Worcester Business Journal

wbjournal.com | May 15, 2023 | Worcester Business Journal 19 By James Monette Monette is an assistant vice president and area manager for Workers Credit Union in Littleton. 1. Be practical. While you may be able to afford a higher car payment with your first job, do you really need the most expen- sive car? Brand name and high-end items may have a draw, especially when you have an influx of money. However, many items work just fine as they are, and there is sometimes no need to spend money. 2. Differentiate between wants vs. needs. If you forgo spending $3.95 on a coffee and donut every day for 10 days, you will save $39.50. If you forgo it for 20 years, you can save $28,949. This is how you reduce your spending leaks. 3. Pay yourself first. Treat yourself like a bill and devote a portion of your salary for savings. This creates a rainy-day fund for life events out of your control. 4. Invest in insurance. Having insur- ance protects your finances. There are many different types of insurance you need, including health, dental, renters/ homeowners, and auto. Insurance can alleviate future financial disasters. 5. Create a budget. Knowing your cash flow and organizing all your expenses and income will help you stay on top of your money and avoid unnecessary purchas- es. A good rule of thumb is to follow the 50/30/20 rule, allocating 50% of your monthly income to needs, 30% to wants and 20% to your financial goals. 6. Have a debt repayment plan. Those college loans may seem overwhelming. A plan for paying down loans creates small victories and makes progress. 7. Understand credit. It is important to understand your credit score, which is a number estimating how likely you are to repay debt. This number can fluctuate de- pending on your credit spending, number of missed payments, and length of credit. 8. Only open one credit card. With multiple cards, it is easy to get into finan- cial trouble as it can lead to overspending. 9. Prioritize retirement early. As soon as you can save for retirement, you should. Your first job out of college is a great time to start. If your employer offers a 401(k) plan, enroll as soon as you can. 10. Keep learning. Have an open mind and be curious, and in return, you can master your finances. It's important to feel comfortable with financial decisions. If you don't understand something, don't be afraid to ask someone knowledgeable you trust. It takes time to understand, but anyone can do it. K N O W H O W Let's make a deal: e fine art of negotiating business acquisitions C reating departments out of nothing is necessary as companies grow and develop. Some managers welcome these experiences to start from scratch and see them as potential opportunities for recognition and promotion. Others shy away from such assignments due to risks involved: What if the department doesn't meet performance expectations? Here are tips in building anew: Analyze the company's path, says Angie Ross at business blog Centrinity. A department needs to be founded on an understanding of where the company is going. "In the beginning, you may have just wanted to stay afloat, but taking that next step requires you to set a course," she writes. Ross says it's important to know where the company is now, as well as the end goal, to check for alignment with the company's mission and vision. "You'll develop a better understanding of all the requirements that need to be addressed," says Ross. Outsiders' perspective is part of this picture, gained through client feedback, employee input, and the company's online reputation. Like a startup, departments need a brand. ey need an identity, and they need to deliver value – in this case, value to other departments, says Mary Shacklett in TechRepublic. "Value is created when you continuously demonstrate that you can eliminate pain points and move the company forward," says Shacklett. "At the beginning of the process, promoting the new department – as well as developing it – will be primary functions. If you can recruit strong performers and build a cohesive team, the job will be that much easier." Hire right. Some core questions: How many people do you need? What will they do? What role will they play? How will the team be structured? "It's perfectly acceptable (and recommended) to start with the basics, and grow the infrastructure and processes as you grow the team," according to ManagersResourceHandbook.com. 10 THINGS I know about... ... Financial literacy for college grads F O U N D I N G A D E P A R T M E N T BY SUSAN SHALHOUB Special to WBJ Amy Morrissey is a partner at Bowditch & Dewey, a corporate law firm based in Worcester handling challenging litigation and complex regulatory issues. A specialist in mergers and acquisitions, Morrissey has negotiated high-value deals up to $200 million. BY AMY MORRISSEY Special to the WBJ O nce companies find suitable partners for mergers or acquisitions, it may seem like the hardest parts of their business deals are done. In fact, the challenges have only just begun. e next big step involves negotiation, a fine art that should never be undertaken alone. When it's time to actually make the deal, you need two new best friends: your accountant and your attorney. Your accountant is essential because the biggest driver in almost every acquisition is the Internal Revenue Service. e structure and timing of any deal has huge tax implications. Using a great accountant, tax attorney, or certified public accountant is a must, since they can help structure the deal with the most favorable tax treatment possible. It's important to hire this person early, especially before any letter of intent gets signed. at letter outlines the potential deal expected to be formalized so each party has transparency into the structure. Your other best friend is your attorney, who will help drive the negotiations in your best interest. It's important to focus not only on the purchase price, but all W W the nuances involved in the deal, such as staggering out payouts to ensure business continuity. I like structuring an earn-out (a future payment based on company performance) in every deal since it keeps both sellers and buyers motivated to transition ownership smoothly. Once these key players are in place, the parties can help you negotiate the best deal for you. One of my clients, who came to me too late, was adamant about keeping his deal simple. Paying $525,000 for an assisted living facility, he wanted only a purchase price payout at closing and did not consult experts. But while he negotiated the purchase agreement, the company's working capital tanked. So, the buyer had to inject another $200,000 into the business to keep it running, essentially making the purchase price $725,000. Had the buyer structured the deal more carefully, this could have been avoided. He hired me and an accountant shortly thereaer, and the next three acquisitions went smoothly. Oen, I think about John F. Kenney's 1961 inaugural address discussing negotiations. "Let us never negotiate out of fear," he said. "But let us never fear to negotiate." I always warn my clients not to be afraid to ask for what they want. Indeed, they should ask for more than they want. Part of negotiation is discovering what each party is willing to give up and what they are not. e back and forth needs to be conducted with emotional intelligence, that is using emotions to empathize with others, overcome challenges, and defuse conflict. When I had a client selling her bath-bomb business to a larger company, I talked with her a lot about the potential buyer and figured out how we could use his motivations to our advantage. When we discovered the buyer cared more about eliminating his competitor than the proposed business plan, I figured out a way to help the seller make more money. Indeed, getting all the details right about negotiating and deal structures can make a huge difference to the bottom line. With proper preparation, buyers and sellers can make sure they won't leave hundreds of thousands of dollars on the table. W

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