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Event Recap

Author:

Rebecca Pedooem
Account Manager 
Opus Connect
Rebecca@opusconnect.com

Moderator: Robert Clippinger, President at Clippinger Investment Properties

Summary:

Developers can agree that mixed use projects can be challenging in the simplest of circumstances. This roundtable will focus on the following:

  • Why mixed use? 
  • Why does it work?
  • When does it not work? Socio/Economic? 
  • Financing Mixed Use 
  • How do retail/restaurant/residents cohabitate?
  • Parking Issues? 
  • Picking the right retail/restaurant 
  • • Managing Mixed Use

A good, well planned mixed-use project can be beneficial for everyone involved!

From the city, developers, lenders, residents, and retailers, everyone can profit. In this month’s discussion, we heard from the expert Bob Clippinger. (Bio attached)

So why do mixed use projects work? Mixed use projects can attract better tenants, lenders and retailers. Landlords can charge higher rents from tenants and tenants can benefit from the wide range of amenities they can be offered (i.e, coffee shop/mini mart/restaurant). Mixed use projects can also be beneficial to the city because they can create a more “neighborhood feel”- food brings everyone together!

In fact, mixed use developments can alleviate many service needs by providing parking options, convenient retail, accessible restaurants, and residential living quarters all throughout a walkable area. Walkability (walk scores) are popular once again – people prefer this over driving/commuting to different places so from an urban planning perspective, they offer efficiency and a decrease in traffic congestion.

When deciding on developing a mixed-use project, there are some consideration to keep in mind from financing to retail and resident cohabitation. Lender relationships are important because mixed use projects are complicated. Most commonly the 80/20 Rule apply but things can get tricky if you are not properly prepared. Pre-leasing can make the lending process easier, however, if that becomes an issue, there’s always other kinds of loans such as mezzanine.

Can we all get along?! That is, how can your residents and retailers cohabitate? Devil is in the details. According to experts, the best way is to plan ahead and define the terms of the lease clearly to all parties. Make sure your tenants are aware of where they are living. Smells and noises can be an issue so a developer can bypass this matter by making sure not to take on any Ethnic foods as a tenant and ensure your ventilation system works! Hiring an acoustics specialist can also save you a lot of headaches down the line. As far as your retailers, they can’t complain if you pay for cleaning or CAM, you’re getting 90 units of residents, and there’s nothing like foot traffic for any retail business.

For more information regarding this topic or Opus Connect, contact Rebecca Pedooem at Rebecca@opusconnect.com

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Event Recap

Author:
Colin Lloyd
Investment Writer/Presenter/Consultant
In the Long Run- Colin Lloyd Consulting
cdlloyd@blueyonder.co.uk

Limited Partners and Trends in Private Equity

The inaugural Opus Connect London event was generously hosted, on Thursday 27th April, by Faegre Baker Daniels, at their offices near St Paul’s Cathedral. There were more than forty attendees who listened to a distinguished line-up of industry experts. Chaired by Blazo Ivanovic of recruitment specialists, Norman Alex.

The Panellists

Silvi Wompa Sinclair, who heads up the Private Equity (PE) practice at Willis Towers Watson, provided an institutional perspective on the current trends in PE. Ted Cominos, of Faegre Baker Daniels, who has more than 20 years’ experience, in the PE business, both as a lawyer and practitioner, described the place PE has within an investment portfolio alongside Real Estate and Fixed Income. Completing the panel, Francois Aguerre, Co-Head of Origination at Coller Capital, a leading player in the PE “secondaries” market, articulated the case for PE in the current environment, but cautioned investors to expect low double digit returns given the low interest rate environment prevalent in developed markets.

The Debate

The panellists covered a number of key issues including the change in investor return expectations, which have fallen as interest rates have declined, but, according to Sinclair, so too has their risk appetite. Sinclair went on to allude to a bifurcation of institutional investors approach; either choosing to invest with the largest players in the industry or focussing on specialists within a specific industry, sector or geography.

Aguerre noted the increased appetite for private debt in response to the collapse in government bond yields, whilst Cominos opined that within the equity space almost all the deals he had encountered were focussed on the technology sector.

The panellists all agreed that LPs are no longer passive investors. They have grown more demanding, especially in relation to the management fees charged on un-invested capital. Aguerre estimated that $1.4trln of PE assets are held in cash, which could amount to $20bln in management fees if fully loaded.

With equity markets entering the ninth year of a bull market, the question of what investors should expect from PE over the near term was inevitable. Sinclair noted that a number of larger investors were bringing PE investment in-house, but at the same time smaller PE specialist managers were winning mandates, whilst larger managers were taking on specialist consultants and industry experts to bridge to gap between scale and specialization. Cominos reminded the audience that, given the fiduciary obligations of many large institutional investors, larger PE managers were still garnering a larger proportion of the new capital which continues to flow into the sector. Aguerre countered that LP’s are still focussed on hiring “talent”. Cominos, concurred, stating that his own analysis showed that newer, smaller managers tended to outperform the behemoths of the industry. Sinclair suggested that, first and foremost, investors were interested in a manager’s track record. Looking ahead, at this late stage in the cycle, Sinclair urged investors to look for managers who had experience in restructuring in order to avoid a disappointingly long wait to glean acceptable returns.

The panellists' went on to discuss the issues with the large, established General Partners (GP). Sinclair highlighted the importance of succession planning, Aguerre alluded to the importance of deal-flow, pointing out that the average GP would be expected to spend 60% of their time travelling in search of investment opportunities: a punishing schedule for someone in their forties, even more so for a manager in their sixties. Cominos picked up on the question of deal flow, pointing out that pipeline management was the key to delivering sustainable returns over the long-term.

In terms of geographic demand the panel saw growth in the US, a stable environment in Europe and a decline in interest in Asia. Sinclair mentioned that Willis Towers Watson’s clients were focussed on sectors including sustainability, cyber-security and technology.

When asked what they thought would be a significant PE trend over the next five years, Aguerre stated that he was positive about the growth of the industry given the steady pace of global economic growth. Cominos saw the trend towards manager specialization as gathering momentum, whilst Sinclair, noting that the industry was in the process on maturing, compared PE to a “teenager” with the potential to develop good or bad habits as it reaches maturity.

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Event Recap

Author: 

Steve Sahara
Director
Stout Risius Ross
ssahara@srr.com

Growth through mergers and acquisitions remains a key growth strategy given slow single digit growth in GDP and other headwinds to organic growth and/or perceived risks of new product/new market development. This growth motivation, coupled with ample sources of low cost debt capital, have led to very high transaction multiples and deals that some say are “priced to perfection." Sellers and intermediaries that represent them are driven to reduce execution risk, seek certainty of close, and minimize time in market through a well-orchestrated auction process. Many academics and consultants warn that as much as 50% to 80% of M&A transactions fail to add shareholder value, and media headlines have covered numerous high profile multi-billion dollar mergers that have failed to deliver the intended shareholder benefits, often due to factors that due diligence is designed to uncover.

Commonly cited high risk areas for transaction due diligence include: Intellectual Property, R&D, competitive analysis, accounting policy (historical and forecast results, revenue recognition, working capital), integration issues versus assumed synergies and other key business value drivers.

Interestingly, some of the most frequent items that are said to be disputed (or submitted as claims against reps and warranties insurance) include: taxes, financial statement presentation, legal & regulatory compliance, undisclosed liabilities, IP, customer contracts, and employee related issues.

Transactions with an international / cross-border component may increase risks geometrically (regulations, laws, customs) and at the most basic level foreign currency exposure in cost and/or revenue line items should be considered.

So the risks surrounding proper selection, execution, and integration of M&A targets are clear and may be equally or more challenging to address in middle market companies where, despite smaller size and often lower business complexity, there may be offsetting risks because of fewer professional resources and perhaps less developed reporting systems.

Participants commented on the increased use of sell side due diligence by PE firms to speed the process, increase perceived certainty of close, and reduce “re-trade” potential when portfolio companies are being sold.

The roundtable was moderated by Steve Sahara, SRR, hosted by Bryan Cave and sponsored by NFP, Victory Park Capital, and Baker Tilly.

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Blogger:

Lou Sokolovskiy
Founder & CEO
Opus Connect
lou@opusconnect.com

BECOME A BUSINESS OF ONE (Bof1): BREAK AWAY FROM THE PACK.

Meet Dave and Bob. Dave went to Harvard Law, graduated in the top 10% of his class and served as a law review editor. Bob went to Yale Law, graduated in the top 10% of his class and served as a law review editor. Both went on to work at AmLaw 100 firms. Fast-forward 7 years: Dave makes partner before any of the other associates on the partner track while Bob remains an associate for several more years. Fast-forward another 7 years: both are now partners, but Dave makes 5 times as much as Bob because Dave is the designated Rainmaker at his firm while Bob is a “service partner.”

What accounts for this gap? Both lawyers appeared equal at the start line and both had the same opportunities ahead of them. So how did Dave make partner after just 7 years at his firm, and why did he earn so much more than Bob even after Bob also made partner?

Business development.
“Business development” is a loaded term in today’s day and age, and can mean different things depending on who you ask. To me, as a business development professional with over 10 years of experience helping executives create exclusive professional networks, business development is more than just selling yourself or a product to potential customers. It is (i) the creation of long-term value for an organization, individual or brand (ii) by establishing and maintaining mutually beneficial relationships with other people (peers, clients, suppliers, etc.), (iii) used in conjunction with other marketing techniques. Some people are naturally good at business development while others are not. People with inherent business development acumens always have room for improvement. But like many skills, even those who are not innately blessed with this talent can learn this valuable skill set by implementing techniques to help them maximize their potential, giving them the highest possible chance of success.

When people seek my advice on how to expand their network and improve their business development techniques, the first and most important thing I always tell them is that they need to view themselves as a Business of One, or Bof1. You need to perceive yourself not just as an individual person with a job, hobby or certain type of personality, but as an actual business entity. And like any other business, you can take certain actions to strategically plan and organize in order to optimize your profitability, brand recognition and other potential advantages.

Let’s visit Dave and Bob again. Both seemed to have started out in equal positions with equal opportunities. How did Dave break away from the pack and end up as a Rainmaker, while Bob simply became a service partner? The answer is that Dave became a Bof1: For example, Dave spent time, money and effort developing his network throughout his career – even before graduating from law school. He joined boards, attended industry events, kept in touch with former classmates and sent them periodic updates of his professional successes. Dave helped colleagues and friends succeed in their own businesses by matching them with other contacts in order to create mutually beneficial relationships. Eventually, Dave’s networking paid off and he started to develop his own book of business, adding monetary value to the firm. Bob, on the other hand, came to work every day, sat in his office and did his work, billed more hours than Dave but then went home afterwards instead of networking at industry events, catching up with former classmates or becoming involved in local organizations. Bob did a very good job as a lawyer, but never managed to bring in any clients of his own. There is nothing wrong with being like Bob; he’s smart, diligent and hardworking and makes a decent living. But, if you want to reach for the stars and be a Rainmaker, you need to start acting like Dave and become a Bof1.

Aside from getting promoted faster or making a higher salary, a good sign that someone is correctly employing the Bof1 concept is how versatile s/he is, i.e., does s/he have applicability and relevance in other roles or professions. For instance, a lawyer who has a great network could easily move into a career as a legal recruiter; or an investment banker at a large institutional firm could go on to start his/her own private equity firm.

While he may not be the most popular person, a great real-life example of this is Donald Trump. Trump certainly isn’t the wealthiest man in America, nor is he the smartest or most talented—nor does he have the best hair. While he initially made his money in real estate, the name “Trump” is now recognized nationwide. Trump made himself into more than just a guy who does real estate—he became a personality, a brand, an entity – a Bof1. For instance, after gaining a reputation for being a successful, tough and hard-headed business man (the kind of thing that makes for good TV), he went on to host the successful prime-time television show, The Apprentice, for 14 seasons. He has also licensed the name “Trump” to dozens of businesses, (ex: Trump Financial, a mortgage firm) and receives millions of dollars in compensation for speaking engagements. In 2011, Forbes' financial experts estimated the value of the Trump brand at $200 million. (Trump claims that his brand is worth about $3 billion.) Being a Bof1 clearly pays off.

Now that we can appreciate the value of being a Bof1 and how it can help you maximize your success, the next question is how do you become a Bof1? What specific techniques can you use to implement this concept and continuously enhance your Bof1?

When I advise people on becoming a Bof1, the first step is always to create a personal business plan. A solid Bof1 Plan includes the following key components:
(1) A Personal Mission Statement: draft a written mission statement for yourself, including your personal goals.
(2) A description of your Personal Brand: showcase your unique expertise in something that is relevant to your audience.
(3) A SWOT Analysis: Make a list of your strengths, weaknesses, opportunities and threats. This list will help you focus on where you should direct your efforts to come up with specific action items.
(4) Action Items: Come up with specific action items (short and long-term goals for yourself) based on your SWOT analysis.
(5) Set a Time Budget: Break your Bof1 Plan into bite-sized weekly and monthly deliverables and goals.
(6) Track your Goals/Create Accountability: Establish and maintain a system for tracking your accomplishments so that you can assess your performance relative to your Bof1 Plan. Utilize peers in order to create accountability for accomplishing your goals.

Together, these tools can help each of us maximize our business development potential and become a Bof1. These techniques will be further elaborated upon in future articles, as well as concrete ways in which to establish and maintain meaningful relationships with quality contacts and the types of marketing techniques a Bof1 can employ.

Stay tuned!

About the author: Lou Sokolovskiy is the founder of Opus Connect, an exclusive members-only professional networking organization for senior executives in fields such as private equity, banking, finance, real estate, law and accounting. He is also the managing partner of Genero Capital Partners, a private equity firm. Lou has over 10 years of experience in transaction origination and execution, managing operations, initiating strategic partnerships, and new business development in a variety of industries, including healthcare management, finance, and technology. He holds a B.S. degree cum laude in Business Administration from University of Southern California and MBA from UCLA, Anderson School of Management.

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Event Recap

Guest Blogger:

Denise Nix
Marketing and Business Development Manager
Glaser Weil
dnix@glaserweil.com

Opus Connect Event Recap: Real Influence: How to Persuade Without Pushing and Gain Without Giving In

Was there a time recently when you were talking to a colleague (or a friend or family member) and he was looking at his phone? His eyes cast down, thumb flying furiously across the tiny keyboard as he nods vacantly along to what you were saying? Was there a time recently when you were the one with the phone in your hand as someone was speaking to you?

While we all, hopefully, know that this is rude behavior and counter to positive communication … the lure of the device and other modern-day distractions can be hard to resist. Dr. John Ullmen, an author, executive coach and motivational speaker who gave a lunch talk hosted by Glaser Weil last month, calls this “bad listening.”

Ullmen, who appeared as part of a lunch speaker series by Opus Connect Event’s Real Estate Chapter, said positive communication — especially active listening — can be a powerful tool in the quest to persuade and influence people. A few small changes in communication style, the UCLA Anderson School of Management faculty member said, can make a big impact. Some techniques he suggested:

  • 3:1 — That ratio represents the number of positive communication interactions that should be given to every single negative one. That’s really just a starting point, Ullmen said. Some experts, he added, suggest a 5:1 or 6:1 ratio. Just think about the fly choosing between the proverbial honey and vinegar.
  • “Yes…” — What follows after that “yes” can mean the difference between a positive or negative communication experience, Ullmen said. “Yes, and…” acknowledges what the speaker said and builds on it. “Yes, but…” sends the message that what the speaker said was wrong, and what is about to be said is right.
  • The Power Thank You — “Notice when something good happened and be in a position to point it out and articulate it,” Ullmen said. There are three ways to make a “thank you” powerful: 1.) Be specific about why you are thanking the person; 2.) Acknowledge the effort it took to do that specific task and 3.) Note the impact the deed had on you.

Learn more about Ullmen and his work at MotivationRules.com.

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Event Recap

Guest Blogger:

Eric Desai
Robin Lane Capital
eric@robinlane.com

Opus Connect Event Recap: The Consumer Sector: Winning in Low Growth Times, M&A Activity, & Overall Trends and Condition

In case you were unable to attend the recent Opus Connect San Francisco panel on the Consumer sector, we had a great turnout and some valuable insights into the current deal market and industry trends. A big thanks to our moderator, Ted Kuh (Lecturer at Haas School of Business, University of California, Berkeley and formerly Managing Director and Global Head of Retail Industry Investment Banking at Citigroup Global Markets), and panel members: Julie Bell (Partner - San Francisco Equity Partners), Robert Brown (Co-founder and MD - Encore Consumer Capital), Joe Rainero (CEO – Kinder’s Meats & BBQ), Kevin Sherman (VP Marketing - BJ's Restaurants) and Brian Sullivan (MD - The McLean Group).

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