Founded in 1965 with one office in Central New Jersey, Amper has experienced significant growth through the years. The firm currently has six office locations throughout the New Jersey / New York area with approximately 250 professional people as part of the organization.

Our most recent growth is the result of Amper's joining with the Partners and employees of Diamant, Katz, Kahn & Company, a firm with roots dating back to New York in 1927 and in Bergen County, New Jersey since 1985. According to leading national industry publications, this is one of the larger transactions in the accounting profession this year, expanding Amper's practice and making the firm one of the 30 largest firms in the United States.

During these difficult times in the accounting profession, we continue to look at our success and growth as a sign that our clients view us as their most trusted business advisors. We will continue to work hard at maintaining this trust. Having recently completed our seventh peer review, all with the highest possible rating of "an unqualified report," our greatest achievement is perhaps the framework of integrity and trust we have tried to build with our clients, referral sources and peers.

Our mission includes continuing to provide value added services with integrity and creativity, in addition to giving back to the communities we serve.

BY WAYNE TESSLER CPA
PARTNER IN CHARGE, WALL OFFICE

A continuing goal in any business should be to build long-term value. This applies to business owners whether it is their intention to turn the business over to the next generation or eventually sell it. Too often, business owners are reluctant to make the necessary commitment to human resources, management team expansion, plant & office facilities and other necessary infrastructure support. The result of not deploying the necessary infrastructure and human resources support, as a business grows, can increase stress on the business, its personnel and the owners; cause a decrease in profits and negatively impact long-term value.

For those situations where a succession plan to the next generation is either not viable or desirable, the ultimate goal should be to plan an exit strategy for the business owner or owners. The earlier this objective is identified and planned for, the more time the owners will have to maximize the business value. Without proper planning, both short-term and long-term, this final exit can be very disappointing.

It is the accumulated long-term value that will drive the ultimate selling price in a business sale transaction. Typically, it is the small and intermediate, carefully planned steps that enhance the value and business profitability. Below are 10 critical fundamentals to consider for building long-term value.

1. Strategic business plan — Develop and implement a well thought-out strategic business plan. Going through this process with the right professional guidance will result in identifying opportunities as well as threats and weaknesses. Applying good business judgment and consistent discipline throughout this process will enable the business to achieve goals and successes that otherwise might be overlooked. The plan and its underlying action steps should be reviewed often and monitored for progress on achievement of goals and objectives or identification of elements for appropriate revisions. In addition and most importantly, periodic assessment should focus on the accountability of key personnel charged with carrying out the detail implementation steps of the plan. (For more information regarding strategic business plans, refer to Alan Wink's article in the Fall 2001 Review newsletter. If you would like another copy of this, please contact Tammy Brunskill in our marketing dept.)



2. Financial modeling — projections and budgets — As part of the business plan discussed above, there should be detailed financial modeling that, at a minimum, projects on a monthly and annual basis, the company's statement of operations, balance sheets and cash flows. Budgets should be prepared and interfaced with these analyses and used by management to create accountability and to measure actual performance against goal.



3. Know how your business may be valued in a sale transaction — Become more informed. Know how businesses in your industry are valued in sale and merger transactions. One of the most common barometers used in business sale or merger transactions is EBITDA, which stands for Earnings Before Interest, Income Taxes, Depreciation and Amortization. Another common barometer is EBIT, which stands for Earnings Before Interest and Income Taxes. Businesses will often be valued at a multiple of these barometers and depending on the type of business, the multiples can range from as low as three times EBITDA or EBIT, to as high as eight or nine times EBITDA.



4. Stay focused on your business’ value — Maintain a focus on the value of your business by applying the appropriate barometer and range of multiples discussed above. Annually, calculate a range of selling values for your business using the appropriate barometer and range of multiples discussed above.



5. Develop a strong and balanced management team — Excessive reliance on an owner or owners can inhibit growth and profitability and depress the business value. A good management team will also protect a business from collapsing as a result of a sudden illness, death or disability of an owner. A good example of where expanding the management team can create growth opportunities would be in a situation where the Owner/CEO is also wearing the hat of a CFO. By bringing on a qualified CFO, the Owner/CEO will be free to take a step back to focus on the big picture and more effectively guide the company into new growth areas and increased profitability.



6. Employee compensation and incentive plans — Review and develop compensation and incentive plans that reward strong employee performance and loyalty. Applying this approach will minimize the turnover of top performers and enable the recruitment of additional top performers. As part of this process, it will also be important to identify the non-performers and replace them. The goal should always be to attract and retain the best and avoid the pitfalls of the revolving door syndrome. Many companies that do not subscribe to this approach end up constantly losing good people and are usually left with the mediocre performers. The long-term effect on the profitability and ultimate value of the business can be huge.



7. Proprietary products and/or services — Look to develop proprietary products and/or services that differentiate you from your competition. This should enable the business to operate at higher profit margins as well as higher levels of recurring sales volume.



8. Minimize business concentrations & economic dependencies — Avoid or manage concentrations that create economic dependencies and increase business risk. Concentrations can jeopardize the success of the business as well as negatively impact the value of the business, or worse, make it non-marketable. Excessive reliance on only one or a few major customers, vendors and products are examples of concentrations that should be evaluated and addressed.



9. Assess areas of vulnerability — Know where the threats and weaknesses are for your business. These come in many shapes and forms. Once you have identified them, you can incorporate strategies into your business plan to deal with them. Some examples of vulnerability are competition, concentrations as discussed above, excess overhead, inadequate financing, an ineffective management team, inadequate insurance coverage, product development, environmental issues and non-existent strategic planning.



10. Leverage from your outside professionals — Take advantage of the experience of your accounting and consulting firm to assist you with addressing and implementing the above concepts. These professionals will be able to guide you in the areas of determining appropriate corporate structure to minimize income taxes on a future business sale as well as succession and estate planning concepts to minimize gift and estate taxes in succession planning scenarios.

The above items are not revolutionary nor are they all-inclusive. Some may not even be appropriate, depending on the size and nature of your business. However, for the business owners that have not taken the time to plan ahead to build value, now is a great time to start. As Yogi Berra once said, "if you don't know where you're going, you'll end up somewhere else."

THE IMPORTANCE OF POST ACQUISITION INTEGRATION

BY MICHAEL CORRIDON CPA
SENIOR MANAGER, CONSULTANTS TO MANAGEMENT GROUP

Undertaking an acquisition is a complicated task, even for large companies who have closed numerous transactions and have staffs dedicated to the process. For a smaller company with limited or no acquisition experience the task can be overwhelming. Many times management becomes absorbed in trying to get financing in place or dealing with legal issues that may come up. While these are significant issues that obviously must be handled, they do not address the vitally important process of integrating the new business into the existing business. This integration will be a key determining factor as to whether or not a transaction is a successful one. In order to give the transaction the best chance of success, a significant effort needs to be dedicated to the integration process, before the transaction is closed. This effort should begin while due diligence is going on, or even sooner if the information is available. The following is a guideline to the steps that should be taken to help ensure that the integration process is set up to flow smoothly.

1. Business Plan — A well thought-out plan should be developed for any acquisition. This plan will serve a dual purpose:
   a.      The process of putting it together will take some of the emotion out of the transaction. This will help ensure that there is a real business case for pursuing the transaction; if so it will,
   b.      Serve as a preliminary road map for the key steps to be undertaken throughout the rest of the acquisition process on into the early stages of the integration process.
   
   An experienced consultant can help in this process by acting as an impartial outsider in order to ensure that the transaction is not overly ego driven and that no critical elements are missing from the plan. The plan should spell out synergy opportunities, redundancies, goals and one time costs related to the transaction. After walking through the planning process it should be clear that the combined entity should perform better than if the two companies had never been combined. Significant emphasis needs to be placed on detailing synergy expectations. Usually, these are buried within financial plans with little visibility. In order to raise their visibility and thus their measurability, it is helpful to add milestones such as new product introductions or head count changes. Creating these metrics helps to cement responsibility for delivery of the synergies in the newly combined company.



2. Dedication of Resources — Assuming the plan indicates that the transaction should go forward, people from various disciplines, i.e. sales, design, finance etc., can be assigned to begin working on the integration plan. The teams should be made up of people from both companies so information can be shared and analyzed to further support or refute some of the opportunities identified in the business plan. The recommendations and implementation plan developed during this phase needs to explain how the target synergies will be achieved.
   
   One of the critical mistakes made in acquisitions is underestimating the time commitment involved to ensure a successful transition. All too often this leads to either the integration effort suffering, the on-going business suffering or in the worst case, both suffering as precious talent is spread too thin to accomplish the tasks at hand. This is especially the case in the mid-sized business. Even if internal resources are available, one of the issues hampering the successful integration is management's lack of experience in dealing with the issues that arise during an acquisition. Adding some consulting expertise can have multiple benefits at this point. First, the additional people can ensure that both the ongoing business and the integration plan get the appropriate amount of attention and are kept on track. Second, the consulting team can add some acquisition experience to the team, which will keep the team focused on critical success factors.



3. Integration Planning — Once the team is established the integration planning process can begin in earnest. This is an ongoing process that must begin before the transaction closes and continue after the deal is done. At this point in the transaction much more information will be available. The initial activity of the integration team should be to quantify the synergy opportunities and redundancies outlined in the business plan. Based on their findings they will work to resolve differences between the two companies; modify the assumptions outlined in the business plan and also develop the implementation plan to be approved by senior management. The most important component of the implementation plan is a detailed process calendar, which defines activities and establishes a timetable for completion. This tool, if properly prepared and reviewed on a timely and regular basis, will allow senior management to efficiently monitor the integration and be alerted to any to any issues that need immediate attention before they become big problems.



4. Communication — If there is anything all acquisitions have in common, no matter what the size, it is organizational uncertainty. Employee emotions and expectations can run the gamut from the highest highs to the lowest lows. If this uncertainty is not managed well it will definitely become destructive to the organization and will surely undermine the integration process and ultimately rob the transaction of some of its value. This is why it is so crucial for senior management to communicate the integration plan to the two organizations as early as possible, especially to the people critical to the transaction's success. Despite the level of secrecy involved in the transaction, word travels fast to the outside world and any level of uncertainty can be exploited by the competition looking to attract talented people. In times of tension, employees need to feel that management has a solid plan to take the combined business forward.

For most businesses an acquisition is the most significant event it will ever face. It certainly is not a run of the mill occurrence. Acquisitions are the quickest way for a business to grow, but they are also very expensive in the short-term and difficult to unwind if they don't work out. It's the rare case when an acquisition that has gone poorly can be sold off at a profit. Acquisitions also take a lot of management’s attention off the existing business. Given all these factors, doesn't is make sense to give yourself the best chance of success? Devote the time and resources to adequately assess the transaction and plan its integration, using outside consultants, if necessary. The additional expense of time and money will be insignificant if it prevents a poor transaction or gets a good one off the ground running fast and efficiently.

VIDEOCONFERENCING, A VIEW OF THE FUTURE

BY DENNIS OZIEL
DIRECTOR, AMPER COMMUNICATIONS CONSULTING

What is videoconferencing?
Videoconferencing, sometimes referred to as teleconferencing, enables face-to-face meetings of individuals and or groups that are located in various sites without having to physically travel. A videoconference can be as simple as two locations or end-points collaborating with each other. This is known as a point-to-point conference. A multipoint conference would be connecting three or more end-points to participate in a meeting. End-points can be an individual's office, conference room, boardroom, manufacturing floor or even a residence. The videoconference can be a simple face-to-face meeting or a media rich event with data collaboration and document sharing. Because of the technology we deploy, a videoconference is as easy as initiating a phone call.

Why videoconferencing?
To put it simply, cost. The most obvious savings is in the direct cost of travel. However, the time associated with the preparation for travel can be even more costly. The security risk to personnel is virtually eliminated by having participants in locations that have been known to be secure. The peace of mind that this provides to personnel is priceless.

Who can benefit from videoconferencing?
Any organization that has more than one location or makes frequent trips to the same location will potentially benefit. Examples are: financial institutions, law firms, manufacturers and distributors, educational institutions, healthcare organizations, federal, state and local government.

What are the benefits of videoconferencing?
Organizations will make faster decisions. People can gather from remote locations when the need arises to make decisions rather than waiting for the next regularly scheduled regional or district meeting.

Organizations will make better decisions. Videoconferencing will increase the available time of valuable resources such as executives and subject matter experts.

Workforces can be trained to meet particular industry certifications without leaving their offices. This minimizes travel time and expense while increasing productivity and morale.

Building closer relationships with clients and colleagues will occur because of the ability to actually see the person or persons with whom you are communicating. The visual aspect of videoconferencing makes multiple participants less cumbersome to deal with.

How do I get started?
Contact Dennis Oziel, Director of Amper Communications Consulting. Dennis will help you determine if the client would benefit from investing in videoconferencing. Together you will develop a compelling value proposition that clearly demonstrates the ROI.

Amper, Politziner & Mattia has announced the promotions of Larry Gray and Tim O’Rourke to Partner status.

Larry Gray CPA, of our Edison office, is in charge of quality assurance for the accounting and auditing services. Larry has extensive experience serving a variety of industries in both the public and private sectors. His clients have included businesses in the manufacturing, telecommunications and service industries.

Larry received his Master of Business Administration Degree in Accounting from New York University after majoring in Economics from the State University of New York at Buffalo. He is a member of the American Institute of Certified Public Accountants, the New York State Society of Certified Public Accountants and Chairs the Accounting and Auditing Committee of the New Jersey Society of Certified Public Accountants.

Tim O’Rourke CPA, CFP, of our Flemington office, has 15 years of experience serving large and small businesses in a variety of industries, in which he consults with clients regarding corporate and individual income tax planning, financial statement preparation, financial analysis and business and personal financial planning.

Tim is a graduate of King's College with a Bachelor of Science Degree in Accounting and obtained a Certificate in Financial Planning from Fairleigh Dickinson University. He is a member of the American Institute of Certified Public Accountants and the New Jersey Society of Certified Public Accountants. Tim has served on the Board of Trustees, as treasurer, and on various committees at Oak Hill Golf Club and Women's Crisis Services, as well as several committees of the Hunterdon County Chamber of Commerce.