The Bridge: Fall 2020

SUMMER 2020

INDUSTRY KNOWLEDGE FROM OAK STREET FUNDING ®

Pivoting for Success in the New Normal

FALL 2020

FEATURES

FALL 2020

PUBLISHER Oak Street Funding EDITORIAL DIRECTOR Beth Saxen

6|A cquire During a Pandemic and Political Turmoil?

CONTRIBUTING WRITER Scott Flood ART DIRECTOR | DESIGNER Aidreen Hart The Bridge is a newsletter produced by:

4 | Long Term Succession Planning in Uncertain Times

8 | Seven Tips to Successfully Manage Remote Employees

10 | Improve Focus and Control by Consolidating Business Debt

Oak Street Funding 8888 Keystone Crossing, Suite 1700 Indianapolis, IN 46240 844-395-8241 Loans and lines of credit subject to approval.

Potential borrowers are responsible for their own diligence on acquisitions. CA residents: Loans made pursuant to a California Department of Business Oversight, Finance Lenders License (#6039829). The materials presented are for informational purposes only. They are not offered as and do not constitute an offer for a loan, professional or legal advice or legal opinion by Oak Street and should not be used as a substitute for obtaining professional or legal advice. The use of this paper, including sending an email, voice mail or any other communication to Oak Street, does not create a relationship of any kind between you and Oak Street. Š2020 by Oak Street Funding, LLC.

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www.oakstreetfunding.com | 844.395.8241

LETTER FROM THE FOUNDER & CEO Who would have thought when I wrote my letter for the Spring issue of the Bridge® earlier this year that so much would have transpired between then and now? While the word “unprecedented” has been used ad nauseam, it might be worthwhile to take a few minutes to consider the current market for mergers and acquisitions as it is also seeing unprecedented activity. This is happening for a number of reasons – some of which you may want to address now as time is of the essence.

Oak Street Funding® Vision Statement To be the market leader in client experience for commercial financing by delivering unique and diverse product offerings through cutting edge technology and exceptional employees that drive an EXCELLENT client experience.

As you will read in my article later in this issue, Acquire During a Pandemic and Political Turmoil?, we are in perhaps the last quarter to take advantage of a number of tax benefits that may potentially change in 2021. As you may know, there are a number of tax incentives for acquiring a business that may go away under Democratic leadership in the White House and the supporting majority in the senate.

These potential political changes may pose a dramatic increase in capital gains and dividends as well as alter personal and business exemptions, while also hindering passing capital gains on to heirs – which, for many, are key considerations in these business transactions.

Though there is a need to move with a sense of urgency, I am not condoning eliminating any type of due diligence in making a thoughtful decision to acquire. However, should you be moving in this direction, the time to put things in motion is now. Why? Consider the amount of time it takes to make this type of business transaction under the best of circumstances – assessments, loan applications, legal reviews, underwriting, closing…the list goes on. To simplify the process, consider working with a lender that handles the entire loan process from application to closing in-house. It could turn months into weeks if all parties are ready to act.

In addition to the focus on acquisitions, this issue of the Bridge® features information about our Exchanges – a free service that brings buyers and sellers together – as well as articles by key contributors on other topics that will help support your acquisition efforts.

Wishing you the best in navigating the rest of this year and in 2021. May you and your family stay safe.

Text START to (317) 854-5146 Stay up to date with industry-relevant content by subscribing to text messaging from Oak Street Funding.

Rick Dennen, Founder & CEO 844.395.8241 | www.oakstreetfunding.com

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Long-Term Succession Planning in Uncertain Times Good business lessons often emerge during difficult times. The COVID-19 pandemic has proven to be challenging for most businesses, separating the nimble and agile from the slow and stodgy. Across every industry, it’s been incredibly difficult to proactively navigate in the new normal.

It’s not easy to think about the pandemic positively given lost lives and business closures; however, as bigger challenges and crises are likely inevitable in our rapidly changing world, ask yourself these questions: Are you prepared? Is your business – and your team – ready for whatever business disruptions lie ahead? Do you have the right leadership to handle the next new normal?

If you already have a leadership succession plan, you’re ahead of most businesses. However, yesterday’s approach to succession planning may not be what you need to 4

prepare your team for a constantly changing business environment.

Today, given the realities of a rapidly changing marketplace, a succession plan needs to be a living, proactively revised blueprint that aligns the skills and experience needed in each key role with your strategic growth goals.

The following are critical items to keep in mind as you create a successful succession plan.

www.oakstreetfunding.com | 844.395.8241

Review current and assess future business strategies Understand where you are now and where you are headed by answering: • What lessons have been learned?

• What challenges are likely?

• Are you organized to succeed in the future?

Evaluate and determine your critical roles Focus on the roles and people you need most given the business’s strategic priorities: • What skills and competencies are needed in each role?

• What resources can be utilized or need to be added?

• What behaviors are you seeking from employees?

– Given the need to constantly adapt, you might consider viewing resiliency and innovation as key attributes.

Rethink performance reviews Look at your team by concentrating on what they can achieve, not what they have accomplished:

Help employees succeed Provide the support your up-and-coming leaders need to grow: • Give them clear, well-defined goals but resist telling them how to get there.

• Help them focus their energy and strengths on what they can impact the most.

• Remove obstacles and provide guidance.

• Encourage and fund educational opportunities.

• Promote physical and emotional well-being.

• Know there will be mistakes and trust them to learn and improve.

Implement the succession plan Be mindful of the following to drive success: • Stress-test your plan by implementing it against various scenarios.

• Integrate the succession plan into your hiring strategy.

• Explore ways to pivot and adjust the plan as conditions change. 

• Focus on coaching employees for what is needed, not what has been done.

• Be realistic about skills they have and the skills they can learn.

• Ask about and consider your employees' aspirations.

Identify leaders In crises, people gravitate to others willing to solve problems, so ask yourself: • Who are your problem-solvers?

• Who embraces rather than avoids change?

• If something happens to you, who would you trust to take over?

• Remember, great leaders find growth opportunities even during times of crisis.

Given the realities of a rapidly changing marketplace, a succession plan needs to be a living, proactively revised blueprint that aligns the skills and experience needed in each key role with your strategic growth goals.

844.395.8241 | www.oakstreetfunding.com

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Acquire During a Pandemic and Political Turmoil?

by Rick Dennen, Founder & CEO

You might think with world-transforming events like the COVID-19 pandemic and the resulting – but brief – market disruption, making an acquisition would be the furthest thing from a prudent business owner’s mind. However, I, and many experts, would argue that given the current market conditions now is an opportune time to seriously consider prudently growing your business.

Mergers and acquisitions are occurring at a breathtaking pace. So why is now the time to buy? One of the major factors is the uncertainty of the political climate we are now experiencing and the possible repercussions of a Democrat heading to the White House in early 2021. A number of the tax policies that Vice Presidential candidate Joe Biden is looking to enact could, should the senate majority flip, swing the pendulum away from the current tax advantages of acquiring a business.

There is a possibility of not only a dramatic increase in capital gains and dividends, but also the inability for some to pass capital gains on to their heirs.

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www.oakstreetfunding.com | 844-395-8241

Another reason a swift buying action might be prudent now is the amount of time this type of business transaction can take with the assessments, loan applications, legal reviews, underwriting, due diligence and closing processes. You could be looking at months, or even longer given the disruptions resulting from the pandemic slowing the process in some cases.

If possible, find a lender that handles the entire process from application to closing

in-house. This will hasten and simplify the process.

All this said, it is still important to do your due diligence as you would with any business transaction of this magnitude.

Once you feel you have found the right opportunity and culture fit, act quickly as 2020 will soon be over and you might miss maximizing your transaction and solidifying your competitive position. 

“Given the current market and political conditions, now might be an opportune time to consider making an acquisition.”

Steps to Consider When Making an Acquisition 3. Determine why the company is selling and its value to your business

1. Understand how the company potentially being acquired fits in with your business strategy and culture

2. Create an experienced, crossfunctional evaluation deal team

5. Get to really know the leadership team and key employees

4. Develop an accurate valuation and assess the health of the company

6. Put in the time to create and implement an Integration Plan to merge the purchase into your business, focusing on the people so 1+1=3

7. Develop and review key metrics, beyond financials, to assess if the acquisition creates the value expected, and if not, modify the Integration Plan to coursecorrect

Rick Dennen is the Founder & CEO of Oak Street Funding, a specialty lending company. Rick founded Oak Street Funding in 2003 with one vertical—insurance businesses — and has grown the company into a national business with nearly one hundred employees, eight business verticals, and a portfolio exceeding $1B.

844.395.8241 | www.oakstreetfunding.com

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tips to successfully manage remote employees

Having your team work from home can be more efficient, effective – and enjoyable if you implement some smart strategies.

Move to digital document formats that can be shared quickly and easily.

If your employees don’t already have fast internet connections, help them upgrade.

Create communication standards, so everyone knows when calling, emailing, or texting is most effective.

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Schedule some social time, such as “Zoom lunches” or ‘”video happy hours” but be respectful of work/life balance.

Encourage scheduled breaks or “office hours,” because when the lines blur between work and home, work tends to take over and employees tend to burn-out.

Share your expectations, maintain a performance driven approach and celebrate – company wide – when goals are met!

Schedule a once a month “State of the Union” to inform the entire company if you are meeting goals, give special recognition, celebrate work anniversaries and spend quality time together. www.oakstreetfunding.com | 844.395.8241

Capital. Partnership. Resources.

You’ve worked hard to build your business. Really hard.

As you continue to move forward, doesn’t it make sense to work with an experienced lending partner with the capital you need to support your business today, and your successes tomorrow.

Oak Street Funding – we’ll get you there.

Call us at 844-395-8241 or visit oakstreetfunding.com to learn more.

Improve Focus and Control by Consolidating Business Debt 10

In this time of pandemic and political upheaval, it is easy to feel uncertain and overwhelmed. Now more than ever, taking steps to focus on what is important to enhance your business will not only improve your outlook but it can also have a positive impact on your bottom line.

Taking control of your business debt is one strategy that can provide many benefits. If you’re making payments on several loans or other types of business debt, debt consolidation may be a good option.

Even if your revenues are healthy, limited cash flow can hold you back from pursuing activities such as adding staff, upgrading technology, www.oakstreetfunding.com | 844.395.8241

marketing and advertising, retiring a promissory note with the seller, or even acquiring another business. The right business debt consolidation strategy can be advantageous in many ways because it can help you: • Simplify business debt management with one monthly payment • Replace high-interest debt with a lower-rate option

One caution: If your business is rapidly losing cash or has serious underlying financial problems, debt consolidation may not be the best strategy. In this instance, it is wise to reach out to your CPA for guidance.

• Lower total monthly payments • Free up capital needed for growth initiatives • Shorten the repayment period • Enable you to focus on long-term growth and security 844.395.8241 | www.oakstreetfunding.com

Another tip: Partner with a lender who understands unique revenue streams and can structure a consolidation against future cash flows rather than tangible items such as inventory. 

Before you consolidate 1. Know what you want to accomplish. Lower rates?

Lower payments?

Fewer bills?

2. Examine all your business debts. Don’t forget lines of credit and credit cards.

3. Decide which debts to consolidate, so you’ll know how much you need.

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Is it time to buy or sell your business?

Oak Street Funding provides a no-cost, national service to bring buyers and sellers together. Our Exchanges: • Provide confidentiality: Only qualified buyers will know you are selling.

• Expand your reach: Access buyers and sellers you might not otherwise be able to find.

• Increase profitability: Our exchanges are completely free – so there are no brokerages fees or costs.

• Keep you informed: Receive messages immediately when a new listing matches your criteria.

• Deliver a convenient experience: Log on to our Exchanges 24/7 from any device.

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Investment Advisory Firm

Click the desired button to visit the Exchange site or call 844-395-8241.

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