Andy Cagnetta, CBI, BCI
Transworld Business Brokers, Fort Lauderdale FL
IBBA Chairman

Reno marks the end of my year long Chairmanship, and while I am proud of my service in the position, I can truly say it was not what I had anticipated and or hoped for. Being asked to serve as chair seems like a lifetime ago, and in most respects it was. The economy was strong, credit was easier (has it ever been easy?), and businesses seem to sell with much more velocity with the large amount of buyers in the marketplace. I wrote previously that running the association was like playing defense in football. And that still holds true as it has been all about right sizing, budget cutting, staff shrinking and changes, and focusing on the IBBA’s “main thing”.

So obviously, times have changed, and therefore we had to adjust all of our business models. And that sums up our year at the IBBA and M&A Source: tweaking, tightening, adjusting, cutting, grass roots promoting, and plain out rolling up our sleeves and getting great things done.

Some of those great accomplishments include:

1) A successful conclusion of MASTF (M&A Source Task Force). The Source is truly the “New and Autonomous Source” through a lot of hard work by many players!

2) Our break though communication with the SBA. I truly feel that Bernie Siegel under the banner of the IBBA Government Relations Committee moved the needle on the eventual reversal of the Goodwill Cap on SBA 7A lending. Additionally we now have an open dialog with the SBA’s leadership that should last a very long time.

3) SITF’s (Strategic Initiatives Task Force) continued work and support of SEC licensing issues. We have a long way to go, but our relationship and communications with all the players is top notch!

4) Our work on expanding internationally. IBBA Canada is hopefully a model that will be replicated throughout the world in the coming years.

5) M&A Source’s and IBBA’s use of webinars and social media to educate our members. This is certainly a glimpse of the future delivery of education!

6) The workshops and information created and delivered specifically geared toward helping you our members survive and thrive in the economy!

7) Although not completely successful, our expense cutting efforts and our savings policy changes to insure the future of the IBBA is assured.
But our transformation has just begun and I promise the best is yet to come. And our new leadership is ready to implement and think outside the box to bring even more information and benefits to you our membership.

There are many other great accomplishments this year that we can all be proud of. Thank you to all the volunteers on our board, committees, and those who oversee and deliver our IBBA University education. I also want to thank our partners at SmithBucklin known to me as “Team IBBA”. You would be hard-pressed to find a more dedicated and talented group of individuals. Their dedication and positive spirit through some very trying times has been nothing short of spectacular!

Finally, thank you to my family at Transworld and the one at home (Ali my wife, Lauren and Rachel my teen daughters) who allowed me to volunteer to proudly serve our industry.

As far as riding into the sunset as I head west to Reno? No way! I am going to get geared up and look to the Far East for my future inspiration and balance!

Playing Great Defense is a Part of the Game
Andrew Cagnetta, CBI, Transworld Business Brokers, Fort Lauderdale, Florida

As my term as IBBA Chairman comes to an end this Fall, I reflect back not only on the past year but also on the time spent as Vice Chair. It has been a long two years for the IBBA and its members. Our economy, industry and association is currently weathering a downturn that started sometime in late 2007. Prior to the softening and then near collapse of our economy, our profession experienced growth and prosperity, which of course translated to success for our association. However, the last two years have presented some challenges to us all.

Much like football, the growth years before 2007 were like playing offense. It was fun and exhilarating to be a part of our leadership team because we could make plays and take risks. The IBBA experienced growth in revenues, attendance and membership, which led to the launch of new programs, an expanded offering of educational courses and lavish receptions at conferences.

Once the economy turned, we switched gears and began to play defense. While many of our own businesses struggled, we faced similar challenges with the IBBA. Being Chairman during these changing times has not been an easy task. We had to right size our programs to protect our investments and minimize losses, but in the end I feel we made prudent and tough decisions to preserve our association while serving our membership.

As I have relayed to many of my entrepreneurial clients, these challenging times shape our leaders and eventually strengthen our business foundations. As Mark Thorsby, IBBA President, regularly reminds me, we must make sure that “the main thing is the main thing.” To that end, we have all changed the way we do business in order to survive, and we have done the same at the IBBA. Across the industry, we’ve preserved the best in our models and nurtured the basics that support our core businesses. And I think the best leaders and business brokers will survive and thrive as we take the ball back and transition back to offense.

Luckily, I think our days of playing defense are just about over. As in football, there is a transition from defense to offense handled by the special teams. Dear membership, we have a great special teams unit coming on the field. Edwin Lee as our new chairman in 2010 is symbolically perfect for this situation. He is our first Chair from outside the United States (Edwin lives in China), as well as our youngest to hold the position to date. Just like on special teams, you need brash, fast and “outside the box” thinking on special teams to be successful. Edwin’s youth and international influence will bring fresh perspectives and approaches to delivering our members’ value.

Beyond the symbolism, Edwin is very talented, and a great guy, to have as our leader. Don’t think his approach and understanding of our industry will be completely foreign. He is a University of Southern California graduate (BS and Masters) and is also a CPA and CFA – he knows our domestic industry. Believe me when I say that no one is better prepared to be our Chairman and special teams leader. I look forward to assisting him on my last year on the Board.

Whether we are playing defense, offense or bringing in the special teams, we must all realize that in the end, we are on the same team. Your involvement with the IBBA is more important now than ever. To be successful in this game (industry), we must ban together to put our playbook in order and share the keys to winning. I urge everyone to share our resources, influence our policy makers and be a part of winning team as we shift our focus in this rebuilding economy. Let’s all get ready to play offense again!

Andy can be reached at ac@tworld.com.

SBA, After Backlash, to Ease Limits on Loans for Buyouts – WSJ.com

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If at first you don’t succeed, don’t panic | Crain’s Chicago Business

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We’re Slow, But We’re Expensive!

Why do bankers have a bad rep? Sometimes it’s their own fault.

A south Florida-based distribution company found itself in the position of having excess inventory at December 31, 2008. Their products have a long shelf life so the company did not see it as a major problem. They knew that within 60 days inventories would probably be back to normal levels.

During their annual review the company’s auditors identified that the inventory levels caused a breach of one of their bank’s loan covenants. The key point is that the bank didn’t identify the problem to the company. Instead, it was the company that told the bank of the breach when it asked for a letter for a temporary release of the covenant (the request was made so that the audit could be issued without qualifications).

The bank sat on the request for approximately six months. They finally agreed to issue the letter in exchange for a fee of $5,000 even though inventories had been within the covenant’s guidelines for many months.

It was only after the fee had been paid and the letter issued that the audit could be finalized. Caveat Emptor.

Howard Schulman
Transworld Business Brokers, LLC
Business Sales, Mergers, Acquisitions & Financings
754 224 3137 — Direct Line
954 449 7899 — Fax
howard@tworld.com

I wrote a letter to my godson many years ago like this as he left for college.    I cleaned it up and made it appropriate for grade school.   I have college versions, one for males, and one for females.  Email me if you want those versions.

1)     Be a student.  Get it in your head! Realize you’re at school to go to school (sounds dumb, but some of us thought we were there for different reasons).  Treat it like a 9-5 job.  Up in the morning, go to school all day, and between classes work on your homework.  8 hours of class and studying, you’ll have plenty of time for fun later.

2)     Act like a student- It’s way to easy to dress and act like a slob or be the class clown.  And it’s even easier for a teacher to give the slob looking and chatty person in the class (yeah you the chatty one with her shirt not tucked in) a lower grade.  If you don’t think looks matter with grades, you are sorely mistaken.  Teachers are humans and they behave like the rest of consumers.  The nice packaging wins.  Also, first impressions are huge.   At least dress smart the first month, then taper off to respectable.

3)     Go to class and pay attention.  This is huge.  Sounds stupid but it is true.   Take your tuition and divide it into the classes held.  It’s quite costly to daydream.  Plus, teachers love to test on what’s in class.  Reading the book won’t help.   By the way, you need to listen and take neat notes.   If you hear it, write it, I guarantee it will be way easier to recall it test time.  Cramming doesn’t work.

4)     Sit up front in class.  You will get better grades.  I promise.  Plus it’s easier to see, hear and to do the next tip.

5)     Make sure your teacher likes you personally!  This can very helpful.  And it will help your grades if they know you and like you.    They will give you the benefit of the doubt to those they know…and like (guess you should dress well).  Ask questions, after class if need be.  Go see them during office hours for the next tip.  And be nice.   Not cheesy, but respectful.

6)     Ask for information.  Ask what to study for exams.  If you ask, they will tell you.  MAKE SURE YOU PAY ATTENTION IN THE CLASS BEFORE THE EXAM.  They will give hints.  You cannot rely on others to take notes for you! (It doesn’t work)

7)     Make sure they know you care about your grades.  If you care, they will hesitate to give you a lower grade, and it will bump you to the next grade.  Plus you can always ask for extra credit, if you mess up an exam.    Tell them you care.   Tell them you want to do better and ask them how.   This is huge.  A teacher once made up an entire class for me to help me graduate.  I met with him once over the summer, read a book, wrote a report, and viola, four major credits toward my degree.

8)     Neatness and partial credit counts!!!!  Teachers love organized, well written papers with no misspellings, neat handwriting, and good organization.  Well-written reports with misspellings that look messy will get you bad grades.

9)     Start strong and keep up!  I fell behind early and barely recovered.   You need to set the pace and stay with the pack (as a runner you get the idea).Stay in physical shape and get plenty of sleep.   If you keep in shape, you’ll be able to keep your energy up for both for your studies and play dates.

10)  Stay safe and away from people who drag you down or misbehave for fun.   They may be fun in the short run, but they lose in the end.  Small stupid decisions can change the rest of your life.

10.5) Have fun.  Every once in awhile stop and look around and smell the roses.  Realize you’re in school and this is a great time in your life

Andy Cagnetta
ac@tworld.com