days. To make matters worse, as wages rise, employees are increasingly tempted to jump ship to a competitor. But a higher wage isn’t always the number one reason staffers make the switch. Often the jump will stem from culture clashes and, more notoriously, a company’s management team’s failure to properly recognize the delicate balance between an employee’s perception of their individual contributions to the company and their weaknesses as perceived by their managers.
According to researchers, when an employee’s performance is out of step with their employer’s expectations, the misalignment at some point compels a change. Either the employee improves or is asked to find another job. And it doesn’t take much to create a ticking time bomb either. For example, in many cases, a quick review of a company’s mismatches can be found on the website GlassDoor.com, where former employees can rate their former employers and voice their experiences, good and bad, and their reasons for switching jobs. A common negative refrain emerges, wherein former staffers argue their case for why they were not appreciated as expected and why they were not promoted. “It’s management’s fault,” they say. True or false, in today’s labor market, business leaders can’t afford to second guess even the slightest of potential HR issues. Rather, they should be looking closely at how to prevent turnover and unhappy staffers and drilling down to the root causes of the problem.
Not surprisingly perhaps, the number one gripe in my experience over the last 10 years in the food industry from former employees is not low wages. It’s getting proper feedback. It sounds easy enough, but according to recent studies, trying to implement a robust and effective employee feedback system into an effective “employee engagement” program takes trial and error to perfect. Each company and culture is unique, and a one-size system does not fit all. Still, if your employee engagement program needs a tune-up, here’s the latest on what works and what doesn’t.
The problem with negative feedback
In early August 1943, General George S. Patton, commander of the U.S. Army forces in Sicily, visited the 93rd Evacuation Hospital tent to check on his wounded soldiers. The fighting was tough and the injuries severe. There, he encountered Private Paul Bennet, age 21, shaking nervously. “It’s my nerves,” he told the general when asked. At that moment, history recorded perhaps the most notorious example of negative employee feedback. Sickened by his sense of cowardly injustice, Patton slapped the young private across his neck with his glove and screamed at him, “Your nerves, hell. You are just a Goddamned coward, you yellow son of a bitch.” And with that, the boy sobbed as doctors and nurses looked upon the scene in horror. Needless to say, this example of feedback was not an effective approach, and Patton was later severely reprimanded by Gen. Eisenhower and forced to make a public apology for his actions.
I cite this infamous example as the extreme case for using “negative feedback” to improve a subordinate’s performance because it’s easy to see why the approach does more damage than good. Today, with the exception of military-style training, negative feedback is the least attractive way to improve performance.
The positive approach
In a recent Harvard study, researchers Francesca Gino and Bradley Staats concluded that company culture also takes a hit from negative feedback reviews. Their study asked participants to write a short story, after which they partnered with a researcher who gave them feedback. “People who received negative feedback, we found, were far more likely to seek a new partner for their next task than those who received confirming feedback. People who received criticism from peers looked for new relationships.” It’s a kill-the-messenger response. It turns out that if an employee does not feel their employer values their work overall, negative feedback in any particular area will seem harsh and unjustified, and will cause them to seek other employment at first chance. To stem a negative tide, however, business leaders will have to walk a fine line to get the highest production from their troops.
In May 2019, I wrote an article: Want to Save Your Company? Just Say No – CEOWorld Magazine. In it, I focused on the downside of becoming a “yes-man” organization, wherein managers and staffers never hear “no” for an answer. I argue that a yes-man culture that eliminates critical feedback damages an organization’s ability to take on more risk, the kind that produces new products, new markets, new sources of revenue, and, yes, failure. In my view, corporate culture needs an effective balance of give-and-take to survive in the long run. Researchers, on the other hand, say that we can have it both ways: a softer, gentler, more positive-thinking peer-to-peer company culture that avoids the ill effects of negative feedback and succeeds.
In a Fortune Magazine interview earlier this year, CEO of Mondelez Dirk Van Der Put divulged his formula for the company’s recent success: “I need to take away any barriers so employees can move fast. I need to take away blaming or fear of failure or not accepting being different… then it’s up to the people.”
The reason negative feedback causes such a reaction, researchers argue, is notably because the recipient takes away a negative self-impression from the experience, resulting in a damaging blow to their developmental self-confidence going forward. In the military, this may be overlooked. But in business, the troops tend to quit as a result and look for a new commander with a softer touch. So, how do we fix this?
Linking feedback to culture
Many new hires will quickly recognize how peers get promoted. They will learn if their company has an “HP way” (or not). Coined by the founders of Hewlett Packard back in the 1970s, which was way ahead of its time, the “HP way” was fundamentally focused on a more holistic approach to their employees’ motivation to work, which included children’s scholarships, stock options, and profit-sharing incentives, to name a few. And it worked. But incentives today need to go even deeper and wider into employee engagement to be as effective. Employees need annalmost cult-like emotional buy-in to stay and thrive, and while not all companies are as adaptable, many are learning fast.
Food companies that made the top best places to work recently include Wegmans, Publix, and The Cheesecake Factory, according to Fortune’s top list for Millennials, and In-N-Out Burger on GlassDoor.com’s top list.
According to GlassDoor’s annual 2019 Best Places to Work as rated by employee surveys, linking culture and feedback works best when everyone sees the same goal as reachable and personal. And the results speak for themselves. Top employee engagement companies, according to the survey, had four pillars of success in common:
A mission to believe in: A motivating mission that inspires quality work. Employees have a sense of purpose and understand the impact they make.
A strong culture: A clearly defined and shared set of values that fosters community. Engaged leaders see positive culture as part of a good business strategy.
People-focused: Employees are engaged and empowered to do their best work. Emphasis on employee growth and development.
Transparency: Open and clear communication, from the top down. Honest feedback is valued and encouraged.
Developing an effective employee engagement program
In June 2019 at their annual HR conference, the Society for Human Resource Management (SHRM), the world’s largest HR membership organization, showcased a workshop by Brad Karsh, wherein he advocated for companies to create a culture of continuous feedback on an ongoing basis.
Normally, most companies provide for an annual performance review looking back over the year and measuring performance against targets achieved or missed. The trouble here, as Karsh points out, is the changing composition of a younger workforce, and, in particular, meeting the expectations of the 80 million-strong Millennial generation looking for a faster, more personalized way to gauge and engage their individual performance. And the best and fastest tool to get you there, especially if you’re starting over or need a serious makeover of your existing employee engagement program, is new software.
Among the list of leaders in the growing “employee engagement” arena is OfficeVibe.com. With the help of Deloitte Consulting, OfficeVibe developed a program that provides input from regular employee surveys, and then groups their responses into performance scores. This is essentially a modern digital version of a 360-degree review, whereby all worker performance is evaluated by other workers and management. Performance scores are developed and linked to agreed-upon targets, such as an increase in the number of happy customer comments or a reduction in the number of unit production errors, etc. This approach is like having a live GlassDoor or Twitter comments exchange for employees to reach out and help each other succeed and to vent anonymously about anything that bothers them, from boring meetings to helpful tips on improving a new production line. Managers can then anticipate a problem or shortfall beforehand, which is not a common benefit found in the old-school annual review feedback method.
If there’s one thing most common in business, it is that nothing stays the same for long. And that includes the nature and nurture of your workforce. What’s clear today is that, while nobody likes to hear bad news, most younger workers are not comfortable with negative review feedback that is not couched in a positive way that values and warmly appreciates each worker’s positive overall contribution to the mission of the company. Annual reviews that include negative feedback remarks are rapidly falling away as Millennials prefer affirmative guidance more from employers today. The consequences of failing to adapt to this culture shift are a higher employee turnover rate and a potential loss of key talent, which is harder to replace in a tight labor market.
So, if you find yourself somewhere behind the curve on creating a modern feedback and positive employee engagement work culture, I suggest you take a minute and ask your HR executive for a best practice review, and then act quickly. Giving no action on an old-school annual review feedback program that still includes negative feedback comments as the “stick” with no “carrot” component is a company killer. In other words, as Ric Alvarez, CEO of Richelieu Foods, puts it, “If you don’t have anything nice to say, keep it to yourself.”
About the author: Rick Andrade is a food industry investment banker at Janas Associates in Pasadena, where he helps food CEOs buy, sell, and finance middle-market companies. Rick earned his BA and MBA from UCLA, along with his Series 7, 63, & 79 FINRA securities licenses. He is also a CA Real Estate Broker, a volunteer SBA/SCORE instructor, and blogs at www.RickAndrade.com on issues important to middle-market business owners. He can be reached at RJA@JanasCorp.com. Please note this article is for informational purposes only and should not be considered in any way an offer to buy or sell a security. Securities are offered through JCC Advisors, Member FINRA/SIPC.