Guest Blog

The sale of a privately held company or family business has a unique marketing challenge.  On one level, similar to selling any product, it is in the seller’s best interest to have the maximum number of potential buyers know the business is for sale and to engage with as many parties as possible.  The market dynamic principles of supply and demand convey that the higher the demand and the lower the supply, the better the price a product can be sold.  In the case of a business sale, the supply is one and the opportunity to purchase is unique for a specific time & place and may not be available again for a long time.  

Now the challenge. In the sale of a business, most owners desire to have no one know that their company is for sale prior to the transaction being completed.  This desire (or should I say fear that keeps entrepreneurs up at night) is motivated by concern about how the information will be received by customers, employees, and vendors. The last thing an entrepreneur wants is to have staff turnover, customers revisit an existing relationship, or competitors take advantage of the situation. The good news is that business buyers seeking an acquisition are aligned with sellers in wanting the information a business is for sale to be held in strict confidence. This is motivated by a desire to retain customers, employees, and vendor relationships. 

Reconciliation of these directly conflicting elements requires knowledge, experience, and skill. Knowledge is employed in the development of a comprehensive marketing program that attracts the maximum number of qualified parties while maintaining an environment of strict confidence.  It is beneficial to engage a business brokerage firm with experience selling companies in the relevant industry and geographic area, as they may already know potential buyers.  It is prudent to use a mergers & acquisitions intermediary with processes and legal documentation in place that will allow only financially qualified parties with sincere interest in an acquisition to learn a company is for sale.  Most of all it is critical to hire a broker with the skill to navigate the process from justification of the maximum possible sale price to confidential, competitive market creation with the ability to successfully negotiate the best possible outcome and facilitate the deal to closing with the least amount of transactional turbulence. There is no substitute for knowledge, experience, and skill in a professional advisor.  Seek the best and you will get the best outcome. 

​IBA has successfully sold more companies in the Pacific Northwest than any other company.  We are licensed to sell real estate in Washington & Oregon.  All communication with is held in strict confidence.  100% of IBA’s fees are performance based.  

Additional information on IBA can be found at www.ibainc.com. Joseph Hollcraft, an ORLA Allied Partner and this blog’s author, can be reached at 503-739-4880; or Gregory Kovsky, IBA’s President & CEO, can be reached at (425) 454-3052, [email protected], [email protected], or www.ibainc.com/2023.

Guest Blog

The hospitality industry is a dynamic and ever-evolving sector, facing a unique set of challenges and opportunities. In recent years, the industry has been impacted by various factors, including economic uncertainty, natural disasters, and cyber threats. These factors have contributed to an increase in insurance premiums and a tightening of underwriting guidelines, making it more difficult for hospitality businesses to obtain and maintain adequate coverage.

Key Factors Affecting Hospitality Insurance
There are several key factors that are affecting hospitality insurance in 2023 and 2024, including:

• Insurance market turmoil: There continues to be a tightening of appetite are becoming more and more selective in who they offer terms to if at all. The cost of insurance is up and many carriers are restricting no longer offering components of covage
• Natural disasters: Natural disasters are becoming more frequent and severe, and this is having a major impact on insurance rates. In 2022, there were 18 U.S. weather/climate disaster events with losses exceeding $1 billion each. These events are causing significant losses for insurance companies, and this is leading to increased premiums for hospitality businesses.
• Cyberattacks: Cyberattacks are a growing threat to businesses of all sizes, and the hospitality industry is no exception. In 2023, the Kroll IR Spotlight Trends Report identified the retail/restaurant sector as the most impacted industry sector. Email Compromise and Web Compromise were the top threat incident types. Threats against the retail/restaurant sector most often involved CVE / Exploit as the initial access method.
• Higher claims costs: Higher claims costs from escalating verdicts and rapidly evolving environmental, social, and governmental (ESG) conditions are affecting individuals and businesses.
• Underinsurance: Appraisal analysis showed that nearly 90% of buildings appraised in 2020 and 2021 were undervalued. As a result, were underinsured 68% of buildings were underinsured by 25% or more and 19% by 100%.

In addition to the general challenges facing the hospitality industry, there are also some specific insurance issues that businesses in this sector need to be aware of:

• Property insurance: Property insurance is becoming increasingly difficult to obtain and expensive for hospitality businesses. This is due to the heightened risk of property damage from natural disasters, such as hurricanes, floods, and wildfires. These events can cause significant damage to buildings, equipment, and inventory, leading to substantial financial losses for hospitality businesses.
• Liquor liability insurance: Liquor liability insurance is also becoming more expensive for hospitality businesses due to the increased risk of lawsuits from patrons who are injured after consuming alcohol. This risk is particularly prevalent in establishments that serve alcohol and have a lively atmosphere. Incidents involving intoxicated patrons can lead to costly lawsuits, making it crucial for hospitality businesses to have adequate liquor liability coverage.
• Cybersecurity insurance: Cybersecurity insurance is becoming increasingly important for hospitality businesses as they are increasingly targeted by cyberattacks. These attacks can compromise sensitive customer data, disrupt business operations, and damage the reputation of the establishment. Cybersecurity insurance can help businesses recover from the financial and reputational damage caused by cyberattacks.

By understanding and addressing these specific insurance issues, hospitality businesses can better protect themselves from potential risks and ensure their long-term success.
 
Key takeaways for hospitality businesses:

• Start working with your broker early: Start working with your broker 90 to 120 days prior to your renewal date. This will give them time to shop around for the best rates and coverage options for you.
• Communicate your property improvements: Communicate the most recent property improvements and your 1–3-year maintenance/improvement plan. This will help your broker to understand your risk profile and get you the best possible rates.
• Know your replacement cost: KNOW what it will cost to replace your current operation rather that what you think it will cost (or what it cost 3 to 5 years ago). This will help you to avoid being underinsured in the event of a loss.
• Differentiate yourself: Differentiate yourself as best in class with a good story and make sure your social media presence matches the story. This will help you to attract and retain insurance carriers.

Recommendations for Building Resilience in 2023 & 2024
In order to build resilience in 2023 and 2024, hospitality businesses should take the following steps:

• Fully understand and manage your risk profile. This involves understanding the specific risks that you face and taking steps to mitigate those risks.
• Pick a specialty broker. One who specializes in understanding your business AND your industry. Help them tell your story who you are, what makes you different and why insurance carrier should partner with you.
• Build an engaged, productive workforce. This involves investing in training and development for your employees and creating a positive work environment.
• Learn more at GetHIP.biz!

Establishing the estimated market value of a privately held company or family business is a sophisticated, nuanced process requiring significant knowledge & experience. Business value is built on four pillars: Market Demand, Profitability, Potential, & Infrastructure. Market Demand’s influence on value is calibrated by industry, geography, economic conditions, & financing availability. The role of profitability is straight forward. The more profitable a company the higher the value and the larger the dial for turning up Market Demand. Profitability that is sustainable or growing is the most attractive in the business opportunity marketplace. No one purchases a company desiring to exactly replicate what it did yesterday. All business buyers acquire companies seeking to see how it will perform under their ownership.  The larger the opportunity for growth and enhanced efficiency the more potential a business has and the higher the value. Infrastructure value can be found in a spectrum of assets ranging from employees to physical & online locations to intellectual property and from customers to equipment to suppliers and inventory.
 
Only a mergers & acquisitions intermediary firm has the knowledge to incorporate present market demand into a valuation process. Business appraisers & CPA’s use the data generated by business brokers for their market comparables and lack the comprehensive knowledge of the dealmakers learned from working in the field facilitating transactions.

IBA offers complimentary opinions of business market value to potential customers interested in selling their companies.  The service is free as a method of providing entrepreneurs an opportunity to assess our knowledge, experience, and customer service without contractual obligation. All information shared with IBA is held in strict confidence. IBA traditionally sells businesses within 10% of our suggested market value.  IBA has the ability to justify our values to buyers, accountants, banks, investors, and lawyers.  The true value of a business is what a willing buyer & seller will agree in an arm’s length transaction.  The value of having a highly skilled, knowledgeable, & experienced intermediary convey the value proposition should not be underestimated.  IBA has consistently achieved timely sales of privately held companies and family businesses in Washington, Oregon, Alaska, and Idaho for strong market values since 1975 out of our physical offices in Bellevue, Spokane, & Portland.  

Additional information on IBA can be found at www.ibainc.com. Joseph Hollcraft, an ORLA Allied Partner and this blog’s author, can be reached at 503-739-4880; or Gregory Kovsky, IBA’s President & CEO, can be reached at (425) 454-3052, [email protected], [email protected], or www.ibainc.com/2023.

Key performance indicators (KPIs) are foundational to most jobs. These useful measurements help companies understand progress over time. But beyond revenue growth and profit margin, there’s one KPI some managers overlook: joy.

How happy are your employees?
Perhaps more importantly, what’s your own level of joy in your job? At Dell Technologies and at Renegade Global—a consulting practice that helps people invest in their personal brand and growth—we see the people in our businesses, not just the professionals.

1. Make play nonnegotiable.
Play goes hand in hand with curiosity, which in turn fuels engagement. When you prioritize play, you combat opposing feelings of burnout and even depression.

2. Diversify your sources of happiness.
There are different kinds of happiness: “rock star,” which you might experience after a big win; “flow,” which happens when you’re caught up in something you enjoy; and “higher purpose,” which occurs when you focus on something bigger than yourself. You need all three.

3. Avoid the three Ps.
Of the common pitfalls people tend to fall into at work, three Ps top the list: perfectionism (seeking an unattainable standard), people-pleasing (never putting yourself first) and personalizing (making things “about you”). Be sure to give yourself—and others—the grace to make mistakes. Prioritize your own needs and remember that not everything is personal.

4. Overcome difficult conversations.
Effective communication is an art form. When you have a difficult conversation ahead, consider the following steps:

• Vent to a neutral third party (not colleagues) to release tension.
• Empathize with the other person’s perspective.
• Rehearse what you want to say.
• Ask for what you need—then stop talking.

5. Check in weekly.
At Dell and within Renegade Global, we have seen great results with weekly check-ins, asking questions such as, Which activities did I love? Which ones did I loathe? What are my priorities? What help do others need from me?
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With these tips in mind, you can transcend clichés about work-life balance and make joy a core KPI of your job.
Want to read more stories like this? Check out Realize magazine.