Roger Vozar

Thursday, 28 February 2013 21:51

What to expect from the M&A market in 2013

Considering the uncertainty in the stock market, 2012 turned out to be a good year for mergers and acquisitions (M&A), and the outlook is even better for 2013, says Albert D. Melchoirre, president of MelCap Partners, LLC.

“Last year was pretty tumultuous, with the overwhelming European debt crisis, a slowdown in certain emerging markets, uncertainty about the presidential election and its potential impact from a capital gains tax perspective, and the fiscal cliff debate,” Melchoirre says. “But there were several factors that would indicate reason to be optimistic about the M&A market in 2013.”

Smart Business spoke with Melchoirre about those factors and his expectations for the M&A marketplace in 2013.

How was 2012 from an M&A perspective?

The number of domestic M&A transactions was down by 4.6 percent from 2011. However, the average deal size increased 13 percent — from $138 million to $156 million. From a private equity standpoint, fundraising increased 31 percent compared to 2011. That bodes well for future M&A.

It’s interesting to note that deal volume was up 56 percent in December compared to November.

What was the reason for the end of the year activity?

The primary driver was the capital gains tax increase in 2013. There was concern that if President Barack Obama was re-elected taxes were going to go up significantly. The M&A process typically takes six to nine months, so that started before the election outcome was known. But there was pressure to try to get something done before the end of the year.

Another situation driving transaction activity was private equity dividend recaps.  Many PEGS were going to the bank and taking out large dividends so the money would be taxed at the lower rates in 2012. They didn’t have enough time after the election to sell the business, so they paid out large dividends instead.

Because of the influx of closing activity in the fourth quarter of 2012, my sense is that 2013 will start out slowly. But I’m cautiously optimistic. When we look back at 2013, the numbers may be flat or down slightly because there isn’t enough time to make up for that lull.

Why are you ‘cautiously optimistic’ about the M&A market in 2013?

Some of the positive signs are the large amounts of cash reserves on corporate America’s balance sheets. The S&P 500 alone has over $1 trillion in cash, which is very strong. Combine that with favorable credit terms in the banking market and improved consumer confidence, and the elements are there for a solid year.

Another positive sign is more clarity with respect to the tax situation. Now business owners won’t be dealing with making decisions based on unknown, pending tax law changes. There’s something to be said for certainty. Uncertainty creates a tendency to be hesitant to make a move. When people know the rules of the game they can make decisions accordingly.

Do you expect corporate cash reserves to be utilized this year?

Absolutely. When you have corporate buyers sitting on these large cash reserves they have to deploy that capital in order to grow their business — there’s only so much equipment you can buy. When companies are sitting on trillions of dollars, one of the ways to accelerate that growth is through acquisitions. Cash is king and you can take advantage of opportunities in the market to grow and expand your business. And that cash will have to be deployed — the public markets will not let them sit on those reserves.

Last year, 75 percent of our sell-side deals were sold to strategic buyers who were sitting on a large amount of cash. Corporate buyers are acquiring competitors or complementary businesses through vertical or horizontal integration. With deals involving a private equity buyer, if they don’t have a portfolio company it would strictly be a financial play.

While I’m cautiously optimistic we’ll see more of the same activity this year, it looks like 2014 could be even better.

Albert D. Melchoirre is president of MelCap Partners, LLC. Reach him at (330) 239-1990 or

Insights Mergers & Acquisitions is brought to you by MelCap Partners


House Bill 479, known as the Ohio Asset Management Modernization Act (AMMA), is the new law that means Ohio residents will no longer have to set up trusts in other states in order to protect their assets.

“It’s an important piece of legislation,” says Richard H. Harris, partner and chair of the Estate Planning & Probate Administration Practice Group at Brouse McDowell. “Prior to this major change, we weren’t exactly at the forefront in this area of asset protection planning.”

Smart Business spoke with Harris about the legislation, which will go into effect on March 27.

What will the AMMA change?

It contains a number of different protections, but basically it provides better creditor protection across-the-board. One of the more significant provisions is the creation of a domestic asset protection statute known as the Ohio Legacy Trust Act, which, in layman’s terms, means that for the first time an Ohio resident will have the ability to create an irrevocable trust, retain certain beneficial interests in that trust and have the trust assets protected from creditors.

Long-standing law in Ohio and most other jurisdictions provides no creditor protection to settlors of revocable trusts — those trusts which you create during your lifetime to hold your assets for your benefit and which keep the trust assets from being subject to probate at your death. Other jurisdictions such as Delaware, South Dakota and Alaska have enacted statutes that enable an individual to set up a domestic asset protection trust in that jurisdiction that will give some creditor protection to the person who created the trust. One of the key requirements in these jurisdictions was that you had to use a trustee who was a resident of the state or a trust company that is legally authorized to operate in that state, and some or all of the trust assets had to be custodied in the state as well. House Bill 479 was enacted, in part, to keep trust assets and the trust administration business in Ohio and to make Ohio competitive with a growing number of other jurisdictions in providing creditor protection to self-settled asset protection trusts.

Are there any exceptions?

Yes. You can’t set up a domestic asset protection trust in Ohio to avoid alimony or child support, or if you already have an issue with a creditor — that would be a fraudulent conveyance. This type of planning is most useful in situations where someone is in a high-risk environment, such as a physician who has a high risk medical practice or entrepreneurs or any high-net worth individual whose work involves a significant amount of risk of personal liability.

What are the other significant creditor protection provisions contained in this new legislation?

One is a significant increase in the homestead exemption. Right now, it’s $21,625 per debtor. With the new law, it increases to $125,000 per debtor and it’s stackable, which means a married couple can protect up to $250,000 of equity in their house from the reach of creditors.

The legislation also created an optional personal property recording system. Transferors will be able to record a notice of transfer of personal property with the local county recorder. Recording a conveyance of personal property will put all creditors on constructive notice of the property transfer, which will have the effect of cutting off the right of the future creditor to challenge the transfer at a later date. The new legislation also clears up an ambiguity in Ohio law regarding inherited IRA accounts. Ohio’s exemption statute that exempts certain property from being subject to attachment by creditors has been revised to specifically include inherited IRA accounts and 529 Plans.

What might this mean for Ohio residents?

The AMMA obviously provides much better asset protection planning for anybody who lives or works in Ohio. Gov. John Kasich approved it because he thought it would encourage business activity and professionals would be more likely to maintain their assets in Ohio. ?

Richard H. Harris is a partner and chair of the Estate Planning & Probate Administration Practice Group at Brouse McDowell. Reach him at (330) 535-5711 or

Insights Legal Affairs is brought to you by Brouse McDowell


Benefit administration systems put information at employees’ fingertips while freeing up HR staff to focus on strategic issues such as employee engagement and retention.

“Everything related to employee benefits and an employee’s life cycle can be stored in a technology solution and then used by both the employee and the HR department,” says Meghann Guentensberger, Director of HR Services at Benefitdecisions, Inc. “Medical, dental, vision, and even ancillary benefits like transportation and flex are all in one system that’s accessible to everyone.”

Smart Business spoke with Guentensberger about the advantages of automation using an online benefit administration tool and how to choose a system that fits your needs.

What can a such a tool do?

It automates the administration process through an employee’s life cycle from onboarding to termination. The system also handles annual benefits enrollments and life event changes. When someone gets married or has a baby, they can make health care enrollment changes through the system rather than filling out a 20-page application with an HR person.

The system can also be electronically connected to the insurance carriers, feeding information directly to them in real time. This ensures timely and accurate enrollments and terminations while also facilitating the billing reconciliation process, ensuring you’re not paying for someone inadvertently left on an insurance plan. Between savings generated from efficiency of staff and error reduction, a benefit administration system can save more than $19 per employee per month.

In addition to employee benefit information, many of the tools have Human Resources Information System components and can track compensation history, paid time off and leaves of absence. Skills and past performance history can also be tracked for succession planning purposes, which facilitates resource allocation. The tools empower employees to update their electronic personnel files and promote their skills by updating certifications, education or training.

How do you choose the right solution?

There are five advantages of a benefit administration system that should be considered when selecting the appropriate system: cost savings, productivity enhancements, increased communication, facilitation of employee retention and recruitment, and the ability to eliminate paper transactions.

But first, take a step back and document current processes so you know what you’re paying for your system and in HR time. This will help build perspective around the hard and soft costs of what you’re doing now versus what you could be doing. Then list what features and functions you want, so you can evaluate providers and do a direct comparison.

It’s also important to think about the solution globally rather than getting carried away by the presentation of a tool that takes current pain away. Develop a plan for where you’re going and how it fits in. Often, the tools provide scalable solutions that will allow you to add features as time goes on.

Adding a benefit administration system doesn’t mean you have to revamp everything. These tools interface with existing systems such as payroll, so you don’t have to overhaul what you have.

Have an independent third party ask questions and go through the process of how it will be used. When a vendor does a demonstration everything looks amazing, but you’re only seeing what they’re showing. A neutral third party can provide an unbiased perspective.

Who needs a benefit administration system?

Any company big or small  — the complexity of the system is dependent on the company’s size and needs. With health care reform, it will be more difficult to remain compliant using paper, both because regulations change so quickly and the required reporting. This system allows you to analyze your population and compute costs to ‘pay or play.’ You can pull the data and run models to make a decision that makes the most business sense.

For smaller companies without an HR department or just one HR person, this tool can really help them be more effective and efficient instead of being transactional.

Meghann Guentensberger is Director of HR Services at Benefitdecisions, Inc. Reach her at (312) 376-0449 or

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.

It’s a good time to refinance a commercial real estate loan or purchase a property.

“The market has become more competitive. The big retraction of lender funds in 2008 and 2009 that resulted from increased reserve requirements and unfavorable market conditions has flipped. More banks, insurance companies and other financing sources are back in the mix and looking to lend as the economy continues to improve,” says Kimberly Rysyk, a senior vice president in the Real Estate Lending Division at Bridge Bank.

Smart Business spoke with Rysyk about the state of the lending market and opportunities that are available.

How is the current commercial real estate lending market?

It’s favorable for borrowers, as lending sources increase and interest rates remain low. Many banks have re-entered the market as their financial positions have increased along with the economy. The increase in sources has created competition, resulting in a decrease in spreads. This has translated into a drop in rates. The bottom line is that there are more lenders looking for the same deals.

What about lending for new projects?

Finding lending sources for new projects remains difficult but improved through the latter half of 2012. Cash equity of 25 to 35 percent is standard and projects with higher risk may approach 50 percent. Certain housing markets warrant new construction as demand for new housing and rents increase. Lenders are interested in those builders and developers who have been able to sustain themselves through the recession and have cash to invest. There is financing out there for speculative construction as well, provided the cash equity is sufficient and the buyer is financially strong.

For owner-occupied businesses it can make sense to find property that’s not necessarily in a top location, but in a place where they can have a brand new building suited to their specific needs that works based on debt coverage, cost of the project and cost of the land.

Is it a good time to invest in such properties?

Historically low interest rates and real estate prices still depressed from the Great Recession have created some opportunity. There has also been a slow but steady improvement in the labor market and a leveling of vacancies and rents, which are positive signs for the economy. This is a good time to invest in commercial properties if you know your market.

In San Francisco, for example, payroll tax incentives for businesses that relocate are making some areas attractive that previously were considered B-rated. This has led to big companies, such as Twitter, Zynga and, to relocate to areas that were not considered desirable but are now looking up. Other companies or investors can take advantage of the depressed values here, refurbish or rebuild, and greatly affect the end value of the project. There are lenders out there who can recognize the end value and will lend on the resultant cash flow, rather than the current depressed value.

What should you consider when choosing a bank?

Strength and longevity are key. Has the bank been in the commercial real estate business through the downturn? Were they able to navigate changes in the market? An experienced banker will look at your past and future projections, uncover the pros and cons, and help you determine the best solution for your needs, whether it be building new, renovating an existing building or refinancing your current debt.

What concerns do you have for the future?

A significant swing in interest rates is concerning. Properties that were refinanced at extremely low rates may have difficulty finding refinancing sources at maturity. This concern would be heightened if the facility were not amortized or if property values do not rise sufficiently. The European financial crisis, for example, has had an effect on companies that do business on a global scale. This type of uncertainty affects the stock market, which has a strong bearing on the continued strength of the economy. Finally,  federal regulators are considering increasing the reserve requirement for real estate loans. A significant increase could chase many lenders out of the market once again.

Kimberly Rysyk is senior vice president, Real Estate Lending Division, at Bridge Bank. Reach her at (408) 556-8392 or

Insights Banking & Finance is brought to you by Bridge Bank


Whether it’s a major event such as Hurricane Sandy or simply a snow day, businesses need to be aware of the wage and hour implications of weather-related absences.

“It is important to have clearly defined policies in place that address the many pay-related issues that are involved with a weather-related closing,” says Jenny Swinerton, general counsel at Sequent. “In addition, it’s always a good idea to implement a contingency plan that identifies essential personnel who are vital to the continued operations of the company and establish procedures for communicating with employees regarding emergency closures.”

The same issues apply in cases when businesses close because of an outbreak of the flu.

“This is expected to be one of the worst flu seasons we’ve had in years, so it’s a good time for businesses to review their existing policies to ensure that they address all of the various issues that arise when an employer is forced to close for any reason.”

Smart Business spoke with Swinerton about weather-related absences and how the Fair Labor Standards Act (FLSA) dictates pay requirements.

What happens to employees’ pay when a business closes because of weather? 

Employees are treated differently under the FLSA depending on whether they are classified as nonexempt or exempt. Briefly, nonexempt employees are those who are entitled to overtime pay. Exempt employees are those who are paid on a salaried basis and also meet specific legal requirements to be exempt from the overtime pay requirements.

The FLSA requires employers to pay their nonexempt or hourly employees only for those hours that the employees have actually worked. As a result, if a nonexempt employeed are unable to come to work or the office is closed, the employer is not required to pay them.

Exempt employees generally must be paid their full salary for any week in which they perform work. So, if an employer closes the office because of inclement weather or other disasters for less than a full workweek, the employer must pay the exempt employee’s full salary for the week. The employer may, however, require the exempt employee to use vacation or paid time off.

Does the length of a shutdown determine how you handle absences?

It really doesn’t matter for nonexempt employees because they’re paid only for hours worked. So if you shut down for a week, you don’t have to pay nonexempt employees during that time. With salaried employees, unless an employer suspends operations for an entire workweek, they must be paid their regular weekly salary regardless of the number of hours they worked. This becomes tricky with telecommuting because an exempt employee is often going to be checking email or responding to phone calls even while stranded at home during a storm. If exempt employees work for a small portion of the workweek, they must be paid for the entire week.

If you make deductions from exempt employees’ compensation for absences attributed to inclement weather, you may jeopardize the employees’ exempt status and incur liability for any overtime they may have worked.

What happens if an employer’s business is open, but exempt employees don’t show up?

If the employer remains opens during or after a natural disaster and an exempt employee cannot report to work, the Department of Labor considers this to be an absence for personal reasons. But deductions may only be made from the exempt employee’s salary in full day increments. However, it is important to remember that if a salaried employee performs even a little bit of work during the day, employers are still required to pay the employee’s full day salary.

What else should be considered?

Employees who are instructed to remain on call during inclement weather and who cannot use the time for their own personal benefit must be compensated for this time. Additionally, if employees are performing job duties outside their normal scope, such as sweeping the floor, they may be considered a volunteer and do not need to be paid for that time.

Read Sequent’s blog — frequent posts from a wide range of Sequent experts regarding HR, technology and consulting.


Jenny Swinerton is general counsel at Sequent. Reach her at (614) 410-2362 or

Insights HR Outsourcing is brought to you by Sequent

Ohio legislators are considering tax law changes that would relieve headaches for companies that do business across many municipal boundaries.

While Ohio has a uniform law limiting how a municipality may tax, it serves only as a ceiling for what a city may do. Cities can and have imposed their own rules and treatments within those guidelines.

Nonuniform municipal rules and multiple filings have made it difficult for companies to determine what taxes they owe and have deterred others from doing business in the state, says Joseph R. Popp, JD, LLM, tax supervisor at Rea & Associates.

“One of the challenges is the definition of a day. Are you working in a municipality for a day if you’re present at all, or do you have to work half of the day, or the full day? What if your workers pick up a truck at your office and then spend the rest of the day outside that city?” Popp says.

“Cities are taking different approaches, which could result in multiple cities trying to tax you for the same day,” he says. “That’s an example of the complexity that businesses are facing and why they feel that the Ohio municipality taxation structure is burdensome.”

In addition to creating uniform definitions, House Bill 601 would eliminate the need to file tax returns in cities where less than 1 percent of your income is allocated and the tax owed is less than $50. It would also change rules regarding a “free pass” that has been given in cases when workers spend fewer than 12 days in a city. That would be extended to 20 days, and tax would then be collected going forward only.

Smart Business spoke with Popp about the problems posed by current municipal tax laws and what proposed legislation would do to rectify the situation.

What types of businesses does this affect?

Those that are mostly going to be affected will be service-based groups — those that do cable TV installation or something service-based that would take company representatives to many different municipalities while working under the same business umbrella. Temporary agencies that have people going to multiple locations would also be a business group that would have interest in this.

Are there things businesses should do in preparation for the bill’s passage?

Businesses should consider looking at where they might have done things wrong in the past.

A client of ours has a real estate rental company and thought it was in a jurisdiction where tax was not due. However, we found that it was in city limits and tax was due to the city. We’ve prepared returns showing this taxpayer owes $20,000 for a couple of different years. Because of that city’s interest and penalty structures, the client will pay another $20,000 in penalties and interest. Under the new rule, the city would be limited to imposing only $4,000 in penalties and interest, although it’s not clear if the new legislation would be a retroactive change.

So, companies may want to see if there are opportunities to leverage the rule change and end up paying less to the municipality. The municipality may not like the rule change and it wants to get as much tax, interest and penalties as it can now, so that opens up another bargaining chip for businesses to use in their negotiations with a municipality’s tax administrator.

Is the legislation likely to pass?

Yes, and the reason for this confidence stems from how this came about. The major cities are on board with this, the Ohio Society of CPAs is presenting the professional point of view and the members of the legislature are involved in the process. There was a lot of effort put forth to ensure that there was agreement and buy-in by all interested parties.

Click here, to stay informed on the issues affecting your business today and visit the accounting article library.

Joseph R. Popp, JD, LLM is a tax supervisor at Rea & Associates. Reach him at (614) 923-6577 or

Insights Accounting is brought to you by Rea & Associates

When it comes to zoning and land use regulations, things are not always as they appear. You may want to move into a building that housed a similar operation and sign a lease, only to find that the prior use had been grandfathered.

“There are all kinds of things out there that are not necessarily apparent that you need to check out before you do anything,” says Catherine A. Cunningham, a director at Kegler, Brown, Hill & Ritter. “One of the unique features of zoning is that it is not a state law, it’s a local law under the police powers of the local government. Every local government has its own rules. They have some commonality in how they do things, but the rules and regulations that you would be subject to are unique to the jurisdiction where the property is located.”

Smart Business spoke with Cunningham about the importance of reviewing local ordinances and regulations when considering a business site.

Do companies neglect to consider local ordinances and regulations when looking at potential locations?

It sometimes happens that way. Companies should consider all local ordinances and regulations to make sure that when they choose a location, they are able to do all the operations that they intend at that location.

Normally, most jurisdictions require that if you are constructing a new building, changing a use, or expanding an existing facility that you get a certificate of zoning compliance or zoning clearance from the local government to ensure that you are in compliance before you get too invested in the project.

What common mistakes do businesses make when choosing a location?

They might choose a location where the zoning doesn’t permit what they do, and sometimes they move to a location and find out they can’t expand or the building had a prior zoning violation that they’ll inherit.

Part of the due diligence, anytime you’re going to construct, lease or buy, is to check to make sure that what you want to do and the way you want to use the property are permitted under the current zoning law.

Do companies sign leases before realizing they have a zoning or regulation issue?

That happens more often than it should, in my view. Very often a business is dealing with someone it’s leasing from who is assuring its that it’s OK. Sometimes the company just makes a call to a government authority and talks to somebody, assuming that’s an adequate approval, when really what you need to do is to file an application and be sure that the governmental authority has had adequate time to review all of your information and make an approval.

Often it appears, or it is assumed, that a project or proposed use of property is in compliance with zoning, but then, when the government understands the exact nature of the project or operation, it may find it doesn’t comply with local zoning. Then companies can be prohibited from using the property or from making the expansion or adding the equipment that they think they need in their operations.

In many cases, businesses that have manufacturing facilities, hazardous materials or other special uses, such as outside storage, may trigger special permits from the local government regulator. A lot of times those businesses aren’t aware those permits are required, and sometimes they don’t qualify for the permits and can’t use that location.

Once you identify a property you want to look into, it’s critical to contact the local government or legal counsel to make a determination of how the property is zoned, whether you can use it the way you intend, and to try to get a certificate of zoning compliance or authority to use it that way so you’re cleared before leasing or buying a building.

EVENT: Managing Labor & Employee Relations Seminar will take place March 5. Click for more information.

Catherine A. Cunningham is a director at Kegler, Brown, Hill & Ritter. Reach her at (614) 462-5486 or

Insights Legal Affairs is brought to you by Kegler, Brown, Hill & Ritter

It’s tempting to always want the latest technology for your business, but it’s more important to determine what you actually need in a Web hosting service before rushing after the flavor of the moment.

“Cloud service is the way the market is going because it’s efficient and effective. But it doesn’t make sense to push everyone to the cloud. A local pizza shop that has only 1,000 visitors to its site each month could go with a $4 per month hosting package on a shared server that will fit their needs very well and they’ll be very happy with it,” says Ryan Niddel, CEO of Brain Host.

Smart Business spoke with Niddel about what to consider when selecting a Web hosting service.

What’s the first step a business should take when shopping for a Web hosting service?

The first step is to research the type of hosting services available, and then evaluate your needs. Hosting services are predicated on a few key performance indicators from your site’s traffic: the number of visitors, the bandwidth necessary to accommodate the amount of traffic on the site and your anticipated growth plans for the site. Choose a hosting solution that reflects your company’s goals.

What hosting options are available, and how do you know which is right for your business?

The focus is on need, but your budget is always a consideration. To host a small business site for a mom-and-pop pizza store, you could comfortably utilize a shared hosting environment for $4 to $15 a month.

From there, you jump up to a virtual private server (VPS) solution, which is having a piece of a server configured only for you and your business. It’s as if you’re the sole owner of a quarter of a box and you can do whatever you want with it — you own all the bandwidth and all the metrics.

Then you can upgrade to a dedicated server — basically the entire box. It’s ideal for larger, traffic-heavy sites or for someone who wants to segment out their own box and resell pieces of it.

Finally, there’s the environment where much of the world is headed, which is the cloud. It’s fully scalable and accessible in real-time, so the amount of bandwidth you need can actually be adjusted at any given point throughout the day, week or month. You pay only for what you use — no more and no less.

In a VPS situation, if you’re using more service than you purchased, it can take several days or even several weeks to increase the amount of traffic you can send to your site. Cloud hosting allows you to simply turn a virtual knob on a screen, and all of a sudden, you have all the bandwidth you need.

How do you know which Web hosting service is going to have less downtime?

Everyone providing a Web hosting service is going to promise you the world and it’s going to be tough to for them to deliver it. The best way to know for sure is to ask where their servers are located and what contingency plan is in place when problems arise.

You want someone with a clear plan and a cascading effect. If the main servers on the Eastern Seaboard go down, the hosting company should be able to recognize that and then quickly  switch to an alternate server. Or in the event that there is a power outage, the minute that power goes out, a backup generator or another server should instantly kick back on in another part of the world, leaving you with only a few seconds of interrupted service. It should be an automated process, rather than one that requires people to monitor the servers and physically flip switches behind the scenes.

The red flag for a Web host is lack of transparency. If they refuse tell you what they do and how they do it, then it will difficult to believe that they will be able to deliver on all that they are promising.

Ryan Niddel is the CEO of Brain Host. Reach him at (419) 631-1270 or

Insights Internet is brought to you by Brain Host

Traditional desktop phones are on the way out, as companies discover that unified communications software now provides additional and more convenient ways to communicate and share messages with employees and clients.

“When Voice over Internal Protocol (VoIP) was introduced, many capabilities were promised. With the recent uptick in real-time communication services — instant messaging (IM), presence information, video conferencing, speech recognition, etc. — being used in conjunction with non-real-time communication — voicemail, email and fax, we’re finally seeing some of those capabilities being implemented and the promises of VoIP finally being delivered,” says Jeff Beller, IT and telecom consultant with Skoda Minotti Technology Partners.

Smart Business spoke with Beller about unified communications and how it enables companies to be more efficient.

What is meant by unified communications?

Unified communications has evolved to now deliver more fully on the promises of VoIP — to streamline communications so as to accelerate it, extend its reach and afford efficient means of collaboration. Recent advances in presence and mobility technologies have made it more useful.

Unified communications is software that brings different communication into a single user interface. The software provides presence, voice, IM, ad hoc collaboration — audio or video, and online meeting capabilities — all viewed, monitored, initiated and controlled via a single unifying application. All communication modes are connected so that workers and clients are able to get help at that moment in time.

As a comparison, only 20 to 30 percent of calls are answered when using more traditional services, with most calls going to voicemail. The phone tag scenario and, ‘I’m not available, please leave a message,’ won’t differentiate you from the competition.

What equipment is needed?

You need a VoIP-enabled phone system. The software application can run on your desktop, smartphone or tablet so it’s not only unifying communications, but also the various devices. Your smartphone turns into an office desk phone, and when you leave the office, a caller automatically reaches you. It’s not call forwarding; it behaves like your office desk phone with the same number and controls like transferring or conferencing.

Manufacturers that offer VoIP also have unified communications applications (chat, presence information, etc.), or you can use a third-party application, like Microsoft Lync, with those VoIP systems. Have a needs and readiness assessment performed to learn what your needs are, understand what is out there and then decide what works best. It’s best to work with a consultant who can demonstrate different manufacturers and technologies, rather than just one offering.

How does ‘presence’ work?

Presence makes communications more efficient by mining data in your Outlook calendar and, when you’re unavailable, switching availability off for your instant messenger or phone system. It can tell how you’d prefer to be reached or who to contact in your absence. Also, if there’s no keyboard activity for 15 minutes, others can see you’re likely not at your desk. This information populates a dashboard in the unified communications interface that also controls calling, instant messaging and conferencing.

The real-time display of intelligent presence information, combined with mobility, really benefits a receptionist, who can direct the caller to the right person almost instantly. Fewer calls go to voicemail, so clients are served better. Similarly, field service staff can communicate with co-workers more efficiently to solve problems faster and provide better customer service.

What’s the future of unified communications?

The need for a desk phone will become less as workers acclimate to using unified communications software on their desktops. Presence technology also will improve with multiple datapoint mining for instant assessment of communication states. As this state becomes more granular and meaningful, it drives ‘smart’ communication routing. And, as ‘always-on-and-always-connected’ mobile devices (smartphones and tablets) are integrated into the corporate network infrastructure, the use and significance of desk phones will dissipate.

Jeff Beller is an IT and telecom consultant with Skoda Minotti Technology Partners. Reach him at (440) 449-6800 or

Insights Accounting & Consulting is brought to you by Skoda Minotti

Thursday, 31 January 2013 20:44

How to navigate the hardening insurance market

Business insurance costs and coverage terms have become unstable, but there are steps that businesses can take to minimize risk and keep costs under control.

“Health insurance rates increase almost every year — there’s never good news. With respect to property and casualty insurance, premiums have been decreasing or flat for a number of years. Because rates have been stable, business owners are often unwilling to spend time and resources on loss control and risk management,” says Peter Bern, CEO of Leverity Insurance Group. “This reduction in pricing is deceptive, setting businesses up for a shock when the insurance market takes a turn, so it’s important to proactively address risks and losses now before insurance prices begin to climb. Those that simply ride the market without working to reduce risk will have a harder time placing coverage and won’t be offered rates that are as competitive and coverage that’s as comprehensive as they had seen in the past.”

Smart Business spoke with Bern about the causes of the hardening insurance market and what companies can do to address the situation.

What does a hardening market mean? 

It’s not just an increase in premium rates; rather, insurance companies and their underwriters are also taking a closer look at the risks and determining whether they want to change the coverage terms by requiring higher deductibles or are unwilling to provide as much, or any, coverage for specific exposures. Basically, it’s a challenged marketplace and it’s more complicated to get competitive and comprehensive coverage from insurance companies.

Why is this happening?

Over the last several years, insurance companies have been hammered by unprecedented losses from natural disasters, corporate fraud and dealing with continued flat investment returns, which can be attributed to the weak economy. Worldwide, insured catastrophe losses have hit and exceeded historical records, and, as a result, insurance companies are paying out more in claims than they’re taking in through premiums. As 2013 begins, there is no doubt that Hurricane Sandy will have a large impact on the insurance marketplace. The scary part is that the losses are still being added up. Bottom line, for insurance companies to make money and stay financially viable, they need to increase pricing and exercise greater discipline in underwriting risks.

What potential rate increases do companies face if they don’t take action?

As a business owner, a 10 to 15 percent increase in cost will still be unpleasant, but a 40 percent or more increase in addition to a reduction in coverage could affect the viability of your company. Over the past year, premium rate increases of approximately 5 to 7 percent are being seen throughout the insurance marketplace. However, certain segments and businesses have experienced larger increases in premiums because of loss frequency and severity, as well as diminished capacity in the marketplace.

What can businesses do to take charge, control losses and mitigate the effects of the hardening market?

It starts with proper risk management practices to prepare in the event of a loss. By partnering with a trusted adviser, businesses can:

• Pinpoint exposures and cost drivers.

• Identify loss control solutions tailored to unique risks of the business.

• Create a contingency plan to account for disaster and unpredictable risks.

• Build a company focused on safety.

• Manage claims efficiently to control costs.

• Determine the most competitive and comprehensive way to transfer risk.

Even if the insurance marketplace doesn’t harden to a point that it affects your company’s well-being in the short or long term, a business with effective loss control and risk management initiatives will always pay less to secure and protect its assets and exposures in any market conditions.

Peter Bern is CEO at Leverity Insurance Group. Reach him at (216) 861-2727,  ext. 512 or

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