Exit Strategy Knowledge for Entrepreneurs: A chat with Marlene Myers of JPMorgan Chase Commercial Banking.
We chatted with Marlene Myers, Vice President at JPMorgan Chase & Co. Commercial Banking, to gain some insight on the resources that commercial banking can provide to entrepreneurs. In addition to her role at JPMorgan Chase Commercial Banking, her role in the entrepreneurial community is integral to the growth of the ever-present ecosystem.
What is your background? What brought you to Idaho?
I have always had a passion for math, science, and puzzles so it was to no one’s surprise when I decided to pursue a biochemistry degree at Arizona State University. Once I graduated, I took a position at a biotech firm in Phoenix for a few years. However, the CEO decided to move the company back to California and I did not want to move out of my home state. It was a friend of mine that suggested banking since I had a love for mathematical puzzles that have a variety of outcomes.
I was fortunate to start my banking career with exceptional mentors who patiently guided me through the intricacies of the industry, but I needed to learn the business side so I set out to get my MBA at the University of Arizona. I found myself inspired by entrepreneurship and the complex issues that can affect businesses on a deeper level. Business, finance and banking, all are interwoven together along with community and building trust among peers. All of which, I hold as core values.
My banking career moved me to New York and Seattle before I came to Boise. While different from the big cities I came from, my family and I love living in a community that encourages outdoor exploration and adventuring. From the first day I spent in Idaho to today, I am continually humbled by the friendliness, community building, and open doors for conversations. It was this sense of home that reminds me every day of how special Idaho is.
What led you to commercial banking?
My upbringing revolved around team sports, beginning with soccer, before transitioning to softball and volleyball. Team sports taught me the importance of trust, respect, and adaptability as a collective striving toward a common goal.
My transition to commercial banking revealed parallels between my earlier experiences and my interactions with clients, leadership, and the community. Most importantly, I recognized the need for a high level of adaptability and focus on community engagement to be successful in my new role. My aforementioned affinity for puzzles and problem solving also made banking seem like a natural fit.
Today, I’m fueled by my interactions with local entrepreneurs, especially those within disruptive markets and challenging the status quo. There’s nothing quite like listening to industry leaders share their knowledge and ideas and knowing that you have the ability to help them reach their
How does your role in commercial banking support entrepreneurs and small businesses, and what led you to get involved in the entrepreneurial community?
My involvement in the entrepreneurial community stems from a deep appreciation of their passion, innovation, and drive to create something impactful.
As companies expand, having trusted advisors who challenge conventional thinking, run scenarios, present options, and provide resources to evaluate potential outcomes becomes crucial for growth and decision making. I am proud to be in the position to help today’s entrepreneurs in that way, question the norms and challenge the “that is just how it has always been done” or “this is the way we have always done it,” statements.
As a part of JPMorgan Chase Commercial Banking, I have the opportunity to bring the firm’s global capabilities and resources to local businesses. This includes offering tailored solutions to Boise’s early stage startups, midsize businesses and large corporations to help them achieve growth, whether credit and financing, digital banking and payments, treasury and merchant services or international banking. We also have dedicated teams of specialized bankers for industries including technology, healthcare and government banking. Our holistic approach includes partnering closely across the firm’s other lines of business including Investment Banking, Asset Management, and Private Banking to serve businesses and business leaders’ needs.
I love building relationships and delivering value, and working with Boise’s business community has allowed me to do just that day in and day out.
What are some common challenges that entrepreneurs face in the growing stages of their company in your experience?
How to effectively acquire debt or equity to start a business, grow, bring in or exit key individuals, fund large contracts, etc. The variety of debt/equity options range based on need and scope, and can change with market conditions. It is important to understand available options, who the key players are and how those options are measured to acquire funding. As well as an understanding of your current income and cash flow statements, balance sheet and projections to help articulate funding needs. As you enter into funding contracts, always be mindful of prepayment penalties with associated costs, how easy it would be to increase funding and or move to a different type of funding and understand how the contract affects your company and your family personally.
Talent Acquisition and retention is key to growth and can be difficult at the start-up phase, especially when it comes to letting go and trusting someone else to take workload off your plate so you can stay focused on vision, values and community. Start-up capital requests can have a section for talent acquisition within working capital needs, this is also true for growth funding. One of the biggest expenses for a company will be personnel. It is important to understand options for work/life balance, benefits, health care, retirement options, growth opportunities, etc.
Scaling operations: As the business grows, entrepreneurs must manage increased complexity and ensure that their operational systems can scale effectively. Often the need to move onto a sophisticated accounting, inventory management or ERP system occurs during a growth stage. It is important to first obtain referrals from current users to understand how long implementation took, what the down time was, how well the service providers responded to urgent matters, etc. This is where leadership needs to utilize their network and trusted advisors to help obtain referrals.
Market Competition: As the business expands, it may face increased competition, requiring entrepreneurs to differentiate their offerings and stay ahead of market trends. At JPMorgan Chase we offer our clients analysis and insights into market and client adoption, usage and feasibility to move into new areas of the nation or world. This tool is helpful to understand trends and if a pivot needs to be made (where and how). We leverage merchant acquiring and Chase card issuing data to paint a holistic portrait of our client's businesses that they can use to inform marketing, new location opportunities, staffing/employment strategies, etc.
Examples:
5 store locations (fashion retailer) used transaction times module to better align staffing with customer foot traffic. She ended up saving 20% on overhead costs
Car and truck dealer (Customer location) - leverage geographic insights (zip codes) to reach customers more effectively.
e-Comm clothing retail: get to know your top customers - where they are located, demographics, including gender, age and income.
Bar and restaurant owner: (Transaction times) - worried about payroll expenses. Align staffing with foot traffic
Brewery: Purchasing trends. Marketing trends.
Navigating the legal and regulatory landscape can be complex and time consuming. This is especially true for a highly regulated business.
Cash Flow management: Maintaining positive cash flow is essential for sustaining growth. A clear understanding into cash flow cycles and how long conversions take in and out of “season” is critical. Sensitivity buffers for market shifts, distributions, large capital requirements should be modeled along with current activities. Within this section, I also want to note how excess cash is spent. We have many amazing B-Corporations in the valley who choose to live by the pillars of philanthropy and giving back to communities. Oftentimes this may make it difficult to understand how to grow through cycles, but there are a variety of options in this area so entrepreneurs can maintain their vision and values.
Marketing and customer acquisition: building brand awareness and acquiring new customers is crucial for growth but can be resource-intensive and require innovative marketing strategies.
Technology adoption: embracing new technologies can drive efficiencies and innovation, but entrepreneurs must invest in the right tools and ensure their teams are adequately trained to leverage them effectively.
Work life balance: What are the boundaries an entrepreneur puts into their life to make sure they are also enjoying the hobbies, travel, family time, etc. that drives their passion for being an entrepreneur.
What are some common exit strategies or transition plans available to entrepreneurs?
Entrepreneurs have a variety of exit strategies when they are ready to transition out of their business.
Acquisition: The sale to a larger company or Private Equity firm can provide a significant return on investment for the entrepreneur. It is important to clearly understand how your company will offer opportunities for growth and expansion under the new ownership structure for your company and employees.
Merger: Symbiotic mergers can be a strategic way to combine resources, expand market reach, and create synergies to benefit both companies. Often this relationship is established through a vendor, competition, or key employee relationship.
Initial Public Offering (IPO): If a company is looking to go public to provide additional capital and liquidity for shareholders, then they must also be prepared for significant compliance preparation and regulatory requirements.
Management Buy-Out: If there is a key individual or team who can ensure business continuity and stability for employees, then this can be a viable exit strategy. Often the funding for this transition can be a bit easier if the founder can stay on for a period of time or transition as a board member.
Family Succession: This option can ensure legacy and values so long as the family member(s) taking over clearly understand the business, are ready to partner and work through challenges and offer diversified and new options for growth.
ESOP (Full or partial): Implementing and maintaining an ESOP can be complex and expensive, but it can also provide several benefits. These include providing employees with a financial stake in the company and aligning their interests with the shareholders. Serves as a retirement savings vehicle for employees, as the value of shares in the ESOP can grow over time. Provides tax benefits to the company, as the contributions to the ESOP are typically tax-deductible. Facilitates succession planning and provides a mechanism for owners to sell their shares and transition ownership of the company.
Licensing or franchising options: Instead of selling the entire business, entrepreneurs may choose to license or franchise their business model, allowing them to generate ongoing revenue while maintaining some level of involvement.
Liquidating: In some cases, liquidating the business and selling off assets may be the only viable exit strategy.
What role do you take in helping them choose the best option?
My role is to provide resources, connections, options and referrals to help work through the process and get to an end goal. As a banker, I am usually talking about the funding portion and how to think critically and strategically so the entrepreneur can understand the choices of debt or equity for growth or start-up.
There are times where the options today do not make sense, but they may in the future. This is where it is important to understand economic trends, cost structures/economics and how capital is being disbursed under those conditions. We have seen many cycles and it is continually important to sensitize projections for upside and downside possibilities. Overall my job is to know capital and connect the dots to provide the best possible outcome for our entrepreneurs.
How soon should startups start thinking about an exit strategy?
This is a complex question because it really depends on the founder’s goals. Many entrepreneurs start a business with the strategy to sell for ROI purposes. If this is the strategy, they should begin with a team of legal, banking and accounting to help set up the business for sale at the on-set. Starting a company as an LLC and then converting to a corporation has tax implications and can set back a sale due to tax purposes.
In addition, certain types of funding (debt or equity) could inhibit a sale based on its structure or prepayment penalties. If an entrepreneur is looking to build a legacy company, then they should understand their options for succession. What is important is to socialize it often and early with their trusted circle and be okay with changes or alternate options.
What’s the biggest mistake you’ve seen entrepreneurs make regarding their exit strategy?
I think that is a combined answer between tax implications and values. Entrepreneurs may focus solely on maximizing the sale price or other financial terms and overlook the potential tax consequences. This oversight can result in a higher tax liability and reduce net proceeds from the exit. Proper tax planning as part of the exit strategy (and diligence) is crucial to optimize the financial outcome.
Another pitfall is sacrificing the company’s vision and values during an exit. Entrepreneurs may be tempted to prioritize financial gains over core principles that built their business. This can lead to a disconnect with employees, customers, and stakeholders, ultimately harming the company’s reputation and long-term success. It is essential to align the exit strategy with the company’s vision and values to ensure a sustainable and positive transition.
What exit strategy are entrepreneurs most likely to overlook?
If an entrepreneur prepares financially for their family early in the business, there may be an exit strategy of building your company into a foundation. The founders would be able to leave their company behind to successors and have it run off certain guidelines to give back to their community that would be stated in the guidelines of the foundation. This is an uncommon strategy, but one that is attainable with the right planning.
What projects or initiatives have you taken part in that you think have had the greatest impact on Boise business owners/entrepreneurs in the community? Yourself?
Trailhead and Boise Entrepreneur Week are unique and instrumental to the growth of Idaho. JPMorgan Chase has partnered with both organizations to share knowledge and listen to feedback from both organizations. Last year, I helped lead a panel discussion on exit strategies at BEW. I was impressed with the active Q&A held during the session from entrepreneurs new to the business as well as seasoned professionals.
Trailhead and BEW provide a safe space to practice and develop your pitch, which is a learned art form. The advice and feedback given by panel partners as well as the teams at Trailhead is a distinctive value add for personal, professional and regional growth. Another key focus is on the students of Idaho. They focus on elevating students with interest in entrepreneurship by providing resources, connections, mentorship, education and pitch practice.
Health Tech Idaho is another program to help the start-up community in health tech think through strategies, build community and share knowledge amongst the participants. The leaders of this group are focused on providing resources to change agents in our community who are focused on innovating and transforming our healthcare system. It is a nice advantage for Idaho to have a group of professionals, resources and entrepreneurs that solely focus on health tech and life sciences.
I am a board member with The Idaho Technology and believe in their pillars to help bring innovation to Idaho through talent, access to capital and advancement of technology in the state. I am continually impressed by the way they focus on real change at the Government level to make sure our state has enough teachers and professors available to the students who find an interest in engineering, developing code, science and technology. Unless the groundwork is available during the development years, children will have a hard time developing the passion for STEM. The ITC provides a voice for the advancement of technology from all levels in our state.
The ITC also supports the “50 to the A” campaign, with a focus on local start-up companies that are moving toward raising their A series. The companies on the list are provided with a community of advisors, mentorship and connections throughout our community.
Capital Eleven Founders Forum focuses on the conversation with entrepreneurs that scaled companies, raised capital and even made successful exits. The focus is to bring Idaho and non-Idaho entrepreneurs together in a single format to raise awareness of the VC and entrepreneur community here in Idaho. The flow of capital into Idaho has increased over the past years, and it continues to do so with events like Founders Forum spreading the word of what Idaho is up to throughout the tech community.
Our Veteran community has a resource within the Idaho Veterans Chamber of commerce. Each year the organization hosts a pitch contest specifically focused on Veteran-owned or Spouse of Veteran’s owned companies. This provides a platform for pitch practice, feedback, mentorship and produce awareness. The pitch contest occurs around Veteran’s day every year and is a great event to attend.
When I moved to Idaho, I had a hard time finding a group specifically focused on a safe, inclusive space for women to connect, grow and inspire each other. I believe in a community that allows business owners to connect with the community where they can be free to learn, grow and connect without the worry of pushing services or products on them. I also believe that hard conversations happen in safe groups where you can speak freely about career advancement, mentorship, closing the wage gap, work life balance, asking for things you need and other topics to further your career and growth. My answer was to start a non-profit called
ConnectHer with four other amazing women in our community. Our events are posted on out LinkedIn page (ConnectHER Idaho) if you are interested in following along.