Your first question may be, “Just what is Corporate Social Responsibility (CSR)?” We see CSR demonstrated in a variety of ways in areas such as:
THE COMMUNITY:
• Contributing to local community programs through financial support and personal involvement
THE ENVIRONMENT:
• Using packaging and containers that are environmentally-friendly
• Recycling
• Using low-emission and high-mileage vehicles where possible
• Seeking more efficient manufacturing processes, etc.
THE MARKETPLACE:
• Utilizing responsible advertising, public relations and business conduct
• Exercising fair treatment of suppliers/vendors, contractors and shareholders
THE WORKPLACE:
•Implementing fair and equitable treatment of employees
•Upholding workplace safety, equal opportunity employment and labor standards

Actions such as these not only uphold today’s business standards, but they also pave the way for future generations. In years past, many of these elements were considered almost anti-business and some had to be enforced by governmental regulation.

Successful companies such as Tom’s of Maine (producer of natural personal care products) and Newman’s Own have practically been built on CSR. More and more companies – public and private – are following the elements of CSR. Google is a desired workplace because of the way they treat their employees: great benefits, great food in the employee cafeteria, exercise equipment – you name it, Google provides it.

Recognizing CSR in today’s business climate not only increases shareholder/investor interest, but also increases value. Socially-conscious companies are considered sound investments. They attract buyer interest and acquire higher selling prices when it comes time to sell.

After all, most buyers want to find a business with the following attributes:

• Good relations with the local community
• Products and/or services that are meeting the current trends in the marketplace and are positioned to meet future trends
• Positive relations with employees and low turn-over
• Excellent customer loyalty
• Good relationships with suppliers and vendors
• No “skeletons” in the company closet
  

In addition, good environmental practices reduce costs, create efficiencies and provide excellent public relations. Good employee relations make for happy workers, which translates to higher productivity and lower absenteeism. Good relationships with customers and suppliers eliminate, or greatly reduce, the possibility of legal entanglements.

All in all, Corporate Social Responsibility not only creates additional value and helps in creating a higher selling price when that time comes, it is also very good business for now and in the future.

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Deals fall apart for many reasons – some reasonable, others unreasonable.
For example:

• The seller doesn’t have all his financials up to date.
• The seller doesn’t have his legal/environmental/administrative affairs up to date.
• The buyer can’t come up with the necessary financing.
• The well known “surprise” surfaces causing the deal to fall apart.

The list could go on and on, and this subject has been covered many times. However, there are more hidden reasons that threaten to end a deal usually half to three-quarters of the way to closing. These hidden reasons silently lead to a lack of, or loss of, momentum.
This essentially means a lack of forward progress. No one notices at first. Even the advisors who are busy doing the necessary due diligence and paperwork don’t notice the waning or missing momentum. Even though a slow-down in momentum may not be noticeable at first, an experienced business intermediary will catch it.

Let’s say a buyer can’t get through to the seller. The buyer leaves repeated messages, but the calls are not returned. (The reverse can also happen, but for our example we’ll assume the seller is unresponsive.) The buyer then calls the intermediary. The intermediary assures the buyer that he or she will call the seller and have him or her get in touch. The intermediary calls the seller and receives the same response. Calls are not returned. Even if calls are returned, the seller may fail to provide documents, financial information, etc.

To the experienced intermediary the “red flag” goes up. Something is wrong. If not resolved immediately, the deal will lose its momentum and things can fall apart quite rapidly. What is this hidden element that causes a loss of momentum? It is generally not price or anything concrete.

It often boils down to an emotional issue. The buyer or seller gets what we call “cold feet.” Often it is the seller who has decided that he really doesn’t want to sell and doesn’t know what to do. It may also be that the buyer has discovered something that is quite concerning and doesn’t know how to handle it. Maybe the chemistry between buyer and seller is just not there for one or the other of them. Whatever the reason, the reluctant party just tries to ignore the proceedings and lack of momentum occurs.

The sooner this loss of momentum is addressed, the better the chance for the deal to continue to closing. Because the root of the problem is often an emotional issue, it has to be faced directly. An advisor, the intermediary or someone close to the person, should immediately make a personal visit. Another suggestion is to get the buyer and seller together for lunch or dinner, preferably the latter. Regardless of how it happens, the loss of momentum should be addressed if the sale has any chance of closing.

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When the time comes to sell, or to at least consider that possibility, a business owner must consider just what it is he or she will be selling. We often hear that someone is “selling the business.” Just what does that entail? When that time comes for you, and you are working with a business intermediary, you will be asked to approve an engagement letter or agreement. The purpose of this document is to outline just what the business consists of and exactly what you will be selling, thus defining what the buyer will be buying. It is important that the selling price be defined in such a way as to prevent any confusion about the selling price and what it includes.

Below you will find some sample wording that might be included in an agreement:

The following clause portion from an engagement agreement really spells out what is included in the sale price:

…This [the selling price] shall include without limitation, cash, accounts receivable, stocks, bonds, indentures, debentures, promissory notes, letters or lines of credit, loans, guarantees, interest, negotiable instruments, real or personal property, payments under employment and consulting agreements, non-competition agreements, partnership agreements, rental agreements, lease agreements (including real estate lease agreements), options, payments pursuant to between option agreements, capital investments, the assumption or assignment or discharge of liabilities, the value of all assets.

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Thinking of selling now or in the not-too-distant future? Here are a few things to do that will definitely help – and, if you decide not to sell, they are items you should do anyway.

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