I am back with a book!

Front Cover Book

A year ago I wrote a blog on Transform, Transition and Change.

I  have missed engaging with you, and yes, it has been a busy year!  Looking back I accomplished some of the goals I set and others are still incomplete! Maybe as a reader you affiliate with this dilemma?

All three actions above have affected me in a very positive way.  I am very proud to announce my newly published book. It is available on Amazon if you would like to purchase it.

It would mean a lot to me if you would take the time and write a review.  See Sample Quotes for Rudi you may want to incorporate at the bottom. Either way, send me a line or two with your feedback and what you think.

The book is written for CEO’s as an instructive business guide that leads them through the myth of finance. Providing a fiscal navigator to embrace operational finance more positively, it’s a holistic perspective to overcome typical business challenges and to experience sustainable growth.

The book now has a dedicated website Stop-Compromising where you can find more details about the book, speaking ideas and board role qualifications, all part of my transition to Business Advisor, Thought Leader and Board Member.

Let me know about your transformations, transitions and changes. Call for getting together over a cup of coffee or send me an email at                                                            stop-compromising@nextstagesolutions.com

Transform, Transition & Change

Transform ▲ Transition ▲ Change

by Rudi Scheiber-Kurtz

Words we are all very familiar with yet simultaneously love and hate!!  Everywhere you look you witness major shifts from status quo, whether it is politics, global warming or in fact our business models.

Mostly likely you will agree with me that the option to remain status quo is not a sustainable one.  One of my favorite words is A-G-I-L-I-T-Y because it hints at not standing still.

How are you going to transform, transition or change your business to provide your customers continuous value with optimal agility?

This January marks the 15th year of Next Stage Solutions offering strategic finance and operations to midmarket companies.  I am humbled at the hundreds of conversations with clients and prospects around sustainable growth, profit optimization and value creation.  I am proud to say that we have

The past 15 years have led me to a cross roads myself today, both professionally and personally.  I am in the middle of transforming. Transitioning and changing.  With that in mind I am working on the following:

  • Write a book/guide for CEOs on Value Creation. Each chapter provides hands-on tools and check lists for the busy CEO.  Looking to publish this spring
  • Transition NSS to an online digital platform for CEOs and CFOs to access finance and operational tools, proven methodologies, charts and guides
  • Develop a new online platform called Finance Beyond Numbers to establish a presence of forward-looking finance with a horizontal approach to leading
  • Lead XPX New England as the newly elected President of this 3 state chapter. It is an active and engaged group of professionals who help owners build valuable businesses and assist them in preparing and executing successful transitions.
  • Support my daughter Natasha with her brand new business that has the grand opening scheduled for January 16. It is a barre3 studio in Bedford, MA.  I have been taking her classes for over two years and I love the concept and work out. Words cannot describe how very proud I am of her for pulling this off single handedly.

Now that I have shared my five examples on transform, transition and change, what are yours? You may have heard me quote one of Yogi Berra sayings:  “If you don’t know where you are going, you’ll end up someplace else.”

I imagine that you do not want to be in that situation, we all want some kind of predictability.  More important than ever is for you to be WORKING ON the business, this way you have a chance to get to where you want to be.

Make it part of your culture to transform, transition and change and agility will be your friend.

 

 

Happy Thanks to Many Givings

My Favorite Thanksgiving Poem

Let Us Give Thanks by Max Coots

Let us give thanks for a bounty of people:

For children who are our second planting, and, though they grow like weeds and the wind too soon blows them away, may they forgive us our cultivation and fondly remember where their roots are.

Let us give thanks:

For generous friends…with hearts as big as hubbards and smiles as bright as their blossoms;

For feisty friends as tart as apples;

For continuous friends, who, like scallions and cucumbers, keep reminding us we had them;

For crotchety friends, as sour as rhubarb and as indestructible;

For handsome friends, who are as gorgeous as eggplants and as elegant as a row of corn — and the others — as plain as potatoes, and so good for you.

For funny friends, who are as silly as brussels sprouts and as amusing as Jerusalem artichokes, and serious friends as complex as cauliflowers and as intricate as onions.

For friends as unpretentious as cabbages, as subtle as summer squash, as persistent as parsley, as delightful as dill, as endless as zucchini, and who — like parsnips — can be counted on to see you through the long winter;

For old friends, nodding like sunflowers in the evening-time, and young friends coming on as fast as radishes; 

For loving friends, who wind around us like tendrils, and hold us despite our blights, wilts, and witherings;

And finally, for those friends now gone, like gardens past, that have been harvested — but who fed us in their times that we might have life thereafter;

For all these we give thanks.  Happy Thanksgiving to All!

thanksgiving

Metrics Matter

A little over a year ago I published a blog on “Measure what you Manage” and given the New Year, I thought that Key Performance Indicators or KPIs are a good topic to consider revisiting for your organization.

KPI

At NSS we believe that metrics really matter. If properly and consistently applied, they provide you real measurements in how you are achieving your goals and objectives.

Key indicators are used to measure day-to-day monitoring, goal setting and for achieving efficiencies operationally. Metrics also change depending on your current priorities.   The importance here is not how many KPIs you are using, but rather that you use the right metrics for the right tasks.

A KPI is a metric, but not every metric is a KPI! How do you go about defining a KPI? Here are some considerations:

  • How many KPIs should you have?
  • How often should you measure?
  • Who will be accountable for the metrics?
  • What benchmark should you use? Make sure you use some industry benchmarks so you can compare yours with the competition.
  • Do the metrics reflect your value drivers?
  • Can they be worked around it and how will you guard against that?

Many of these metrics are in fact non-financial yet they ultimately affect your financials. KPIs should be aligned with your vision, mission and strategy, including short and long term goals. For example, if your company decides that customer satisfaction is going to be the primary focus of improvement this year, you want to clarify how to measure satisfaction and create the criteria in how to achieve customer satisfaction. Make sure to communicate and train your employees and empower them to realize your expectations. Let me give you a sample of customer satisfaction KPIs:

  • Net Promoter Score (NPS) – How many customers like your brand to promote to others?
  • Customer Satisfaction Survey – Internal benchmark to use for future baseline and KPI
  • Customer Response Time – How long does it take to get back to customers and resolve outstanding issues?
  • Customer Acquisition and Retention Rate- measures ability to bring in new customers and of retaining them to generate recurring revenue
  • Conversion Rate – How likely is a customer to make additional purchases
  • External benchmarking comparing to competition

KPIs in midmarket companies are chosen by the executive team. You decide what you are going to measure and how you want them to perform against your value drivers.

Creating KPIs for key value drivers is not difficult per se, where it gets to be challenging is in actually measuring them consistently. It is also assumed that you base your metrics on valid data. Do you have clean data to work from and the tools to measure accurately so that you can gain accurate results? If not, take necessary steps to clean up your data.

Our experience is that many companies who have KPIs, have in fact too many. This creates a danger that the metrics become meaningless over time and employees will find a way to work around them. This brings me to another important point in setting your KPIs. Make sure your employees fully understand the requirements for the KPIs and in how they successfully can achieve them. Develop an incentive plan and recognize and reward positive outcomes. The employees need to fully understand and be empowered in how to affect a metric positively.

Audit your KPIs periodically to make sure they still make sense and that they are still relevant. If a KPI is not being followed, it should be re-examined for its validity. Discuss the relationship between performance and expectations. Think about your processes and intended actions that lead to improved performances. Do not create KPIs in isolation, they all need to be connected and tied back to your strategic intent. It is far better to have a few KPIs that are right and measure the right value drivers in your organization.

The beauty in KPIs, if consistently measured, is that they are quantifiable and measure how well you are achieving your corporate goals and objectives. They also bring accountability and identify the gaps between actual and targeted performance. The KPIs should represent organizational as well as individual factors that lead to improvement. Generally, companies that actively implement KPIs fare better in the market place against competitors. So metrics do matter.

Do you have a KPI story to share, either successful or not? Do you use them at all? Send me your comments. For another take on KPIs, watch my short Rudi/Tuesday video on performance metrics.

Rudi KPI

Happy New Year

Rudi Scheiber-Kurtz, CEO of Next Stage Solutions, Inc. |617-449-7728

What Business Owners want to know about the RBC Ruling

What should Business Owners learn from the Ruling against RBC Capital Markets?

by Laura Kevghas, Partner at Mirus Capital Advisors LLC |  kevghas@merger.com

Background:  RBC Capital Markets LLC, the investment banking arm of Royal Bank of Canada, was representing Rural/Metro Corp. in the sale of their business.  Another team at the bank was trying to get the financing work from one of the buyers, Warburg Pincus LLC, a private equity firm.  According to a recent article in the Wall St. Journal, a senior banker at RBC was in touch with both teams, and didn’t tell Rural/Metro that the bank was trying to get that business from Warburg.  Essentially, RBC was trying to get paid from both sides of the deal.  The former shareholders of Rural/Metro took RBC to court, claiming that they didn’t receive fair value for their shares.  On Friday, March 9th, Vice Chancellor J. Travis Laster ruled in their favor.

So what can you learn from this?

First, pay attention to valuation metrics.  In late 2010, when RBC was pushing to grow their investment banking business, and they initially pitched the company to serve as their advisor, they “relied on two recent deals, signed at 9.5 times and 9.4 times the targets’ earnings before interest, taxes, depreciation and amortization (“EBITDA”), to show what Rural/Metro might be worth.”  But on the final weekend before the deal was to close, the RBC team presented a revised valuation range to the company’s Board of $8.19 and $16.71, which made Warburg’s offer of $17.25 per share look like a great offer.  But the new valuation was lower than the valuation RBC used to pitch the deal, because now it included a deal from 2004 that was at struck at a much lower multiple – about 6.3 times EBITDA.

When an investment banker is pitching you to get your sell-side M&A business, pay careful attention to how they calculated the valuation range they present to you.  Are the transactions relevant? Are they recent?  Which transactions did they exclude from their analysis and why?  RBC is not the first investment bank to pitch a company using only the most favorable valuation metrics.  It’s critical that as the business owner, you be aware that valuation is an art, not a science, and that your results may be different.  Don’t select an investment bank just because their anticipated valuation is the highest.  Getting the highest price for your company is the result of a competitive process, not dependent on historical multiples.

Second, look for conflicts of interest.  In this situation, the judge determined that RBC “failed to disclose the relevant information to further its own opportunity to close a deal, get paid its contingent fee, and receive additional and far greater fees for buy-side financing work.”   In this situation, lawsuits were filed against three parties:  RBC for failing to disclose its conflict of interest adequately; Moelis & Co., a second advisor to Rural/Metro to settle allegations related to its fairness opinion; and Rural/Metro’s Board, which was accused of selling the company for too low a price.

A question for the readers:  do you believe that an investment banker can be free of a conflict of interest if they are getting fees from both sides of transaction?  What if they’re helping both sides get the deal financed and closed, but only get fees from one side?  Share your opinion in the comments.

Laura Kevghas, Partner at Mirus Capital Advisors, has over 25 years of experience in mergers and acquisitions, including both investment banking and corporate development. Laura was a founding employee at Mirus and spent nine years working on new business development, as well as creating offering memoranda and negotiating transactions for clients. She was directly involved in the successful sale of more than a dozen client companies in the software, food and beverage and technology sectors. Laura rejoined Mirus Capital Advisors in 2006, and became a Partner in 2010. She focuses her practice on M&A for companies in the business services and technology sectors, and also enjoys working with industrial companies.


Forward-Looking Finance Leader for Tomorrow's Market Challenges

The Forward-Looking Finance Leader you need Today to meet the Market Place Challenges of Tomorrow!

In tandem with our Webisode Rudi Tuesday launch Oct 1, 2013, let me share additional insight on how to think about your Finance Leader in your business, and why it matters to the company you want to be tomorrow.

What does Forward-Looking Finance mean?

According to Deloitte “it means being able to advance your organization’s growth or improve its competitive position by identifying the key constraints holding it back…. in other words, today’s environment requires a CFO to be not just a strategist, but a pragmatic strategist.”

In planning to grow your business, it is imperative to have access to a Finance Leader who understands market challenges and opportunities, helps you develop a market strategy, and then creates an operational plan with milestones and performance metrics to transform your business to its next stage.

This may be a paradigm shift in how the Finance Function is viewed today versus how we set the right expectations for tomorrow so that you can remain agile and truly compete and grow in the new economic environment.

Paul Otellini, CEO of Intel in an interview with Matthew Quinn of the Wall Street Journal, sums up what he needs from his CFO, Stacy Smith “One role is classic finance to focus Intel on driving profits and compliance with all laws world-wide. The other role is to be a sounding board for me and other senior managers in terms of strategies and opportunities.”

In addition to being a sounding board, the Finance Leader is an influencer and partner to the organization.  With excellent communications and people skills, your CFO supports you with timely and accurate communications.  Additionally, s/he has the ability to bring people together to identify challenges/opportunities, and develop and implement business solutions.  The cross-functional Finance Leader is also operationally driven and understands the importance of efficient business systems and processes for optimal and effective scalability.

In a recent article on the topic of Finance Leader, Ernst & Young says “Finance leaders must … be highly adept at building and leading effective teams around them.”  This position is increasingly more the public face of your company and therefore must effectively build relationships both internally as well as externally.

Lastly, the Finance Leader for the future needs to embrace transformations within your organization.  Whether you are going through a re-alignment or integration from an acquisition, the Finance Leadership requires strong people skills and plays a pivotal role in leading these transformations to make your growth strategies successful in creating value.

YOU NEED THE SOFT SKILLS TO EFFECTIVELY APPLY THE HARD SKILLS

Still uncertain whether you have the right Finance Leader to support you in your future growth? Listen to our short video that gives some examples in how an effective Finance Leader brings value. You may also access the hand outs available on our website page Rudi Tuesday.

Of course, you can always pick up the phone and give us a call for a conversation at 617-449-7728

Combination Products – A Strategic Inflection

Key Highlights and Takeaways by Bob M. Weber, Managing Director of MedTech at Next Stage Solutions, Inc. | weber@nextstagesolutions.com

Addressing the complexities of clinical challenges in the future, an increasing number of newly developed medical devices will be used in conjunction with pharmaceutical and biologic products to create “combination products”.  These combination products are designated as a special class of products within the FDA. The current and future regulatory and market challenges of introducing combination products were discussed by a group of distinguished speakers including former FDA commissioner Dr. Andrew Von Eschenbach.

Below are some key highlights and takeaways from the various presentations from the recent MDG Seminar “Addressing the Challenges of Combination Products, Moving to Interoperable Solutions” at the Lahey Clinic in Burlington, MA.

· A strategic inflection in the Life Sciences area is happening NOW! Such a change that you will not recognize it.  We have moved from observing manifestations to understanding mechanisms.  This is the Strategic Inflection.

· The Process – Discovery, Development, Delivery |  The Product – Integrated Interoperable Solutions

· Discovery, Development, Delivery is no longer linear but circular.  Need to integrate them more seamlessly.

· Speed = Success |  Coordinate Financial Resources, Intellectual Capital, and Infrastructure

· Need collaborative efforts between Financial Investors, Academia, Industry, and Government

· MDG can play a leadership role in driving change. They can be the Int
egrator.

· Changes in Discovery – team approach, emphasis on milestones and outcomes, new fields

· Changes in Development – shift from “components” to “solutions”; collaboration and share of IP (Intellectual Property) at the outset; new business model for ROI (Return on Investment)

· Changes in Delivery – New Systems ; Advanced Technologies; New Regulatory Policies & Practices

· Important: Product has “value” to the patient/customer if it is a solution to their problem.

· For an Integrated Interoperable Solution, there will be a need for: sharing of cost, profit, and recognition; new valuation models for component pricing; market based vs. government imposed regulations.

· The game has changed from “Golf” to “Basketball” (not track & field). Performance of the team will determines success.

· The path for combination products has many challenges: technical (collaborators don’t speak the same language); Regulatory; Reimbursement Issues; Health Economic Outcomes; Marketing Regulations for promoting products.

· Pricing could be key: Cost of Alternative +  Your Unique Value Proposition – Cost of New Product = Difference in price premium of New Products.

· Healthcare Economics will look at the relationship of cost (lower to higher) and effect (better to worst).

· There will be a need to realign the benefits to all stakeholders in order to get a benefit for all – Physicians, Facilities, and payers.

· Value will be defined in terms of time:    Shorter timeframes – lower admissions, lower re = admissions (30 – 90 days).  Medium timeframes – fewer revisions, removals, reductions.  Long-term timeframes –  disease redemption, resource reduction