Business Insights

Case Study: A Business, A White Board, and A Valued Partnership

"Timing was very important, and CSB didn’t waste any of it. From the first phone call on Friday to the meeting on Monday, we were full steam ahead and didn’t slow down until the ink had dried!" Rich Allen, Owner

Case Study PDF Version

The Business for Sale Custom Coating has been providing high quality deburring services and conversion coatings since 1986. The original owners built it up from the ground, creating a local business that continues to positively impact the community and their employees after more than 35 years. When the owners were ready to retire, they needed a buyer. Fortunately, their top manager and sales contributor was interested in purchasing the business.

Rich Allen always felt a desire to own his own business. When the opportunity presented itself, he knew he had to make it work. However, discussions with bankers left him feeling anxious and stretched financially. After conversations with a handful of banks, an SBA loan was the only solution offered. The SBA loans contained unpalatable conditions, and with a strong cash-flow business, the loan options were limited. The SBA solution required him to use his 401K assets, with a general condition that if the purchase did not occur, he only had 60 days to return the 401k funds. If unable to do so, he would suffer the consequences of early withdrawal penalties and have to pay taxes on capital gains. Though this solution left him with many sleepless nights and general anxiety, he was determined to make an SBA solution work. Until the famous CSB White Board Moment…

The White Board Moment In business acquisitions, financing is a key aspect of negotiations, and it’s important to make sure it’s pulling in your direction. Rich Allen went into his meeting with CSB’s CEO, Will Thatcher, and Commercial Banking Manager, Tim Kuhnen, looking for information and options outside of what he already had with an SBA loan. They talked numbers, projected earnings, as well as rates, dreams, assets, and next steps. At the end of the meeting, the white board was filled with simple algebra that said an SBA loan was not the only option – or the best one. Rich Allen walked out of the meeting with a renewed determination and optimism. This was going to happen, and it was going to be good! After all the banks he talked to kept pointing him to SBA, he finally found a bank willing to listen and work with him. They made the money work for him. “When it came to the deal, the money wasn’t the hard part,” said VP Julie Roop.

“It was inspiring to have a bank that saw what I was capable of and put their money where their mouth was.” - Rich Allen

The Valued Partnership Going from the stress of an SBA loan to working with a team that understood the ins and outs of what we were doing changed the culture of the deal right away. The question changed from “how are we going to make this work” to “how should we structure the deal to suit all the parties involved including the Custom Coating employees and customers.”

Business acquisitions are unique, and the rules are constantly changing. If another party joins the negotiation process or makes an offer, the ideal deal structure might change or the timeline gets moved up or even sometimes pushed back. Having a bank that is flexible and creative with their financing solutions is key when making a competitive, serious offer. “At one point, I needed to have the cash within a week, and I did. Nobody expected it because typical banks don’t have the autonomy and support to make decisions that quickly.”

Now that I have worked with the team at CSB, I wouldn’t want to acquire a business with anyone else. I never wanted taking over a business to be about the money. For me, it has always been about the people, and CSB allowed us to adjust our focus accordingly. When the typically stressful part of buying a business is removed – the financing – a weight is lifted. There were numerous people that needed our attention, documentation, and checkbook throughout the process, but we had the time and energy to dedicate to them to get everything done right.

“Working with CSB was easy. They are honest and have integrity – we never got the runaround. In every meeting and every conversation, you can tell they believe in your success which can make all the difference!”

It’s hard to believe that the hardest part of this deal was all the administrative work involved in the business transition because it was all on me and a small team. We were switching utilities over, getting the proper permits, contacting vendors and customers, providing supporting documentation – and CSB supported us throughout the entire process. The way the CSB team approached it as a true partnership made all the difference. We felt their backing the whole time, and we still do. I don’t know how many times throughout this past year the quote from the 1993 Jimmy Valvano ESPY Speech went through my head ‘Don’t give up. Don’t ever give up.’ but I knew this was my quest I needed to do, and it turned out better than I ever imagined.

Written In Partnership with Custom Coating, Inc.

CSB would like to thank Rich Allen and his team at Custom Coating, Inc. for allowing us to share their story in this way. We are hopeful this case study will inspire you to keep chasing after your dreams, to fight for what you know is right, and to always look for a bank that is going to understand you and your needs. If you would like to talk to someone on our team about what we can do for you, reach out, and we will be happy to set up time to hear your story and learn what we can do for you.

Commercial.Banking@csbemail.com
800.488.3958
June, 2024

Business Acquisition from a Banker’s Perspective

When a borrower approaches a lender with a loan request to acquire a company, it initiates a process designed to help the buyer and bank evaluate this life-changing business opportunity. Banks utilize this process to assist the buyer’s evaluation process and to be a sounding board for the buyer. In general, the banker’s view will be oriented around the following:

Buyer Evaluation For starters, an objective banker evaluates an individual’s personal wherewithal: how an individual has overcome challenges and pursued objectives with sustained determination. In her New York Times Bestseller Grit, Angela Duckworth quantified an individual’s ability to persevere and achieve long-term goals. Her book suggests that while IQ is important, an individual’s conscientiousness is a greater predictor of success.

Due Diligence Driven by an industry with low tolerance for loan losses, bankers can be seen as pessimistic. It is their job to consider the numbers and how they would look if things were not all sunshine and rainbows. If a downward economic cycle occurs, is the financial information provided by the company a reliable source of data to make the necessary financial decisions? A financial evaluation is important; however, understanding the acquisition target’s cyclicality is also important. For example, commercial construction in general tends to lag economic cycles while businesses tied to consumers tend to lead economic cycles. Bankers will drill down to the micro-economic factors that apply to a business’ specific situation to give this deal the best chance of success.

Loan Structuring Cash flow is the largest determinant of the business’ ability to repay a loan and often determines how a loan is structured. Loans are structured based on the risk assessment and due diligence findings from the lending team. Loans made based on the cash flow of the business typically have shorter (ideally 3 years or less) amortizations whereas loans with appropriately margined collateral may extend beyond this. There are various structuring options that combine both options, so it is not just one of the other. If a company has excess cash flow, bankers could include a clause to decrease the principal balance by capturing this cash flow. A key to success at this point is transparency. It is important to find a banker that will be transparent with you and include you in the discussions to allow both parties to make an informed decision.

Collateral Evaluation In addition to the buyer evaluation, a banker evaluates the marketability of the collateral supporting the loan if cash flow deteriorates materially, and the collateral is needed to repay the loan. For example, a titled asset may be more marketable than a paint booth in a manufacturing plant. The loan to value ratio will be lower for less marketable assets. To properly identify the value, appraisals (equipment, property, etc.) are often used to substantiate the collateral value used. To further protect their financial interest, banks will typically require a first lien position on all collateral.

Approval Whether by a committee or individual signer, loan approval is a key element of the entire process. As much as the bank is responsible for diligence throughout the process, the buyer must also understand the bank’s (or the credit approver’s) background in financing Merger and Acquisition transactions. There are subjective factors that are relevant in commercial lending, and even more specific nuances are prevalent in acquisition financing. It is important to ensure your bank is equipped to offer the financing and support you need.

Funding It is not unique that an approval contains contingencies for funding the loan. These could include minimum revolver availability at closing, verification of liquidity, or receipt of an appraisal. Once the documents are signed and the loan funded, these items are typically monitored and require ongoing loan reporting on the borrower’s part.

Post-Close Management After closing, the bank will likely want to maintain regular dialogue with the borrower. Depending on the loan size and loan structure, the borrower will have ongoing reporting requirements they will owe the bank. If the deal is structured properly, it should create a lasting, mutually beneficial relationship.

Written by Aaron Schaffer

Chief Banking Officer at Community State Bank
aarons@csbemail.com
260.994.0450
March, 2024

Will It Be a Buyer's Market or Seller's Market for My Business?

The California Association of Business Brokers indicates that Baby Boomers own more than 12 million small businesses in America. Over the next 10-15 years, many of these businesses will need to transition to the next generation or to a new owner as Baby Boomers look to retire. If one assumes the long end of the 10-15 year range, this means that 800,000 businesses will transition each year for the next 15 years. For further context, according to BizBuySell, only 9,093 businesses were sold in 2023. Increasing from 9,093 to 800,000 businesses selling annually is an astounding 8697.98% increase. The question is how much capital is available to support these transitions?

Historically, buyers are key management personnel, wealthy individuals, families, groups, or private equity firms. As of December 1st, 2023, there was a record $2.59 trillion in cash held by private equity firms globally. In 2022, that number was $2.237 trillion. Despite an unprecedented amount of capital available, deal activity in 2022 & 2023 remained sharply down from its peak deal value in 2021 of $2.130 trillion. In 2023, the overall value of private equity transactions declined even further from $1.4 trillion in 2022 to $776 billion. As mentioned earlier, there are various options outside of private equity firms when it comes the sale of a business. While the private equity capital pool expands, family wealth offices are growing in popularity also.

A family wealth office is a privately held entity that manages the financial affairs of wealthy families. In general, these offices have over $50 million in investable assets. An extreme example is Walton Enterprises, the family office of the late Wal-Mart founder Sam Walton, whose heirs have a combined wealth of $224 billion. A recent survey by CNBC indicates that there are approximately 144 family wealth offices in North America, averaging $1.3 billion per office; this totals to $187.2 billion in wealth available to purchase businesses. When you combine the dry powder of private equity firms and family wealth offices, it appears to present an ample amount of capital to support the exiting business owners; however, there is a catch.

The firms and offices mentioned above tend to target acquisition deals with minimum price tags of $100 million. Additional headwinds to sellers include higher interest rates, which require higher rates of return for buyers (translating to a lower price for sellers) and robust due diligence process requirements of buyers. It will be hard to ascertain the amount of capital that will trickle down to lower middle market, Baby Boomer owned firms. In the near term, private equity sized transactions between sellers and buyers appear to have the funding available to support a balanced market; however, as more businesses become available for sale, the funding environment could change quickly. Given the volume of businesses looking to exit, a change in funding availability would likely favor buyers more than sellers.

Written by Aaron Schaffer

Chief Banking Officer at Community State Bank
aarons@csbemail.com
260.994.0450
March, 2024

Key Ratios to Consider in a Business Acquisition

Purchasing a business requires multiple sources of capital. Typically, businesses are purchased through some combination that includes seller financing, subordinated debt, senior or bank debt, and equity. When deciding how much cash to put into the purchase versus how much to borrow, it’s important to use ratios. Below, some ratios are described to help guide your acquisition towards being appropriately structured.

Cash Flow Measurements:

Debt Service Coverage Ratio (DSCR) compares the business’ cash flow to its debt payments. A DSCR ratio of 1.20 is a common minimum target; the higher the debt service coverage ratio, the better.

Senior Debt to EBITDA implies how many years it would take to pay off debt balances if all cash flow generated by a business was used to pay down debt. In general, a ratio of less than 3x is considered acceptable; however, highly cyclical industries tend to have lower leverage tolerances. A ratio approaching 5 is considered high and is usually cause for concern.

Balance Sheet Measurements:

Current Ratio compares a company’s assets available in 12 months or less that are available to pay liabilities due in 12 months or less. A ratio higher than 1.25 is preferred. Additionally, lenders look at inventory history, as this ratio can be skewed higher by an entity that is carrying a lot of inventory.

Quick Ratio amends the current ratio by only comparing readily liquid current assets – eliminating assets such as inventory or advances to shareholders – and comparing the liquid assets to current liabilities. As a reference point, a ratio above 1.00 is preferred.

Debt to Tangible Net Worth illustrates how a business is funded. By comparing the amount of debt invested to a company’s tangible net worth, an investor (or lender) can compare who has more capital at risk. Different forms of capital – debt, equity, subordinated debt – have different expected returns. Newly acquired companies or companies that have acquisition histories have a higher debt to tangible net worth ratio.

Written by Aaron Schaffer

Chief Banking Officer at Community State Bank
aarons@csbemail.com
260.994.0450
February, 2024

How Do I Buy a Business?

Last I checked, there are approximately 33.2 million small businesses in the United States, representing 46.4% of private sector employees. These businesses generated a total of $13.3 trillion of revenue or a simple average of $400,000 of revenue per firm. The revenue range of these firms is typically between $1 million to $47 million, employing up to 1,500 people. Needless to say, there are a lot of really good reasons to buy a business! Most sellers in this space care about 3 things: value of the sale, continuity of their life’s work, and protecting their employees. Buyers consider these along with considering if they are purchasing an entity with an investment return appropriate with the level of risk associated. This is not like buying a car, and to individuals unfamiliar with the process, purchasing or selling a company could appear to be a daunting undertaking.

The first step is understanding if you even could buy a business. Fortunately, Merger and Acquisition (M&A) professionals look for a consistent data set in qualifying potential individual buyers. Practitioners – particularly investment bankers and business brokers – will ask questions to validate the buyer’s qualifications and level of preparedness. Below is a sampling of these questions:

How much equity do you have to invest?
If you’re buying a company, per Small Business Administration (SBA) requirements, you will be expected to contribute 10% of the purchase price in cash. Having cash on hand of $250,000 - $750,000 will separate you from other buyers. If you don’t have that much cash on hand, you’re not out of the game just yet. There are ways to bridge an equity gap with subordinated seller financing.

Where is the equity coming from?
While it would be nice if we all had anywhere from $250,000 - $750,000 laying around that we could use to buy a business, that’s not the expectation. There are ways to use your other assets to support a business acquisition. For example, retirement funds are great collateral for starting or buying a business – and you shouldn’t incur penalties even though the money is being used prior to retirement age.

Does the buyer have previous, relevant management experience?
Dreaming is good, but such a large purchase does need to be grounded in reality at times too! Go where you know! Bankers and brokers are looking for alignment between your background and the business you are purchasing. While not a glaring red stop sign, this does cause a caution sign to go for up M&A professionals if these are out of alignment.

Have you bought a company previously?
This is not to say if this is your first purchase, you won’t be successful. M&A professionals are definitely prepared to be helpful, but there is a preference for individuals that have purchased companies historically. Just like in everything, if you’ve succeeded before, you’re a safer bet – but not the only bet!

In addition to a validation process, there will be some costs associated with buying a company. These due diligence costs can appear punitive; however, they are designed to uncover risks that may be outside of your expertise. Below are the costs in addition to an estimate for your general planning:

Keep in mind, the above list does not include other common costs that might include loan origination fees, SBA guarantee costs, or others related to obtaining a business acquisition loan. As a quick reference guide, here is how I typically estimate the first two fees.

Loan Origination Fees: tied to the size and complexity of the transaction.
SBA Guarantee Fee: driven by the SBA loan size; $2,000,000 SBA loan would have an estimated fee of $23,000.

The business buying process is much more nuanced than can be outlined in a blog; however, Community State Bank has a team of experts that can assist individuals looking to buy a company. Please reach out to our commercial banking team to start the conversation.

Written by Aaron Schaffer

Chief Banking Officer at Community State Bank
aarons@csbemail.com
260.994.0450
January, 2024

A Business Succession Story 

In an earlier blog, CSB’s Chief Banking Officer, Aaron Schaffer, cited the high business failure statistics of 2nd and 3rd generation owned businesses. As we had seen similar bleak numbers in the past, the four owners of our business made the continued success of our company the primary goal throughout our upcoming ownership changes. There was not one clear path for us, and various options were considered. We researched but ultimately rejected an ESOP because of concerns regarding debt on the business and our need to bond large construction projects. We also looked at the option of financial buyers, but given our culture and entrepreneurial structure, we didn’t see selling to an outside group as desirable.

I suspect one of the reasons for next-generation business failures is the level of debt left behind by the first generation as a result of the buyout process. This led us to be intentional about the way our agreements and company were structured. We changed our buy-sell agreements to allow our stock to be left to any current owner’s children who are active in the company. We limited any debt payments to selling owners to 50% of cashflow after payment of unfunded capital expenditures, bank debt, and tax distributions. We also based these buy-sell valuations on book value rather than market value, as we aren’t trying to maximize our owner buyouts. Over the years we have been blessed to generate and distribute enough income that we no longer have all of our personal net worth in company stock.

Additionally, our team is working to put the business in a strong financial position.

• Long term debt will be paid off next year.
• We are building net worth to fortify staying power.
• A high emphasis has been placed on structuring contracts to create positive cash flow.
• Financial information is accurate and shared monthly.
• Branch income statements are generated as well as divisional and company consolidated statements.

Our team wants all of our managers to know how to make money and think like owners. By putting an emphasis on visibility and responsibility, we are teaching the next generation how to access and balance risk in the construction work we perform.

Our financial position has allowed us to add key, high-performing employees to our leadership team, whom we are confident will be better than we are. This will allow our current leadership team to mentor the new staff additions during this transition process without the financial worries more overhead often brings. Additionally, as we bring in people from outside the organization, as some positions will require, we are foremost stressing a cultural and values fit above work credentials. It is of the utmost importance to our team that the next generation of owners involved in our business understand that ownership does NOT necessarily equal leadership.

A further step our team is taking to encourage success throughout this process is having our ownership transition gradually with each of the four owners leaving at different times to ensure continuity and stability in the organization as much as possible.

Will our business beat the odds and continue for multiple generations? Although risk abounds, we believe it will.

Written by Loren R. Troyer

Secretary - Treasurer at Centurion Industries Inc.
Board Member at Community State Bank
800.488.3958
May, 2024

Identifying and Developing Leaders in an Organization 

n my forty years of working in professional organizations, I have seen multiple individual predictive models, reviewed resumes from high GPA candidates who attended well-regarded higher education institutions, and had wonderful conversations with bright, energetic candidates that are well versed in communicating core concepts that allow businesses to succeed. Frankly, I have even witnessed insightful team members that are able to see obstacles to success and offer recommendations for improvement. However, it is rare to work with a person that aspires to be “The Man in the Arena” as former President Theodore Roosevelt spoke of. These are the people that I seek to be leaders of organizations.
If you have not read our former President’s explanation of who the “The Man (Woman) in the Arena” is, I encourage you to. These individuals will not be quickly identified, for they can easily be confused with superior resumes and communication skills. To truly uncover such an individual, you will observe them in the times when a person needs to make a sacrifice to achieve. This sacrifice may be time for preparation, embarrassment for the sake of knowledge, or even pride by being willing to go to places in their work journey in which they will feel less than and demonstrate commitment to achieve an outcome that is hard.
Please do not misunderstand my earlier comments. Well spoken, well-educated and well-trained staff can in fact become high potential leaders in an organization. However, there are steps to identify these individuals that truly have high potential. The tactics I utilize are measuring, testing, and stretching.

Measure: An organization should strive to measure each employee, or we lessen our opportunity to begin tracking those team members that contribute at a rate greater than others.

Test: When you objectively identify those that perform at a greater skill level, test them. Ask them to perform their current role plus. That is have them be part of a project team or be a champion of an activity inside their work group. This will force the team member to get out of their comfort zone and rely on others for success allowing me to observe their ability to work within a team and their developed (or undeveloped) skills to influence an outcome.

Stretch: We want to test the team member. Give them a high-profile task that will require them to achieve an outcome which will appear to be far outside their reach. These tasks will require them to learn, lead, and execute. Most employees avoid hard things whereas these “special” employees will demonstrate a level of dedication and sacrifice that is able to be observed by many. These “special” employees want to be part of hard things.

What do you do when you observe you have one of these “special” employees?

Your first step should be to understand what the employee wants to achieve in their career. Having an open and honest conversation will assist in visualizing where the individual could be placed inside the organization. Key questions may include:

• Are you willing to relocate for the company?
• What other lines of business in the company interest you?
• Is management of team members of interest to you?

In sum, once you have identified one of these high potential leaders, you have an important choice. Should you remove them from the high impact role they are in today for a position that promises greater future outcomes for the company? My experience has led me to believe that, when possible, it is always better to err on the side of giving these talented team members the opportunity to become more than to improve the possibility of a positive outcome of today.

Written by Will Thatcher

President and CEO at Community State Bank
willt@csbemail.com
260.994.6039
February, 2024

The Importance of Succession Planning

Succession planning is a structured approach for businesses to identify and retain new leaders who can replace old ones when they retire or die. The purpose is to help maintain continuity, avoid disruption in operations, and preserve the businesses value, especially for small businesses, well after the founder is no longer active. It acts as a safety net, preparing candidates for planned or emergency replacements due to retirement, new opportunities, and unforeseen events such as death.

There are six key steps in succession planning:

1. Identify Key Positions: The process begins by identifying critical roles with an organization such as top executives, department heads, and/or other key personnel with a consideration to both short-term and long-term needs. For small business, this could also mean identifying a successor owner.
2. Assess Current Talent: Once key positions are identified, existing employee evaluations should take place to determine their potential for leadership roles, looking beyond technical skills and considering qualities such as adaptability, communication, and strategic thinking. The goal is to create a talent pool of potential successors.
3. Develop Succession Plans: For each identified position, create a customized plan by outlining the specific steps needed to prepare a potential successor by defining development activities, training programs, and mentoring opportunities.
4. Provide Training and Development Opportunities: Invest in the growth of your identified successors by offering training and encouraging cross-functional experiences to broaden skill sets.
5. Monitor Progress and Communicate Transparently: Regularly review the progress of potential successors and adjust as needed, keeping employees informed about succession planning efforts.
6. Execute Transition: When a leadership vacancy occurs, smoothly transition to the identified successor and provide the necessary support during the transition process.

There are many succession planning tools available to help organizations identify and prepare internal talent for leadership roles. Often, payroll and human resource companies offer performance, compensation, and learning management resources within a Human Capital Management (HCM) system. Such systems help to align talent development with business goals. For small businesses once talent is identified, it may be appropriate to consider transfers of minority equity interests or the development of stock option or phantom stock plans to allow the identified talent to participate in the equity of the company without obtaining meaningful control.

Ideally, succession planning should be an ongoing process and not a last-minute scramble. The negative effects for a small business that does not properly plan are numerous and can be crippling, such as alienation of employees who see no clear path for advancement leading talented individuals seeking opportunities elsewhere, reduced loyalty and commitment, lower performance of ill-prepared successors, and risk to business continuity.

Done properly, succession planning provides a leadership pipeline and increases employee engagement and retention which leads to not only increasing the overall value of a business, but for small businesses in particular, it can lead to allowing that value to be sustained long after the founder exits the business thereby benefitting the founder’s estate as well.

If this article catches your attention as something your company needs, it’s time to take action. The process might be daunting if you’ve never spent time working through these aspects before, but there are multiple resources available as well as the above process. My encouragement to you is not to try to accomplish this all in one day or even by yourself. Work on this one step at a time, and before you know it your team, your culture, and your future will be better off for it.

Written by Brian J Downey

Attorney at Barrett McNagny, Attorneys at Law
bjd@barrettlaw.com
260.423.8871
May, 2024

The Silver Tsunami and Succession Planning 

The term “silver tsunami” references the rapidly aging populations of developed countries around the world – the United States is no exception. By 2030, the Baby Boomer generation – about 76 million strong – will be at or beyond retirement age. Around this time, it is estimated the US population over 65 years old will outnumber those under the age of 18. This population shift has implications for small businesses, as 41% of the small businesses are owned by Baby Boomers. While recently many boomers have delayed full time retirement, whether due to the impact of the Great Recession or COVID, a large segment of the population will be focusing on transitioning their business in the coming years as they prepare for their next phase. While the concepts related to succession planning are simple, the execution of it rarely tends to be easy. These statistics alone are enough to get you wondering!

• Less than 1 in 4 private company boards say they have a formal succession plan in place according to the National Association of Corporate Directors.
• Per Deloitte, only 30% of family-owned businesses survive to the 2nd generation – 12% to the 3rd, and 3% to the 4th and beyond.
• According to a University of Connecticut Family Business Program, the death of the founder preceded 47.7% of business failures. Similarly, 29.8% of businesses failed after the unexpected death of the owner.

Succession planning is designed to help business owners understand how their business is valued, how to preserve and grow its value, and how to successfully pass the business on to others intact. If there is anything in you that wonders if you should have a succession plan, the best thing to do is act now. At least start the conversation as there are a lot of steps you can take to encourage success before the actual sale occurs.

For example, your business would typically undergo an assessment that reviews the business strategy, managerial talent, corporation structure, and external economic environment. Some founder operated businesses don’t naturally have the corporate governance expected to realistically continue or scale the business without the founder at the helm. Believe me, this is better to find out now and not 2 or 3 years into a new leader! Owners will need to ask themselves, “Do the personality profiles required by key positions align with the profiles of your successor?” It is not often in a sale of a business that an acquirer’s operating rhythm is the exact same as the sellers’ - even between family members. As long as you and the new leader are aware and prepared to manage this, it is not bad, but it can create friction between the old and the new. A great place to start is long before the sale is finalized. Maybe there are practices you and your current management team can adopt prior to the sale that would reduce the transition pains to the new style?

It’s important not to forget about how all of this will affect the exiting owner. Planning for a life post-business incorporates a multitude of new responsibility, including planning an estate, creating trusts, identifying charitable giving opportunities, preserving familial harmony, income tax management, investing post-sale liquidity, and ultimately finding purpose beyond the business. Additionally, sale transactions approaching $50 million or more may require the establishment of a family wealth office to oversee financial affairs into the future.

It’s worth mentioning that the business transition does not have to occur all at once. Some owners actually prefer to retain their equity while new management is running the company. Owners ready to have a partial liquidity event today may consider selling a minority stake in their company or pursuing a dividend recapitalization. Simply put, selling a minority stake means still having a liquidity event and getting paid out partially while still retaining control. On the other hand, pursuing a dividend recapitalization achieves the liquidity event without equity dilution but adds unproductive leverage to the business. These strategies could help facilitate the creation of a foundation, family wealth office, or provide a financial partner to accelerate business growth.

There are numerous resources – books, consultants, trade organizations – ready to assist with succession planning. The bankers’ role in this process is to connect others. At CSB, we have been able to help owners think through this simple but not easy transition and add value through our collective experience. Reach out to us today to see if our team can help you and your business!

Written by Aaron Schaffer

Chief Banking Officer at Community State Bank
aarons@csbemail.com
260.994.0450
February, 2024

Fortifylife Receives $600,000 Grant

Auburn, IN | December 27, 2023 — Fortify Life, a DeKalb County based non-profit organization, has announced a partnership with the Federal Home Loan Bank of Indianapolis and Community State Bank.

As part of this partnership and the Affordable Housing Program, Fortify Life has been awarded a grant for $600,000 to provide much needed renovations to Fortify Home, a local emergency and intermediate housing facility in Auburn.

Through the collaboration of many non-profit organizations in DeKalb County, it was identified that homelessness and housing crisis needs were grossly unmet. Fortify Life wanted to be part of the solution.

In 2021, Fortify Home opened its doors, and it continues to support individuals and families from DeKalb County who are experiencing a housing crisis. Currently, the facility offers 13 rooms. For the program Neighbors, these rooms represent a fresh start. Here, they partner with Fortify Home team members to address basic needs such as food and health care before focusing on long-term goals such as employment, child care, and ultimately, stable housing.

Most Neighbors participants spend five to six months at Fortify Home before transitioning to permanent housing. While the work done through Fortify Home is impacting lives by itself, they also pride themselves on being one of the very few shelters in the region that allows family units to stay intact during their stay.

“When we think about homelessness in DeKalb County, it isn’t the image we see on national news; there aren’t tent cities and camp sites in downtown Auburn,” said Mitch Figert, executive director of Fortify Life...

Read the Full Article at KPCNews.com.