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Business Leaders Podcast - Bob Roark 4th June 2020
How Small Businesses Can Weather The COVID-19 Storm With Mike Dill
00:00:00 00:37:22

How Small Businesses Can Weather The COVID-19 Storm With Mike Dill

Inarguably, one of the sectors that have been hit the most by the COVID-19 pandemic is small businesses. Unlike large conglomerates or corporations, many of these small businesses operate independently, with a much smaller pool of resources than their more considerable counterparts, so they have to take a few more steps to deal with the economic aftermath of COVID-19. Mike Dill is a Partner at Holland & Hart LLP. Using his experience working with small businesses, he joins Bob Roark to discuss how small businesses can go about weathering the storm and mitigating any more negative effects that might rear their head in the wake of COVID-19. Don’t miss this important and timely discussion.

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How Small Businesses Can Weather The COVID-19 Storm With Mike Dill

In this episode, we have Mike Dill. He is a partner with Holland & Hart, a firm located out of Denver. He’s a Corporate M&A Security and Startup specialist in the legal arena. Mike, thanks for coming on the podcast.

It is my pleasure. Thanks for the invitation, Bob.

Given the COVID pandemic and some of Earth’s changing or seismic shifts in the business climate, I thought it was particularly useful to bring Mike on and talk about some of the issues that might be facing business owners. What we hope to cover so you have an idea of what’s coming is we’re going to talk about what you do about staying compliant or being aware of the state local orders and directives. We are going to talk about some of the issues that may be facing you on the HR side of the house. As far as some of the things that you need to be keeping in mind with as you’re either continuing or resuming operations, whether it’s supply chain issues, new business lines or so on. We will talk a little bit if you’ve got outstanding lines, loans, or financing issues and what you do about those. How do you take and provide? There’s a fair amount of concern or shifting landscape on some of the government relief programs, in particular, PPP. We’ve got Mike on. We’re going to go through so you can know what you’re looking forward to in the episode. Mike, why don’t we start out a little bit with how you got here and who you serve?

I act as an outside general counsel for a lot of my companies that are clients. They’re smaller companies that can be growing in a variety of industries such as tech and manufacturing, but they don’t have a lawyer that’s on staff. They have a firm that they can call to get a lot of their questions answered. I will help people when they sell their companies. I will help people raise debt and equity financing, but for a lot of my clients, I get asked all kinds of everyday questions, which is, “I’ve got an employee that reported me to the police because I’m still operating when I’ve got to stay-at-home order that’s going on.” That is a real client and a real situation. I am the quarterback of a team at my firm, so I can pull in specialists that are well-versed in very specific issues such as in employment, tax, etc. A lot of the questions I can answer is as an outside general counsel, I help my clients navigate the variety of legal issues that are facing their businesses, which is a lot right now.

[bctt tweet="The COVID-19 directives from municipal and state governments are not optional, and should not be treated as such." username=""]

I thought we would try to drill down. As we go through the categories, I can imagine the quantity and volume of questions from the clients due to the level of uncertainty. How should they be thinking about the directives from either municipality or state government?

The first thing may be obvious, but it’s worth stating. These are not optional directives. A lot of people have different levels of concern over this Coronavirus and the pandemic and the way that it’s affecting their business. You can not choose to disregard them. There are some people that are a little bit more aggressive in their interpretation of the directives and orders than others. You need to be aware of them. They’re changing rapidly at the state level. While some orders have been in place for a long period of time, they’re still changing every four weeks. We’re in a different phase and I’ve seen some planned expansion of orders. We were done with level one. We’re in the middle of-level two. There’s going to be a level 3 and 4 and then there may be a new normal. It’s not going to be back to the old normal. Each of these different levels is going to have different requirements.

People are navigating a lot of them because there are some companies, my law firm for example, that we’re not back in the office yet. Even though we could be, we’ve chosen to continue to have people work remotely. It is because we can and it’s safer while we put the procedures in place that are going to protect employees and our customers if they choose to come to our offices. I would start at the state level and then drill down at the county level or the city level, depending on where your operations and business offices are. A lot of the county and local directives are built off of what’s being released by the state or they defer to the state.

I’m shifting gears a little bit and thinking toward the HR side of the house. HR remains a topic of interest. There’s going to be a shifting landscape due to what policies and procedures you have in place, depending on whichever level you’re in, bringing people back, and keeping them safe with the COVID crisis. What are your thoughts about that?

For a proactive company that put in place new policies, like our firm did, for example, those policies were probably put in place late March 2020 rather quickly. My guess is on a shorter-term basis that this pandemic is turning out to be, make sure that you’re evaluating those as you transition employees back to work to make sure those policies still work and to see if they’re going to work for the duration of the transition. There’s a combination of times where people are going to work remotely and work in the office given that most non-essential businesses can only have 50% of their workforce in the office at this time. First, you’ve got to dust them off, get familiar with them, make sure they’re going to work for a longer period of time. Second, if you didn’t put those policies in place, which a lot of companies did not, how do our existing policies work with this new environment? Are they going to work in the long run? You need to think about whether they’re covering the situations that are coming up on a daily or weekly basis with your employees.

One question that we’ve heard a lot is, “I have employees that don’t feel safe at work.” I mentioned the client of mine that had somebody that called the cops on the company. The client was in compliance with the governor’s order. The employee didn’t want to work, so he thought this might be his way to not have to work. He didn’t think that he could get fired for that, which was an interesting perspective. The point behind that example is that there are going to be employees that don’t feel safe. How are you addressing those questions when they come up from your employees? What type of additional procedures are you putting in place? That’s beyond HR, but it does involve HR as well.

[caption id="attachment_5252" align="aligncenter" width="600"]

Small Businesses: Some companies are choosing to have their people work remotely in order to maintain safety while stronger protective procedures are being put in place.[/caption]

 

As far as you know as an employee, you’re healthy. You’re compliant and you’re doing what you need to go to work. Somewhere midday or along the way, you go, “I feel less well.” For the business owner, if you have a policy, what’s the challenge or issue about making sure that you’re compliant with your own policy?

You need to enforce it equally among your employees. This is how life has changed underneath the employment laws with the pandemic. One of the things that you can put in place is if you’re sick, you can’t come to work. If you get sick at work, you have to leave work. It sounds like common sense, but you can do that. You can force employees to go home, as long as they’re in danger of getting other employees or getting customers sick. That’s something that you need to be doing consistently. It reminds me of a situation another client of ours had, which is they’ve been operating within the guidelines correctly. They’ve had mandatory testing when employees check-in and check out at work. They check their temperature.

One of the persons that was doing that was a friend with another employee. The employee had been furloughed, hadn’t worked for a while, and needed the job. He failed the test but convinced his friend who was doing the testing to change the results so that he was in compliance. He worked a full day and felt sick. He came in the next day, worked only a few hours, and had to go home. The results were doctored on both of these days. He came on the third day and doctored the result again. There was a huge risk of getting other employees sick. As far as they know, they weren’t any other employees that were sick, so that’s the good news.

The point of all of this is you can have great policies, but you need to make sure your employees are complying with them. These employees weren’t and then the employer had to make the decision about whether to terminate, which they have the ability to do. Understandably so, with people not having a lot of work, they wanted to work but they couldn’t. There was too much risk. The fact that you’re lying to your employer was good enough cause to let these employees go.

I think about that employer going, “I’ve brought in my workforce back. We’ve managed to navigate this pretty well. We’ve got our policies and procedures in place and yet I have an asymptomatic worker come in and get another at-risk worker ill. What’s my risk as a business owner?”

There is real risk; there’s a causation issue here that no one has the answer to. That’s being debated about, “What do we do?” If you can improve or make it likely that they were transmitted on your premises, as an employer, you may have liability for not providing a safe work environment. That’s underneath a variety of federal and different state employment laws and statutes. That’s the real risk. Some employees would bring a claim against you as a business owner for not providing a safe work environment. There’s an additional risk if you don’t do it correctly with current directives about 50% employer and mandatory testing for certain industries. There are additional risks of violating the law, so you could have state agencies or even federal agencies that can bring claims too.

All these testings, thermometers and health checks, all I can think of in the back of my mind is HIPAA. Does HIPAA ever creep into here?

You obviously can’t share that information about the employee’s health [with third parties]. HIPAA does come into play here, but you could still use HIPAA within your business. You’re not using the medical information as if you were a medical provider. You’re only logging and keeping the information as you’re required to do so underneath the state directive. You can’t share it with third parties, but you can use it within your organization to make decisions about this whether to send employees home or not.

I’m that business owner who’s ready to try to get restarted and get my operation going. I’ve got my policies and procedures sorted out. I’ve got my testing sorted out, but I can’t cover all my bases. I would like to try to reach out to my insurance team and ask, “How do I take and offset my risk with an insurance product tool or whatever?” What does that discussion look like?

I would wish you the best of luck in that conversation. As far as I know, I haven’t had clients that have had luck in getting those types of claims covered. There are general carve-outs with most CGL policies that deal with things like pandemics. A good friend of mine is an insurance broker with Lockton. They had a lot of calls early on in the pandemic, saying like, “This is great. I’ve got coverage of anything that goes on.” They had a lot of hard conversations with their customers. Unfortunately, there’s not a lot of insurance as far as I’m aware of to purchase to offset some of those risks. There are larger conversations going on about trying to introduce bills to protect employers from liability. A new law that has been discussed is that if you’re operating in compliance with all of these federal state or local directives for your business, you shouldn’t have liability even if somebody does get sick. I’ve been following those conversations and there’s a chance that those may become law. They’re getting a little bit more traction but right now, it is just conversations or proposals.

Amidst everything else that a business owner has come in their way, I think about the continuing operation in the new normal is going to be an interesting exercise. As we’re going to back out, hopefully communications with our existing customers have been going along normally as typical. What things do you think they should be thinking about when they’re talking, not just their customers but their supply chain?

You’re asking yourself a couple of things. If your business has changed because you’ve pivoted. For example, we have a lot of clients that have started creating or selling masks, PPE, or similar manufacturing operations that they didn’t have before. A lot of the questions that they’re facing are, “How long is this market going to be here for this new product?” And from a regulatory standpoint, there were some matters put in place by the FDA and some other governmental agencies that allow people to operate in a crisis, but it may not operate underneath the longer-term. Check with a regulatory attorney that has expertise with the FDA if you’re making the products in that arena to make sure you can continue to operate them going forward. From a general risk standpoint, we have a lot of clients that are negotiating payment terms, or credit, or collateral with their suppliers or are renegotiating leases or discounts to make sure that they have the cash to operate over the long run. It is a good time to do a lot of those. I never recommend clients not paying because that’s not a good tactic, but it’s good to negotiate.

For the company that’s pivoted to a new product line during this timeframe, what things should they think about in this new business effort?

One is you need to make sure that you are manufacturing something that there’s going to continue to be a market for. We’ve got a lot of clients that have been moving to manufacture PPE, gloves, face masks, or things that are not their normal product line but are needed in the healthcare setting. There’s the demand requirement, which is more of a business issue. There’s also a regulatory approval requirement- the FDA loosened some regulations for a period of time to allow many companies to do that kind of work. Normally, you’d have to get regulatory approval like a license or permit. You need to be mindful of that if you’re going to do it over the long run. I would check with an attorney with expertise in that area.

We were talking a little bit about the financial health check-in and that goes without saying, “If you haven’t checked your health by now, you’re probably reminded as to where you are.” What I wonder is, with some of the rules being relaxed with respect to COVID or whether there is some major force majeure issue because you can’t get supplies. With that type of thought, what might you suggest a business owner consider with respect to contracts? Also, being aware of somebody had a $60 million contract for face masks and they didn’t deliver anything.

There has been a lot of high-profile fraud in New York. I saw a LinkedIn post from a mayor from a relatively big city in the Midwest that said, “Don’t LinkedIn me, message me or otherwise, think that I’m going to give you a $5 million contract for face masks only because we’re buddies on LinkedIn.” That is good because lessons are being learned. To point out your immediate question, you need to be having conversations with those lenders or investors, if you brought in other equity investors in your company, with your customers and with your employees. Everyone is expecting life to be different. Some companies are doing well, but I would say the majority of companies are hurting a little bit.

Everyone expects that it’s not business as normal and appreciates having upfront conversations. If your clients don’t pay your bills, you can’t pay your client’s bill. It’s a waterfall. We’re starting to see that with landlords, rent, etc. I think people will give you discounts if you’re upfront and have conversations with them at the beginning about your financial health, your situation, and are treating them fairly. You’re going to get a much different result if you choose not to pay rent for 2 or 3 months and you don’t communicate about it. You may have seen Red Robin got sued by their landlord for not paying for two months and they are a public company. They’re not even a smaller mom-and-pop company, so everyone’s hurting.

That’s why it’s important to have good upfront conversations with all of those people. People are willing to work together. We’re all in this to get through this together, but you’ve got to be fair. I’ve been advising my clients to not take the position of not paying, instead see how we can adjust the situation going forward. A lot of companies and one tech company in particular that I work with have realized they don’t need as big of a lease as they have. Do they want to pay for that lease for another 1.5 or 2 years if they don’t need it? My advice is, “Don’t not pay for your lease. Pay your lease but negotiate the size of the lease going forward.” That gives the landlord an opportunity to find someone else to potentially sublet it. There are other ways that you can deal with it where it doesn’t result in litigation. I’m not a litigator and I hate litigation. I advise clients if they can, stay away from it.

[bctt tweet="As a business owner, you are at risk of liability for not providing a safe work environment." username=""]

Let’s say you’re working with some renegotiation, whether it’s a lease, loan, or anything else. Everybody’s in a hurry to, “Let’s get the pain to go away. Let’s go ahead and sign this.” What thoughts might you suggest to the business owner that’s got a modification in front of them as far as signing it or being thoughtful?

I would see what the terms are to see whether it’s advantageous to sign it now or it’s more advantageous to be thoughtful because you don’t know what the future’s going to look like. I’ve got a company that that is dealing with an SBA loan that didn’t get treated like an SBA loan. There are certain benefits to them to be treated as an SBA loan with the bank, deferral of principal and interest. There are a lot of benefits to them that they would otherwise get, but we’ve been measured. We haven’t rushed into signing anything because like PPP, these relief packages are changing. We’ve been negotiating with the bank as to what we want. We’re trying to get all of the relief. Not the relief that we’re entitled to if now, if we had an SBA loan. What I’m doing in practice is saying, “We’re not going to settle for what we understand the deal is. We want it as if it was a deal from the beginning. You need to work with us. We’re not going to accept your first offer, but we’ll still continue the conversations with you to find something that will work.”

I remember the first part of the PPP loan. There was this iterative interpretation of what it meant. The SBA opened and crashed. They did and didn’t. They should and shouldn’t. It’s forgiven. It was like standing on a watermelon seed. We don’t know where that thing is going. What thoughts might you have for the business owner that may have received a PPP loan? What should they be thinking about?

It’s changing daily. The biggest thing to be thinking and continuing to think about, and continuing to pay attention to the guidance is the forgiveness aspect. Luckily, there was a fair amount of changes in the first week or two on what constitutes forgiveness. There hasn’t been as much since that original guidance was released on that, except there was another important piece of guidance that we mentioned before, which is if you have borrowed less than $2 million, you’re going to be subject to less scrutiny when it comes to the forgiveness of a loan as compared to larger companies. The reason we came to that guidance was there was some conflicting guidance given by the SBA and the Justice Department as to your ability to have access to capital from other sources.

This is an easy way to address that for a lot of companies. There were still certifications that needed to be made, needed to be true, and need to be made in good faith. There’s going to be less scrutiny paid in the months and years to come if you’ve borrowed less than $2 million. That’s the key. The other key is how you’re dealing with your employees. There’s specific guidance about bringing them back by June 30, 2020, if you laid them off and how much of a reduction in compensation that you can do. Those are still subsets of this forgiveness element, but they’re important things that you, your CPA, your attorney, or somebody that’s advising you needs to be well-aware of.

In the time of change, sometimes people don’t think well when they’re scared. In talking to the business owners, I have a client. I’m a business owner as well. Step back from the fear of the moment and taking some quiet time with people you know I can trust that has worked with you when things weren’t straight. Let me think about this more constructively and frame your questions. Back up, think about it, get appropriate counsel, your CPA, your attorney, get Mike, and these people involved. Let’s frame the problem better. If you have multiple problems, let’s frame each one and then prioritize the problem. Sometimes, in this environment, there’s a rush to get away from the fear of pain. I’m sure you get a few of those calls, Mike.

I do. I think it’s a fair observation. That’s something that I have dealt with too with my clients. How are they going to make it through this? I don’t tell them that when I’m on a call with them, but I worry on their behalf. There are a couple of things that have helped me when I’m dealing with that. Have you heard of the Eisenhower Box, Bob?

[caption id="attachment_5246" align="aligncenter" width="600"]

ISmall Businesses: t's always more advantageous to be thoughtful because you never know exactly what the future's going to look like.[/caption]

 

Sure, I have.

There are a couple of different categories: urgent, not urgent, important, not important. If you’re struggling with something and you can’t stop thinking about it, I look at this box and say, “Is this urgent or important?” It helps me decide, “Do I do something about it? Do I decide to do something later about it? Do I put it on my calendar? Do I delegate it and have somebody else on my team do it? Is it not important and not urgent?” I need to keep thinking about it. That’s the first step. The other thing though is I often tell clients, “My advice to you is not one and done. You’re thinking about this problem is not one and done. Even your counterparty that you’re dealing with is not one and done. Let’s talk about it and think about it. Let’s circle up in a week or so and see if anything’s changed and see if we still have the same mindset. Most of the stuff we’re dealing with is not urgent. It’s when we get stuck in our own head and our own way of thinking that we can cause problems because we get trapped. We get stuck in a cycle of fear within the way that we think. It paralyzes a lot of us from doing anything.”

The OODA loop is what we used to call it in the military. You go faster and faster in a smaller circle. There’s a book I read. It’s got an unfortunate title called The Road Less Stupid by Keith Cunningham. He talks about thinking time and how you can carve out 45 minutes. You go, sit down, and you start journaling everything that you can think of. What about the problem? Is it the symptom? If you could get past that, then go, spend 45 minutes thinking, “Why is it this way? What can I do? What do I think?” Usually, by the time you’re done, you can prioritize the good thoughts versus the not so good ones.

It’s a tool. We talked about this a little bit before. I think about so many of the businesses that have pivoted. It seems like everybody’s in the PPE space. At some point in time, that curve is going to stop and rollover. You’re going to have a bunch of people that are still doing PPE and there’s more supply than demand, which is what we see in the oil field. What would you suggest to those business owners that pivot away from their core business model in the intervening timeframe they’re doing PPE? What might you advise them to think about as some metric or strategy to pivot back from PPE back to their core strength?

To reach out to fellow business owners. A lot of people that are successful have a network either through an organization, friends, and the community. Somehow, they know other business owners, especially in similar industries. When we’re here in Colorado, I’ve been impressed with how it’s a give first mentality. People are willing to help other people. They give some advice, or thoughts to practical things that they’ve dealt with or introductions. It has nothing to benefit somebody on their own. They’re giving for giving’s sake. Talk to other people in the industry that are either doing, continuing to make the PPE or slightly modifying that. Ask people that are in a similar bucket as they are, where demand has dropped for their services or their consumer product and then see, “What do I do?”

I was working with a client that was going to launch an outdoor clothing company that decided to pivot to a natural food company. They were two days from ordering products from China when everything went to hell in a handbasket. They made a pivot in this next month to be a totally different type of company. That’s going to work because, one, there is some demand with food, with all the runs on grocery stores, etc. Two, because I think he found that there’s a big community here, especially in the Boulder area that deals with natural foods. He’s been able to find a great way to transition his business. It’s going to be for the long-term too. I don’t think he’s going back to the other business.

I was struck by what you were saying. We all worry about the things that we worry about and have some inkling of. As you’re looking down the road, we’ve got this problem. Usually, people can say, “I think I understand where the next problem is.” If you’re looking around the corner, what worries you about what’s coming around the corner for these companies that you serve?

What immediately comes to mind are two things. One is 70% of our economy is consumer spending and we’ve furthered a consumer products industry generally in the sense that the government has funded this payroll right through the end of June. There’s some consumer spending that wouldn’t have happened otherwise, which keeps the entire economy and the consumer products industry going. I know this is still immediate to short-term, but I’m wondering over the longer-term how that plays out. How from July to the end of 2020 consumer spending changes with overall lower spending in the economy. I think this pandemic has shown how our supply chain in the US is screwed up, whether it be pork, beef, or chicken. Whether it be products that are made in China. We’ve seen a lot of weaknesses that I don’t think a lot of us even knew existed here in the US. That’s a longer-term problem that I don’t know how we deal with. Does that mean manufacturing moves to Mexico? What does that mean and what does that look like? Those are the two that immediately come to mind. I’m curious if you have any thoughts though, Bob, about what’s worrying you.

I think about the WeWork phenomena where you get in with all of your best buddies in a big working space together. That was a dubious business model to start with. It looks like the interest for everybody to pile into a room with each other is probably going to wane. Denver has a robust restaurant community. It’s amazing. Every little suburb around the place has a restaurant or multiple restaurants in them. Most of them ran on passion and thin margins. If you’re distance where you can have a quarter of your normal seating, short of a vaccine coming out in a hurry. How many people can do take out? I don’t know. I think about the just-in-time inventory issues. If you’re a manufacturer of any description and you’ve got just-in-time, which was touted to be the thing, then your supply chains interrupted. For the guy that’s raising chickens, if your slaughterhouse poops out, you can’t hold the chickens for months. We’ve got a three-year-old chicken. What’s that going to look like?

[bctt tweet="The COVID-19 pandemic has shown how the supply chain in the US is screwed up." username=""]

I think about centralization issues and the business owners, “How do you look around the corner? Is my business viable? Yes or no? Is it dead on arrival? What do I do about that? How do I protect my family and all my work? If my business is not going to survive, what do I do next? Can I pivot? Can I go? Is there going to be a business for sale that I can go in and participate?” There are a lot of Baby Boomer businesses. In 2008, they went, “I should have sold in 2007.” They were saying, “We’re going to hold on and things got so good for a long time. I don’t need to sell right away.” They’re probably looking back doing it again. I think about those issues and almost everybody that’s a top performer that I’m aware of. They bring coaches on board.

As for psychologists, people that teach how to drive, teach how to putt, I need those people because I don’t play golf. In these times, the quality of the people that you surround yourself with to make informed and good decisions. People might say, “I want to save some money at this time because I’m sure my sense of that is there’s probably not a better time. It’s a whole lot cheaper to do this than litigate about it later.” This is my sense of this. I would think that this will fade away into the memory banks. It’s just bad one-off and we get a vaccine soon, but in the event, that’s not true. I think manufacturing is going to come home. Having a service-based economy is an interesting experiment that was proven to have some holes in it.

It’s hard to understand how so much has changed in such a short period of time and to be able to understand what it’s going to look like going forward. It’s anyone’s guess, but everything that you’ve mentioned, I see. The people that are well-positioned and good business leaders are going to end up doing great. I saw a story about a brand in Salt Lake City that was a consumer product company. Their demand dropped off, but they had a warehouse and manufacturing space. They were friends with another company whose demand took off. They loaned all their customer service representatives. They loaned their entire space to this other company. They’re still two separate companies, but it’s thrown a huge lifeline to them. They have another huge advocate and a consumer base that’s going to be looking at their products all because of that business leader. Cotopaxi is the name of the company. It’s a great company. Their business leader was listening to a podcast or was friends with somebody that challenged him about the types of leaders there are that coming out of this crisis. “What kind of person are you going to be?” He answered, “I have been scared. I am not sure what to do, but we’re going to try something.” He made that phone call and it totally changed his business.

Let’s say that company has a good service warehouse department, but my demand has dried up. There’s a small company over here that needs this asset because their sales have taken off. Do you think you’re going to see an uptick in mergers?

Not an uptick overall. What we will see is, especially in smaller companies, people that work together to benefit both companies for a period of time. We’ll see more of that collaboration. We’ll see more of in the way of selective acquisition. There are big public companies that have a lot of resources that have been afraid to buy some companies because of the run-up in value and the way private equity firms that outbid a lot of other companies. It’s going to turn into a buyer’s market from a seller’s market. You’re going to see a lot of large companies buying out a lot of smaller companies because they’ve got the cash and the resources and could weather the storm a lot better. I do think we’ll see more of those types of transactions.

In fact, I saw Facebook bought Giphy, a source of GIFs. They bought them on for $400 million in the news. As you look across the startup community, in the venture capital community in Denver, what do you think is going to be the upshot for those people given this environment?

I’m already seeing this in a lot of transactions where the values ascribed to companies over the months before versus post-pandemic have dropped 25% to 30%. If you were going to do a financing at $5 million pre-pandemic, now you could probably get a $4 million evaluation for your tech company startup. That’s how the market’s changed; there’s less capital to go around. I do think that we still see well-positioned tech companies get funded. Funding in the private market tends to lag behind the public market by 6 to 12 months. Generally and historically speaking, it’s not as long as this time around, but I do think it will lag somewhat. There will be fewer deals to get done, but there are still plenty of capital because there have been billions of dollars raised in venture capital.

There was a recent article about more and more companies are in the Midwest. Not just here in the Rocky Mountain region, but the Midwest region. There are lots of different venture capital funds and tech companies that are getting started and are getting funded. You’re going to have to set yourself up above every other startup. You’re going to have to say either, “You’ve got a lot of traction or you’ve done it being bootstrapped.” Still in this pandemic, you have to show not only those good metrics but how you’ve also been able to transition with the pandemic.

That would call into question the earn-out language. If you don’t think you’re going to get what you want for your company, then the earn-out discussion gets to be interesting.

I’ve heard a metric called EBITDAC, which is Earnings Before Interest, Taxes, Depreciation, and Amortization and COVID. Try to use that as a metric to sell your business. I’m skeptical at works, but we’ve seen people try to use it.

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Small Businesses: Some companies are choosing to have their people work remotely in order to maintain safety while stronger protective procedures are being put in place.[/caption]

 

As we go through here, we could probably chat for some time. The point behind having you on is we have talked in the past. You’ve been active and you have vast experience in this field. I thought it was important for the business owners that we serve to talk and read the blog and others to start. If they weren’t thinking about some of these things to start thinking about the HR side of the house, what you’re doing on financing and contracting. If you’ve got a PPP loan, what should you be thinking about? How do people find you and reach out to you on social media?

I have a LinkedIn Profile, Mike Dill. I don’t know the exact address, but you can find me by searching me on LinkedIn. We’re also on Holland & Hart’s website. I’ve got a profile on the website too, but my phone number is (303) 295-8097. My email address is MEDill@HollandHart.com. I’d be happy to chat with anybody that is a business owner and have some of these questions that they’re dealing with. There are a lot of issues that we’ve seen that we’ve been helping people work through.

As the situation mutates or whatever we’ve got going on, the challenges that we have may not be the same challenges we have a month from now. As we iterated and worked through, you taking time out of your afternoon to come on and share generously with your experience and wisdom is greatly appreciated. I hope for the readers that they found maybe a little less angst by some of the advice and commentary that we’ve had here. For Mike, it is a pleasure to work with. He is a bright guy. Mike, is there anything that I should have asked you that I failed to ask that you think would be important for the business owner to consider?

Nothing immediately comes to mind, but I would say that one of the things that I’ve found personally, and you may have too, is there’s a little less noise going on these days. There was a lot of immediate noise, especially when the pandemic happened. Being myself, working from my home office gave me a little bit more time to sit back, reflect, and think about my business, my family, about things that I think in the long run are important. That’s something that people have a chance to do, to sit back and say, “In the grand scheme of life, what’s important?” Family is the most important. I want to provide for my family. I want to be a good person. In the grand scheme of things, that’s one of the lessons that I’ve learned and I’ve seen that I’m proud of.

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The whole reason we’re doing this is to help save lives, help to keep people safe, and help to look out for each other. That’s something we’ve been missing a lot in the US, especially in the media and a lot of debates. I’m glad to see that. That’s something that people should think about in the context of their business. Take this time. It’s a time that we may never get back in our lifetime. When pandemics happen, it seems like pretty rarely. Let’s take advantage of it and see how you can learn lessons and apply things to your life that you’ll be a better person. At the end of the day, we go back to whatever this new normal looks like.

It does require much character in good times. Character is truly defined about how you behave when things are less than good. Do what you’re doing, stepping up, serving, and sharing is a testament in this time to character. We see lots of character. People that are stepping out and helping. I think that’s going to be one of the bright spots that are coming out of all of these events. Mike, I appreciate you coming on and sharing what you know and helping out. With that being said, thank you for taking the time.

It is my pleasure, Bob. I appreciate the invitation.

Take care.

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About Mike Dill

Mike Dill provides comprehensive legal services to all types of clients, including emerging growth companies, publicly-traded companies, private companies, private equity firms, venture capital firms, and others, at every stage of the corporate life cycle.

During his career, Mike has developed strategies and expertise in working with corporate executives, in-house counsel, and business owners attempting to achieve their key objectives. Over the course of numerous engagements, he has developed significant expertise in capital-raising transactions, securities matters, mergers, acquisitions, and strategic transactions and has become a trusted advisor to numerous clients. He is responsible for achieving his client’s objectives and efficiently closing transactions in a cost-effective manner.

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