In a conversation presented at the 2025 MAPP Benchmarking Conference, Steven Simone, Senior Vice President in Stout’s Investment Banking group, spoke with Daniel Prisciotta, President of PrisCo Financial, and Russ Larsen, Market Head for the Northwest Suburbs of Wintrust Financial Corporation.

They discussed how individuals and businesses can proactively manage cash flow, maximize investment potential, and build stronger banking partnerships.

Steven Simone: From your perspective, what should business owners consider when it comes to growing their business and attracting, retaining, and rewarding key employees?

Daniel Prisciotta: Public companies have a unique advantage since they can offer company stock as a form of compensation. This acts as a currency for hiring, rewarding, and retaining employees over time.

Private businesses don’t have the same option, so they need to think differently. Offering competitive salaries, bonuses, and 401(k) plans is essential. It’s the baseline, the table stakes. But to go beyond that, we help businesses design custom incentive plans to keep their key people engaged.

There are two main categories of incentive plans: equity-based incentives and non-equity incentives. Personally, I’m not a fan of giving away company stock and creating minority shareholders, but for those inclined to do so, options like stock grants or stock awards can work. Alternatively, there’s something called phantom stock (or synthetic equity). Phantom stock doesn’t involve giving actual ownership but instead mirrors the company’s growth. It’s structured through a legal agreement and can be converted to cash, often tied to a change-in-control event, such as a sale or liquidity event, rewarding employees who helped drive that growth.

Another option is a non-qualified deferred compensation plan, which provides a “pot of gold at the end of the rainbow.” For instance, I worked with a client who was struggling to retain top employees despite offering competitive salaries and bonuses. We designed a non-qualified deferred compensation plan tailored to their needs. These plans are highly customizable. They allow you to select who participates, how much they receive, and when they can access the benefits. They don’t fall under the strict rules of ERISA, IRS, or the Department of Labor, giving businesses flexibility.

Looking back, we implemented this plan 20 years ago, and the client hasn’t lost a single employee who was part of it. In fact, some employees have retired and are now collecting on the plan but still choose to work there because the owner wants them to stay. The takeaway is that there are creative, customizable options beyond traditional benefits like 401(k)s or profit-sharing plans that can help attract, retain, and reward key talent.

Russ Larsen: For me, it comes down to alignment. When you’re trying to attract or retain key talent, it’s critical to ensure alignment between ownership and management. Everyone needs to understand the company’s goals, objectives, and long-term vision.

If you’re open to sharing equity, there are various ways to do it. For example, some programs allow employees to acquire equity by borrowing against shares through a bank program. If that aligns with your corporate culture, it can be a great option.

However, if sharing equity isn’t your preference, there are other creative approaches. For one client, we structured advanced bonuses tied to non-compete agreements. This allowed the company to reward employees while protecting its interests. Partnering with your bank and working with advisors like Dan can help you design programs that align key management with your goals and incentivize them to stay.

Additionally, business owners often overlook leveraging technology. If your company is undergoing a technology upgrade, like an ERP or IT system conversion, it’s a great opportunity to talk to your bank. Many financial institutions offer products that integrate with your systems to better manage cash flow, accounts receivable, and accounts payable. Your bank likely has tools available right now that could streamline operations and improve efficiency. It’s worth exploring these options.

Steven Simone: When it comes to capital expenditure decisions, should business owners buy or lease equipment? What about real estate, should they buy or lease? From a banking perspective, what factors should owners consider when making these decisions?

Russ Larsen: As you’d expect from a banker, the answer is, “it depends.” If you’re running a high-growth business, your priority should be retaining cash and capital to support that growth. When considering capital expenditures, whether for real estate or equipment, you want to ensure you keep enough cash on hand, especially if your business is inventory intensive.

There are several programs out there to help with financing. For example, the SBA 504 program allows you to borrow up to 90% for real estate or equipment. I know some people hesitate when they hear “SBA.” But when you consider the terms, 25-year fixed rates currently under 6%, it might be worth the effort.

Another option is New Market Tax Credits, which many businesses aren’t aware of. If you move your business to a designated lower-income area, you could qualify for forgivable loans through the government. Some states, like Illinois, also offer programs where adding employees can lower your loan rate by as much as 200 basis points.

The decision to lease or buy comes down to cash flow. If you’re a mature business with stable capitalization and plans to pass the business down to your kids, buying real estate might make sense. You could hold the property in an LLC, set up a rental agreement, and use it to benefit your family, the management team, or the business itself.

The key is to explore all available options. There are programs like Edge Credits and other incentives that most business owners may not even know exist. That’s why having a good banker or financial advisor is so critical. They can help you evaluate whether these opportunities make sense for your situation.

Steven Simone: What’s the best way for business owners to maximize cash? Should they keep it on the balance sheet, distribute it to shareholders, or take another approach?

Daniel Prisciotta: It’s not uncommon to see business balance sheets with significant amounts of cash just sitting there, idle. The best course of action depends on several factors: the company’s growth and reinvestment goals, shareholder preferences, and any loan covenants or agreements in place.

If it’s determined that there’s excess cash, one option is to invest it directly on the company’s balance sheet. For example, you could create a bond portfolio to earn a competitive return. I had a client with $10 million in cash earning no interest. We worked with them to create a laddered bond portfolio to put that money to work.

The other decision is whether to keep the cash in the company or distribute it to shareholders. For pass-through entities like LLCs or S-corporations, it’s important to consider your basis. Can you withdraw cash tax-free, or will it be taxed? Many pass-throughs show a profit but don’t distribute all the cash, leaving the potential for tax-free withdrawals of previously taxed income.

Another consideration is creditor protection. If the business gets sued, cash sitting in the company could be at risk. On the other hand, if the individual shareholder is sued, personal assets could be exposed. The decision about where to keep the cash, within the business or distributed, depends on where the greater risk lies.

If it’s determined that cash should be taken out of the business, there are several creative ways to do so, each with different tax implications: These include salary and bonus, profit distributions, dividends, shareholder loans, perks and fringe benefits, and share buybacks.

Russ Larsen: As a banker, I often find myself having two very different conversations. In one, I’m advising a client to keep more cash in their business to support growth, capital expenditure plans, or other upcoming needs. In the next, I might suggest a dividend recap, especially if the business has a significant cash surplus, predictable earnings, and a tax-efficient way to withdraw money. Sometimes, borrowing to take money out of the business can make sense, depending on the broader goals and financial structure.

Let me share a quick story to illustrate. I was working with a client who had developed a unique product: a reusable metal panel used to board up windows on abandoned buildings. It had an environmental angle, was more durable than traditional wood, and could be reused. The client wanted to borrow against what I considered inventory, but they viewed it as a fixed asset. The distinction mattered because banks assess inventory and fixed assets differently.

We explored three financing options and ultimately settled on an SBA product with a 10-year amortization. This improved their cash flow significantly, and three years later, they sold the business at a much higher multiple because of this strategic decision.

The takeaway here is that cash flow is everything. Whether it’s improving liquidity, managing working capital, or strengthening your balance sheet, you need to think strategically about your business goals. Your banker should be a key part of this process, offering creative ideas and solutions, not just from within the bank, but from external resources as well.

This transcript has been edited for brevity and clarity.