Good morning!

Here are today’s highlights:

Ami Kassar says the EIDL program is a travesty.
A fascinating look at how three PE firms valued the same business.
Europe’s fastest-growing startup ever.

PROFILE

It’s been 10 years since 21 Hats contributor Liz Reisch Picarazzi was laid off: “The day it happened, I was stunned, embarrassed, and for a few moments, angry. The next day, I mostly cried. And the following day, I woke up knowing that the pink slip was a gift. I’d actually been preparing for that day. Still, the layoff was the catalyst I needed to launch my handyman business, an unlikely path for a female marketing executive who had never worked in the trades. In these 10 years, I’ve built and sold New York City’s top woman-owned handyman company, became a manufacturer with no experience in design or metal fabrication, and emerged from the pandemic stronger than ever.”

“Interestingly, my last corporate job was at American Express, where I worked almost exclusively on products and services for small businesses. It was there that I developed a serious case of entrepreneur envy.”
“Like many entrepreneurs, I’m impulsive and, I suspect, difficult to manage; I tend to work on things that interest me rather than things that should be a priority.”
“When I was laid off, my business plan had been written for two years, the business name for Checklist Home Services and logo were already trademarked, and the URL had been registered with GoDaddy.” READ MORE

GOVERNMENT SUPPORT

Ami Kassar says the SBA’s EIDL program, which is finally sending out funding, is travesty: “Yesterday, I spoke with two people who received their EIDL increases from $150K to $500K this week after waiting four months to get the money. The first business was down 70 percent during covid as his core customers were literally shut down. He desperately needed the money and could do with more. It’s a miracle that he has survived the four months he has been waiting for it. The second business owner’s revenue increased 300 percent during Covid. It’s a travesty that he is getting a long-term low-interest economic injury disaster loan from the government.”

“EIDL loans are NOT traditional SBA loans. The EIDL program is designed to help a business recover from a disaster. The program was designed with a hurricane, earthquake, or tornado in mind – in a small geographic area. It was never intended to deal with a vast national issue such as Covid-19.” READ MORE

SELLING THE BUSINESS

Here’s a fascinating look at how three private equity firms valued the same company: “As part of our annual State of the Market M&A conference, held virtually this winter, we invited three private equity firms to review and submit an offer on a hypothetical company. They revealed their offers at the conference, and we held a panel discussion on why they valued the company the way they did. We keep the invited PE firms confidential. … This year, we based the deal on a real company that actually sold in 2018, fudging enough details to hide the company’s true identity. We provided a full memorandum and financial info and set parameters so everyone is reviewing the same info and providing the same detail in their Letter of Intent.”

“In the end, the winning bid came in about 10-20 percent higher than the company actually sold for. The lowest bids came in around 80 percent of value.”
“Why could one PE firm bid higher? As it turns out, they had previous experience in the space. The acquisition target did big capital product sales. In other words, large, mostly one-time sales without much recurring revenue. What this PE firm saw, though, was an opportunity to build new sales through parts, maintenance, and add-on systems.”
“Another key value driver was customer and supplier concentration. These PE firms said they’re okay as long as the top customer is around 25 percent or less of sales. Once the top customer starts getting to be 30 percent or more, they’ll either walk away because the deal has too much risk or they’ll restructure the offer to include earnouts and other performance-based payments.” READ MORE

Subscribe now

HUMAN RESOURCES

The economy added 943,000 jobs in July: “The surveys for the jobs report don’t fully reflect the growing threat posed by the fast-spreading Delta variant, as they were conducted in the middle of the month. That was before some local governments reimposed mask mandates and other restrictions, and before many employers announced they would require employees to wear masks, be vaccinated or get regularly tested. Companies have also delayed return-to-office plans, including announcements by Amazon.com and Wells Fargo.”

“So far, little evidence suggests that the recent case surge is significantly slowing the U.S. recovery—and the economy has built up a cushion from the availability of vaccines, business reopenings, pent-up consumer demand and aid flowing from multiple rounds of government stimulus legislation.” READ MORE

Will remote workers get left behind in a hybrid office? “Though most evidence that remote workers are at a disadvantage is anecdotal, at least one study, led by researchers at Stanford University, suggests they are less likely to be promoted than their in-office peers. In the experiment, researchers randomly assigned workers at a large travel agency in Shanghai to work remotely or in the office for nine months. Though the remote workers were 13 percent more productive, putting in more hours and making more calls per minute, they were promoted about half as often as their in-office peers. ‘They can get forgotten,’ said Nicholas Bloom, a professor of economics at Stanford and one of the study’s authors.”

“The result is troubling partly because the desire to work remotely isn’t evenly distributed, Dr. Bloom said.”
“As of March this year, among college-educated parents of young children, women have said they want to work from home full time around 50 percent more often than men do.” READ MORE

STARTUPS

Hopin is Europe’s fastest-growing startup of all time: “The digital events startup, founded in June 2019, has raised a fresh $450 million at a valuation of $7.75 billion. Hopin has been a winner through the pandemic as events organizers scrambled to move conferences online. The London-based company provides software to bring conferences and live events online and says it is bringing in thousands of new organizations each day. It counts the likes of the United Nations, Slack, and Twitch among its customers.” READ MORE

THE COVID ECONOMY

New York’s vaccine mandates seem to be having the desired effect: “Previously vaccine-hesitant New Yorkers are not immune to the basics of behavioral theory. Following several unofficial mandates and incentives announced in the city, vaccinations in New York rose significantly toward the end of July after stalling throughout much of the summer. According to preliminary data from the New York City Health Department, at least 79,931 New Yorkers got their first COVID-19 vaccine dose last week, a 39.5 percent increase from the number of residents who got their first shot in the first week of July. Last Friday, 15,440 people received their first dose, the highest single-day total since June 4.”

“The increased rate of shots in New York is consistent with the trend throughout the United States, as the more contagious Delta variant has spurred key conservative voices to encourage their constituents to get a shot and Democratic leaders and major industries have gone the way of the mandate.” READ MORE

Uber is requiring its officer workers to get vaccinated but not its drivers and customers: “‘White collar workers, you're spending time together in an office eight hours a day, 10 hours a day,’ Uber CEO Dara Khosrowshahi told CNBC's Squawk Box in an interview this week. ‘Based on the [Delta] variant and the health concerns there it was an easy call in terms of coming back to the office,’ he said. As far as the ‘over 100 million riders and drivers constantly moving around together on a monthly basis,’ no such vaccine mandate will be instituted by Uber, he said. The massive group that includes both Uber's contracted driving staff and the app's millions of users is simply too large for Uber to police, he said.”

“‘It would only be fair to require vaccines for both riders and drivers,’ Khosrowshahi said. ‘To put that responsibility, that kind of decision making power on a company, I don't think is right.’”
“Uber does already mandate that both drivers and passengers wear masks.” READ MORE

CNN fired three workers who came to work unvaccinated: “In an email to employees Thursday, Mr. Zucker said that the terminated employees violated the company’s honor system, which asked workers to attest that they were vaccinated but didn’t require them to produce documentary evidence of their vaccination. ‘Let me be clear—we have a zero-tolerance policy on this,’ Mr. Zucker said. ‘You need to be vaccinated to come to the office. And you need to be vaccinated to work in the field, with other employees, regardless of whether you enter an office or not.’ He said showing proof of vaccination may become part of the process of entering CNN buildings.” READ MORE

THE MORNING REPORT WEEKLY WRAP-UP

Every Friday, Gregg Stebben of the Small Business & Entrepreneurship Council and I offer our takes on the week’s most important stories for business owners and entrepreneurs. We post a new episode Fridays by noon. You can subscribe wherever you get podcasts or you can LISTEN HERE

THE 21 HATS PODCAST

Episode 71: I Had Two Great Candidates. They Both Blew Up: This week, we delve into some specific hiring situations, including Jay Goltz telling Diana Lee and Dana White that he thought he had two terrific candidates to replace his retiring chief financial officer. And then, after conversations with each of them, Jay had no candidates, which led us to some interesting questions: Has there been a more challenging time to hire for cultural fit? How risky is it for a smaller business to hire a candidate accustomed to working at larger businesses? And what does hiring intentionally for diversity mean when your staff is almost entirely African American? Plus: Dana gives us an update on her potential deal with the military, and Diana explains how she markets her marketing agency.

You can subscribe to The 21 Hats Podcast wherever you get podcasts.
LIsten to the Podcast

If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren

The 21 Hats Morning Report

‘It’s Been 10 Years Since I Was Laid Off’