Tuesday, 27 October 2009

New location for Boss M&A Whispers Blog

I am pleased to announce a new location for "Boss M&A Whispers" blog post which is http://www.documentboss.com/blog/5

This new platform will enable you to have access to more information from the ECM, BPM & BPO technology sector and in particular information related to mergers and acquisitions within this sector.

You will also be able to send information and links that you may find of interest to your colleagues with a single click of your mouse.

I would be interested in your feed back on the new blog and website. Please leave your comments.

All the best

Mark Edwards
Signing off from Google Blogs

Wednesday, 14 October 2009

How many ECM competitors do you really have in your sector?

Do you really know how many companies operate in your specific sector of the ECM industry?
The reality is that the vast majority don’t know. They operate within a segment of the market and regard that as their world as they peer through a keyhole. Typically, they come into contact on a regular basis with the companies that are known to them, maybe due to geographic location or because they share a similar vertical focus.

The known competitors are also often the companies that are:

The largest in your sector
Have been identified and appear in consultants and analyst reports
Companies that attend the industry trade shows
Have websites with positioning similar to your own
Employees that have left the company and moved to yours

The big players have clearly been reduced in number by acquisition. However, the overall number of players in the market has not reduced. So where are the other players lurking? By way of example, in the UK alone there are just under 400 scanning capture service companies! There are over 500 document management software vendors worldwide, which would include those focused on specific vertical markets and line of business applications, whether for healthcare, insurance, manufacturing or local government. In capture and related imaging software there are just over 200 vendors worldwide. All of the above, forming a subset of the ECM marketplace.

Are there hidden companies in the ECM sector?
Many do not get the limelight of publicity and could be regarded as "below the waterline", unseen by the majority of the sector. Don’t assume that you are seeing a true picture of all your competitors. ECM organisations are too busy or just not able to collect the data to get a true bird’s eye view of the sector.

Document Boss has yet to see, in over 10 years of operating in this sector, any company that has come close to knowing the true number of companies active in their own sector. The majority underestimate the size of the market by a factor of two to three! Document Boss holds a unique position in that we do know these numbers.

So what?
If you don’t come across them regularly and are not aware of them, why does it matter? If you don’t know how many competitors you have, should that be of any concern?
We think, YES! You cannot afford to forge your business strategy blindly, on the back of poor and inaccurate "guesstimates". Without proven market intelligence, how do you create a solid strategy and business plan? Sometimes these unseen competitors can suddenly appear in your pond with big teeth and a bite that is damaging to your company and could prove fatal!!

When looking to acquire
When considering acquisitions, how do you ensure that you are not “shoe-horning” your requirements into the wrong fit due to your limited perspective. Opportunistic acquisitions have been proven time and time again to be less successful than proactive, planned and strategic acquisitions. You need first to get an accurate picture of your sector of interest.

Document Boss doesn't just take an overall view of ECM, BPM & BPO. We are able to split the sector down and analyse the individual technologies. We are also able to ‘slice and dice’ the industry by regions and vertical sectors and by the size of competitor. Armed with this information, we can then truly appreciate the scope and potential of the market place.

Take a quick bird’s eye view for yourself
To get a quick bird’s eye view of the ECM market landscape, click here.

Monday, 5 October 2009

The M&A Activity in the ECM sector continues to sizzle!

Today, Nuance acquired eCopy, a provider of solutions that integrate paper documents into a host of software applications provided by multiple major ECM vendors, including EMC, IBM, OpenText and others.

The acquisition was valued at $54 million, all paid in Nuance Stock. This seems to be another example of how valuations have held up during these tough economic times.

Document Boss spoke today with Robert Weideman, General Manager of the Nuance Document Imaging Division, who said, “This acquisition is focused on delivering solutions that make scanning of information easier and more valuable. Nuance has been focused on personal desktop products, as exemplified by our OmniPage Products. The addition of eCopy solutions will facilitate the integration of our desktop capabilities into eCopy’s distributed scanning capabilities from MFP’s. This will increase the value of scanning to an organization and our combined solution set will accelerate the adoption of our products to solve more customer problems and needs”

Document Boss also spoke with Ed Schmid, the President and CEO of eCopy, who stated: “We are very excited about this combination! eCopy has provided direct connectivity solutions to many key ECM companies, bringing desktop connectivity to their offerings. We are now able to leverage Nuance’s suite of products and add additional functionality along with more business process automation capability to our solutions.”

Thursday, 1 October 2009

Document Centric BPO

Dell buys Perot Systems then Xerox buys ACS. Two deals in two weeks by two big players in the hardware business, moving into the BPO market, reflects the interest Document Boss have seen growing for BPO in the ECM, BPM market.

Five years ago Document Boss would not have bothered listing BPO in our positioning statement but now the document centric BPO sector is a big focus.

Looking back to the Hewlett-Packard buy-out of Electronic Data Systems Corp. for more than US$ 13 billion last year, maybe we are seeing the first signs of a pattern. The crystal ball gazers say the BPO market is expected to grow at 5% per annum. Well we all know how accurate the analysts in our industry have been over the years. Just go find some of their forecasts from five years ago if you want a chuckle but I predict that maybe they could be right for a change.

Oh my god! Does this now mean that I am also an analyst! Please no, help! Save me!!!!

Internet advertising now bigger than TV in the UK

Based on figures from the Advertising Association and WARC, a report from the IAB and PricewaterhouseCoopers shows that internet advertising was the only sector to grow in the first half, taking a total of £1.75bn.

For the first time ever, in the UK, internet advertising has outstripped advertising on TV. Interesting maybe, but how does that effect the ECM, BPM or BPO sector and, more pertinently, why am I bothering to mention it on this M&A blog??

Two reasons I mention this in an M&A blog:

1) Marketing has changed massively in just the past 18 months and the majority of companies from our sector are at least five years behind. They see and hear the changes but they do not react - Knowledge without wisdom. There are so many channels of communication and routes to their prospective clients but very few companies in our sector use them effectively . The majority in this sector are operating a sales led revenue process when they should be marketing led. They still place great emphasis upon sales people and too little upon their marketing. Sales people are still an integral part of the process but more and more companies need executives who can communicate effectively through a variety of media to their target audience, leveraging the great marketing tools that are now available.

2) If you want to maximise your return in the M&A world then you must become adept at marketing (as well as all the other sections of the equity wheel) and embrace the new means of communication. If you are buying, then, to maximise your investment, you need to look at that company and treat it like a raw diamond plucked from the ground. What skills, assets, technology, network, synergy has your company got that can take this raw diamond, cut and polish it to ACCELERATE their company EQUITY VALUE. How does your 1+1 =3? If it doesn't, where is your return? Too often the critical eye is upon the acquired company and not upon the acquiring party. It is a question all acquirers should ask themselves. "How will we add value to that company?" How will we make it better, stronger, more valuable.
If you are working towards a sale then you need to be aware of the value first class marketing can add to your company. Don't tidy up your website 2 months before you want to sell the business and expect it to add equity to your company. However, if you give yourself time, you can create an EXIT PLAN so that you can generate a constant supply of leads to your sales force and you have a replicable process, then you have equity value. You will also have increased your historical revenue in the lead up to your sale, which also adds worth.

The reality is that most companies in our sector either overlook the marketing piece of their business or are just out-of-date in their approach, unable to leverage the tools and communication channels that are available to them and instead, expend their energies whipping their sales force for lack of sales that is a result of THEIR poor marketing.
With the internet and the increasing number of options available to companies to convey a message, marketing is more critical than ever. Marketing will continue to increase in importance and the sales process will shrink.
Focussing exclusively on sales to the exclusion of marketing is a bit like a builder building a home by piling brick upon brick without mortar. It is fast and for a short time looks like they are getting results but........................................ ultimately, it ends in tears.

Monday, 7 September 2009

GOTCHA: Kofax Acquires 170 Systems


Kofax announced today the acquisition of 170 Systems. 170 Systems’ audited financial statements for the year ended December 31, 2008 reported revenues of $28.1 million, a net loss from operations of $2.6 million and gross assets of $20.9 million. During the latter part of 2008 the company restructured its operations with the goal of approximately breaking even on the same level of revenues during 2009 and, on an unaudited basis and excluding expenses relating to this transaction, the company achieved that objective during the first six months of 2009.

Kofax expects to effect additional cost savings made possible by its acquisition of the company between now and December 31, 2009. To acquire 170 Systems, Kofax paid total consideration of $43.0 million or net consideration of $32.9 million after deducting $10.1 million of cash held by the company. Of the total consideration $29.7 million was in cash, $9.0 million was in the form of a note payable due on September 4, 2010, bearing interest at the rate of five percent per annum and guaranteed by Kofax’s bank and $4.3 million in the form of a hold back, with $2.3 million to be released on September 4, 2010 and the remainder on September 4, 2011, subject to certain indemnification terms and conditions.

So based upon what we currently understand are the details of the deal and assuming a mid - 2009 valuation:

Revenue multiplier 1.1X revenue
EBIT multiplier n/a negative earnings
Earn-Out ~15%; $4.3M

This shows that companies that are not yet showing positive earnings can still be sold at ~1X revenue, assuming their is a strategic fit.In addition, 170 had $10M cash on hand, which they can can use to fund growth.

From a competitive market standpoint this deal maybe underscores a trend by the larger capture, imaging & IDR technology companies to move further up the value chain into business process applications markets. Who will follow and what effect might this have on the Kofax reseller network?

Tuesday, 25 August 2009

The Changing Tides of Time and Why Success Doesn’t Last

"Time and tide wait for no man" Geoffrey Chaucer

One of the most stimulating aspects of working in this industry (EDM, ECM, BPM & BPO) for me, is the constant rate of change. Technology matures, market tastes change, markets merge, new technology obliterates old technology and even sales techniques change as does the thinking of your customers. Therefore, what once brought you high levels of revenue may not now work. Just like the tide affecting the coastal landscape, then so does time have an effect upon the business landscape.

So what does that mean to senior executives and why should I find that stimulating? Well for one it is inevitable and there is no point in fighting it, so I make the decision to enjoy the journey and accept that I have to change. Accept that you are on a never ending journey of discovery and learning. Don’t try to hang on to what once worked but now is no longer valid.

There is no such thing as the perfect process or absolute performance. What worked last year may not work as well this year and in some cases may not work at all. Document Boss is in a very fortunate position that we see the vista landscape of our industry across the world and see for ourselves the changing sands of time and the effect it has on companies. Some adapt and prosper some struggle and die. What really matters is how you are performing NOW! Do you know and can you measure it? How are you performing relative to the other players in your marketplace? Has technology or the economy changes moved your prospective clients nearer or further away? You need to become better than the competition at understanding your customer requirements and be in a sector that has life. You need to check regularly that you are not in a sector that has lost touch with the moving desires, latest requirements and thinking of your intended clients. If it has then get out quickly but jump in to a new related sector with knowledge and insight and not leap into a dark hole of hope.

Nothing works all the time in all circumstances. Right strategy is important as is right execution, but so is luck. The role of a business leader is to be alert to these changes to manage the probabilities of change and be quick to capitalise on opportunities as they arise. A good example in our industry of a company that adapted well was Tower Technology. They understood their market, had a very good customer base, excellent domain expertise in the Financial & Insurance market, were close to and understood their customer, had replicable solutions, a motivated team with a good culture and a strong service and maintenance business. Several times during their development they had to adapt and change which they did very successfully and were finally acquired by Vignette.

A fast growing UK Document Outsourced service company, well positioned in the market and positioned for growth came unstuck because they were too heavily dependent on large volume, fairly low profit conversion jobs which meant they needed to "feed the factory"...they needed to move up the food chain into hosting etc. They failed to pull in new business and were very vulnerable if they lost one or two major contracts, which of course they did. Despite achieving some substantial revenue on the back of a couple of big contracts they failed to change or leverage their position and ultimately imploded.

Humility in good times and learning in bad times is a healthy attitude and will help to ensure you don’t become down trodden by not taking downturns personally. There are a whole host of elements of both success and failure that have absolutely nothing to do with you, your efforts, or your character.

"Nurture your mind with great thoughts for you will never go higher than you think"

Benjamin Disraeli

You need to be alert and positive minded to the changes and be open to change. That in itself can be a test, to be able to let go of what once made you successful. Initially it can feel like a step in to the unknown. However, you have the opportunity to test your theories as you gather latest information. If you would like assistance to “Keep your finger on the pulse of this industry” see Boss News http://tinyurl.com/cu523j

It’s not all a science there is also some art otherwise successful businesses would be run by boffins in white coats with mathematical formulae. However the scientific methodology of test, observe and replicate will put the odds firmly in your favour. Learning from the recent mistakes of others and testing provides huge benefits in your journey of success.

Testing on a small scale and keeping your eyes and ears open will give you more than a fair chance for the health and growth of you and your company. If you can do that and accelerate your long term equity value, then you are a true and valuable business leader. Nothing stays the same over time. Piece by piece the sands move and so should you but with thought, information and design.

Thursday, 16 July 2009

Software AG Announces IDS Scheer Acquisition for €477 million

Software AG have announced their intention to takeover Business Process Modelling company IDS Sheer. For further details.

Software AG will purchase the outstanding shares of IDS Scheer in a cash-and-debt deal worth up to €482 million. IDS Scheer is a business process consulting firm with 19% of revenue contribution coming from licensed software products. In 2008 IDS Scheer had revenues of € 399 million.

The merger is subject to approval by German business regulators. Software AG has agreed to pay €15 per share to IDS Scheer shareholders in a voluntary public tender offer. The total value of the takeover offer amounts to approx. EUR 482 million. The projected accumulated annual revenue of IDS Scheer and Software AG together would be around 1.1 billion Euro.

The supervisory board of IDS Scheer AG, have committed to accept the takeover offer for all shares in IDS Scheer AG held by them, i.e. a total of 15,332,622 shares. Software AG expects to close the transaction in the fourth quarter.

  1. What impact will this acquisition have for the BPM sector?
  2. There are over 300 BPM / Workflow software vendors globally many small and medium sized companies. Who will be the new stars and who will suffer?
  3. Will this acquisition be a catalyst for a series of acquisitions in this sector?

Post your thoughts in the comment section of this blog or feel free to send me an e-mail at mark@documentboss.com

Thursday, 9 July 2009

Perceptive Software Continue Growth Trend

Perceptive Software continues impressive levels of growth that are well above the industry average despite the recession. CEO Scott Coons said “Perceptive Software continues to grow at four-times the industry average, as we have for a decade”…. “Were pleased that license revenue in the third quarter was 24% higher than the quarter prior.”

Their recurring revenue maintained a record-high 35% of total revenue
License revenue in the third was higher from January to March 2009 despite worsening economic conditions.

Bravo Perceptive! If they can continue with such levels of growth then it must give hope to other companies in this sector that the economic conditions do not have to result in reduced performance.

Monday, 6 July 2009

The Seven Habits of Highly Successful Acquisitions?

Unfortunately, human nature and our general "busyness" dictates there are more cures sold than preventive measures taken. Whilst we have our head down like a worker bee, making ourselves busy, it is easy to forget to look up, ahead and plan.

Prevention is always a better alternative than cure but look at data security. How much money changes hands after there has been a disaster? How many gym memberships are sold once the person has already put on weight? How many health foods, potions and lotions are sold to people who have already had a health scare? How many security home alarm systems are sold to people once they have already had their home burgled?

Over 50% of acquisitions in our sector fail to reach their business objectives because they do not take the necessary actions in advance to increase their likelihood of success. Yet time and time again companies enter their acquisition journey poorly prepared. The result is that acquisition success has worse odds than flipping a coin, yet often costs millions to undertake.

The true failure rate is probably closer to 70% but due to many companies not having clear goals there is nothing to compare the results against. Often, goals are allowed to drift during M&A activity, as companies behave in an opportunistic manner, shoehorning requirements in an effort to save time, save costs, “bag a bargain” or just so that they can show some results for all their management time and effort as their team becomes more and more frustrated while the process drags on and on….…….

Stephen Covey’s advice in his book, “The 7 Habits of Highly Successful People”, was: Number One: “Begin with the end in mind”. This is a great first step in the all important FORMULATE stage of any M&A activity. (The 5 stages in an acquisition are Formulate, Locate, Investigate, Negotiate, Integrate)

Beginning with a clearly defined objective and goals will aid thinking and help to keep yourself and team members on track when discussions start to become complex. It is so easy to become embroiled in the detail, counting the grains of sand, that you lose sight of the bigger picture that should be giving you direction in everything you do. In order to achieve a goal a person must know where they are going.

If I was to list the 7 habits of highly successful acquisitions, then I would probably write a book around the following tenets:

  1. Begin with the end in mind” – I hope Stephen Covey would excuse me on this one but it is so important. Know your acquisition outcome from the start. What should acquisition achieve for you.
  2. Ensure you have a clear understanding of who and what you are” – this is the who and what type of company you are currently. Where are your strengths? What is your current positioning and what is your value proposition?
  3. Have a true and clear view of your competition” – if you are planning an acquisition, this is no time to overstate your strengths with a ‘Pollyanna’ view of your world
  4. Have an M&A strategy that fits with your business plan” – surely you would say this is common sense? I would agree, but having an M&A strategy really fit the company’s business plan is not as common as you may think.
  5. Create a set of SMART acquisition objectives” - be Specific; make them Measurable, Agreed upon within your team, Realistic and within a Time-frame.
  6. Acquire with the insurance of knowledge and experience” – many acquisitions fail because they try to operate in areas that they do not know well or where they have insufficient data or expertise.
  7. Don’t suffer from a keyhole vision” – ensure that you have a clear and unobstructed view of the businesses that operate in the sector in which you intend to acquire. So many acquisitions set out in pursuit of a few known competitors and then try to shoehorn them to make them fit. You need to have a good overview of the possibilities so you get the “Right Fit”
Actually, if I were to write a book on the habits of highly successful acquisitions I would not be able to limit myself to just 7 main points. It would probably be 4 x times as long. However, “The Twenty Eight Habits of Highly Successful Acquisitions” was not as catchy a blog title and would take a lot more time to write and I doubt many reading this blog would have reached this point.

Thursday, 11 June 2009

Good ideas are ten-a-penny! Great Ideas are one-a-penny! Great Ideas that you can successfully implement are “Worth Their Weight in Gold!”

It is a great idea to have an egg for breakfast. They are high in protein, highly nutritious and, contrary to popular belief, are not bad for your cholesterol levels. However, without the skill and ability to implement your great idea i.e. “cook the egg” you just have a raw egg on a plate.

If in business you want to avoid getting egg on your face, then you need a certain level of expertise to execute. What I mean by “expertise” in this article is, “been there done that and have learnt from my mistakes”. Such a person has the “know-how” the expertise and, most importantly, the skill to implement. It is difficult to quantify how valuable this ability is in business, but I would guess if you had a level of expertise where you could just “plug-in” whenever you needed it, then you would be running not only a profitable business but a highly valued business as well.

Learning from others in business is probably one of the reasons why business biography books are still so popular. The majority are hardly edge of the seat “page turners” but they do pass on practical and useful lessons from people on the front line.

The analogy that comes to mind is; if you have ever put together some self assembly furniture without instructions, how much easier it is to assemble the second time. If you are like me, even if it does have instructions it makes little difference as I don’t read them anyway. I have been told it’s a male thing.

Having access to an executive with that first hand “know how” is just like assembling furniture for the second time. They know the short cuts and where to avoid the pitfalls, based upon practical first hand experience. The end result - they can get the job done, more quickly, at lower cost and with a better output.

Daniel Defoe (1660-1731) the author of “Robinson Crusoe” once wrote:

“Set sail with a mariner who has been shipwrecked many times, for he surely will know where the reefs are”

I am working from memory with the above quotation, as I could not find any reference to it on the internet. If you know the exact wording please do let me know.

I understand the sentiment of the above quotation, however, I must confess to a certain feeling of trepidation if my mariner has been shipwrecked too many times, as he may be some sort of a Jonah or just a totally incompetent sailor. Did they have kamikaze sailors?

Business is complex and it won’t be any less complex any time soon. The range of skills required to run a business successfully is many and varied. The time we have to learn new skills is constantly decreasing as the pace of business increases. The rate of consistent change is the only constant. For the small to medium sized organisation it is not always possible or viable to have that experience “in-house” on a full time basis. However, the value of being able to access specific vertical market expertise on a “plug-in” , ‘as and when’ basis could be highly valuable for the learning curve and growth of any company in our sector.

Running a business can be a daunting task. Too often, working in the business instead of working on the business means that you lose a certain level of objectivity. That is when outside help can be useful. Taking a close look at all aspects of your business with a new perspective can yield a better business. Firstly, in diagnosing areas of the business that need prioritising for special attention and secondly, in bringing in the right level of expertise to quickly help fix the problem. A “doer” not a pontificator. - If they have the right level of experience and knowledge. What you don’t want is the “expert” who borrows your watch and then tells you the time as they wave goodbye, only stopping long enough to hand you their invoice. You need first hand, front liners who have the battle scars to prove they’ve won their ‘spurs’ who are willing to roll their sleeves up and take action.

Good ideas are ten a penny. Ask any VC. I know individual VC’s that have 30 business plans land on their desk every week. Many of these hardly touch down before continuing their flight straight to the waste paper basket. Getting the execution right is where the rubber hits the road. Get that right and you can keep the egg off your face and replace it with a nutritious breakfast.

Wednesday, 3 June 2009

The Time of the Small Giants

I think the time has finally come for the (smart) small and mid-sized companies within the ECM technology sector. As I have mentioned in previous blog posts, there have been some significant changes in this industry. The number of companies that are easily seen, what I call the “tip of the iceberg” companies, have now been reduced via acquisition. This now leaves the vastly unseen smaller companies that lurk beneath the surface and for the most part do not reach the light of the media attention.

Obviously, the other significant event in the past few months has been the big “R” word - RECESSION. The only good thing about the swine flu was that it took the media attention away from the big “R”. It was probably also a good thing for face mask manufacturers, have you ever seen so many face masks. I understand that some international flights have been looking like a surgeon’s convention.

How can we not be aware of the recession when every retailer is using the recession as a theme for their marketing. It seems that we can’t buy a packet of crisps without being told that eating these crisps will be an antidote for the “recession blues”. Or recession proof your grocery bill by shopping with “X”.

The recession has however hit some companies hard and they need an antidote which is unlikely to come out of a packet of crisps. Companies such as IBM have assessed the damage that the recession has made to their balance sheet and are looking towards new growth opportunities.

Mark Loughridge, chief financial officer of IBM. "I go through a deal review every week," he recently told Reuters. The current environment provides a "fertile" hunting ground for acquisitions, he added.
Ari Balogh, Chief Technology Officer of Yahoo believes that current tech valuations are "amazing" when compared with their levels just a few months ago. “It's a good time to be buying now," Balogh told Reuters. Yahoo is in the process of acquiring some new companies. "I can guarantee you there will be some acquisitions," he said.

The second part of this year is expected to show an increase in the number of acquisitions and for the ECM sector this will undoubtedly involve the small to midsized companies in this market.
This could create many new opportunities and some of the more profitable smaller companies could gain considerable attention. However, in order to be a small giant they need to ensure that they are prepared for what the next 18 months is likely to bring.

Potential acquirers will often look at a business in a completely different way than existing management of the smaller companies in the ECM sector. By the time a company board decides that they are open to being acquired there are often many inbuilt issues with their business which stop maximum shareholder value being achieved. Some of the problems can also scare away “good fit” acquirers from a “Smart Acquisition” or merger.

Part of any good ‘due diligence’ process is looking at the weaknesses and risks associated with a business and deciding, is it an acceptable and mitigated risk?
The problem for management is that by the time, the acquisition process is commenced it is too late to fix these problems. If these can be identified early, many of the risks can be mitigated & built into a company’s business strategy. This is something that I will be banging on endlessly about over the next few weeks as Document Boss prepares to launch a new service that addresses this and many other closely related issues to the above. The factors that effect equity value are often not aspects of the business that can be changed in a matter of a few months. Historical data about the business also greatly effects value not just what is happening NOW!

Transparent attempts to increase profitability by cutting short term costs and the expense of long term success just prior to an acquisition are all to obvious. Such companies need to start thinking and behaving like a small giant well in advance of any M&A activity if they want to achieve GIANT returns. There may never be a better time for the smaller companies in our sector to shine but only if they learn to walk and talk like the big boys!

Friday, 15 May 2009

“You Should Always be Grooming Your Business for Sale Even When it is not “FOR SALE”

If you are not constantly "grooming" your business to be sold then you have already sold it. To yourself! And guess what? You have probably bought a dud!

The idea that the company should constantly be grooming itself to be sold, even when the prospect of selling the company may not be on the agenda, is, I believe, a very good one.

How does an outside assessment of your business make you feel?
Imagine for a moment that an outside expert from the same industry will tomorrow be given access to scrutinise all aspects of your company. Imagine that the expert who will be arriving at your door is of above average intelligence, will not miss anything and will not be bamboozled by clever sales talk by way of explanation. All they will see are the facts! When you assure them that you have a clearly defined and communicated sales process, yet when questioned, your sales people cannot articulate, follow or even describe this process that you say is ingrained within your company, then everything will be laid bare for them to see. How does that thought make you feel? Having the unbiased outsider delve deep within your company?

How about if you had the magic to make time stand still for six months whilst you made the changes to your business? What would you do first? What would you change?When time starts running again, what difference would the changes you made make to the future operation of your business? Would you make more profit or less? Would your business life be more or less stressful? “

You Should Always be Grooming Your Business for Sale Even When it is not “FOR SALE”
However, the reality is that none of us has the magic ability to stop time, allowing ourselves the freedom to operate in a time vacuum whilst we “sort out” the business.

The difference between knowledge and wisdom: The first is ‘knowing’ or ‘being aware’, the second, WISDOM, is doing something about what you know! By the way, those same changes you planned to make while time stood still, will probably be those that make the business easier to manage, more efficient and potentially, more profitable as well.

Many of us have the “Knowledge” to know what needs changing but it is action that counts. Knowledge is great, but action is greater. Sounding smart will never be an effective substitute for doing something smart within your company to make it stronger, more effective and valuable.
Fast decisive ACTION. Not “SMART” talk, meetings and reports! To make changes in your business you need to work quickly and only measure progress through actions taken; not just talk and decisions. Simply making a decision will not change anything. Meetings and reports should not be defined as action.

You need leaders who have previous, hands on experience of this type of work and the credibility to take the lead. Having such people on the payroll is not always an option for SME’s. The highly experienced executives will not necessarily be attracted to your company. Those that you need most will probably not find you attractive as a full-time employer. However, working for a few days alongside an internal executive so that their hands on experience can be passed on, could be an option in a “Rent a Talent” scheme.

You need to CHANGE what you do to get different RESULTS!
To create a more valuable business than you have done historically, will not only require different actions but may require you to have a different mindset. Doing what you have always done will give you what you have always got! In order to build the value of your business you need to:

  • Attract TALENT (Full-time. Part-time and Interim)
  • Have ACTIVE partners Be CONNECTED to Centres of INFLUENCE
  • Have a CLEAR USP and VALUE Proposition
  • Have DEFINED, Internal Business Processes that MEASURE ONLY what really MATTERS
  • Have a STRATEGY to DELIVER value to your Shareholders
  • Have an END GAME GOAL that points your whole TEAM in the SAME Direction
  • Finally, and most importantly, have a strategy and mechanism for MAXIMISING your trade sale value
To get the above, don’t fall into the trap of expensive consultant “Smart Talk”, Fancy Presentations and Complex Diagrams from pure analyst academics, who have never been on the front line, which result in little effective ACTION and even fewer results. You need to see action and results and you need to move quickly, taking the simplest route. To maximise your chance of success you need real world, front line, hands on experience from executives who are doers and not just talkers who you know will get the job done.

How would you like a whole team of such people waiting in the wings for when you need them most? How would you like this team to have specific experience from the same sector as you? Would the prospect of "Renting a Talent" to manage a specific project or quickly solve a problem within your organisation be attractive and useful to you?

If you have an area of your business that you know requires strengthening I would be eager to discuss some possible solutions.

Friday, 8 May 2009

The Captain of any ship knows the danger of seeing just “The Tip of the Iceberg”

So Open Text have bagged Vignette and the last large, independent ECM player is about to melt away!

Is that good news or bad news for the industry?

For the industry analysts it is probably bad news, since the small visible tip of the industry that they viewed (and most other industry "experts") has just got smaller.

Is that good news or bad news?

If you’re a senior executive in this industry, managing an ECM, EDM, BPM or document centric BPO company and you have previously used these "experts" to keep you informed, perhaps setting your future strategy by their analysis, I suppose that could give you some cause for concern. Their analysis will now be even more skewed and extrapolated.

Is that good news or bad news?

Actually, I think the fact that the pontificating, crystal ball gazers will now be rightly exposed as talking eloquently out of their "hulls" for the past few years is actually a very good thing! There are many good executives in this industry who don't need the "Mystic Megs" to create a profitable company. They especially do not need experts who see just the tip of the iceberg and, based upon such a limited overview, extrapolate theories for where this industry is heading.

In the same way that the Captain of the Titanic got his bearings wrong, it is just as likely that the crystal ball gazers have too. The most annoying thing is that they are selling something based on what will happen in the future and is consequently, hard to challenge. How many analysts are held to account for their reports of five or ten years ago?

“It says here in your report that this industry would be worth $450 billion by now. Well where is it? Can I have my money back please? By the way, don’t let the door hit your backside on your way out!”

There is a lot more life left in this industry and I suspect that we are about to enter probably one of the most exciting stages for this technology sector. New companies are now free to emerge above the waterline as the new shining vessels of success. There will be a lot more acquisitions but not of the size we have seen in the past, until we start to see some multiple acquisition roll-ups.

What is evident to just a few, is the real size of this industry, globally. What has been seen by the many is just the tip of the iceberg. The few big players, sitting proud above the waves, attracting the attention of the analysts and the media. That tip has now melted away to just a few now!
What has previously only been appreciated by just the few, is what lies beneath the glare of the bright sun of publicity. Innovation is there and thriving. Technology, talent and passion that, with the right nurturing, will make it into the sunlight.

The time has come for the entrepreneurs from the SME's to make their way to the surface. (Note to self: I may be carrying this analogy too far now) There is a lot of talent, innovation, value and not an inconsequential amount of profit, hidden away in the companies that have been lurking in the shadows below. This is where the new stars of the industry will arise from. The business world has changed and it will continue to change at an every increasing pace. The big boys can disappear quickly in one brief storm and new players can quickly rise to prominence, due to increased access to information and better communication.

The ECM iceberg has not melted away as the crystal ball gazers had predicted, it has just disappeared from THEIR view. The weight is below the waterline.

Is that a good thing or a bad thing? Who knows? Personally, I can't wait to find out! Good Bye Mystic Meg and let's bring on the party. This is when the fun really starts for those that can see below the Plimsoll line.

If you would like to come diving below the waves and find out what potential treasures are hidden below for your company, please get in contact.

Wednesday, 6 May 2009

Open Text to Acquire Vignette

It was announced today that Open Text will acquire Vignette. They have entered into a definitive agreement pursuant to which Vignette will become a wholly owned subsidiary of Open Text. Vignette shareholders will receive US $8.00 in cash plus 0.1447 of an Open Text common share for every Vignette common share which equates to approximately US $12.70 at close of market on May 5, 2009. This represents a premium of approximately 74% above the 30 trading day average closing price of Vignette's shares and approximately 41% above the most recent closing price. This values the transaction at approximately US $310 million.

John Shackleton, President and Chief Executive Officer of Open Text, stated, "The combination of Vignette with Open Text will extend the breadth of our offerings and further Open Text's positioning as the leading independent ECM vendor in the marketplace."

"Vignette's customers represent some of the world's most powerful online brands and we are excited about the opportunity to expand the relationship with these customers and partners
," said Shackleton.

"After a thorough evaluation of strategic and financial alternatives, the Vignette Board of Directors believes that today's announcement provides attractive value for our shareholders," said Mike Aviles, President and Chief Executive Officer of Vignette. "Our shareholders, customers, partners and employees will all benefit as Vignette combines with Open Text."
"Joining Open Text builds on our commitment to deliver the most innovative solutions for our customers and partners. Vignette has an enviable customer base, deep expertise in Web Content Management (WCM) and global distribution capabilities. Vignette customers will benefit from Open Text's expanded ECM solutions portfolio as well as their Vignette products being supported by the world's largest independent ECM solutions provider,"
said Aviles.

Vignette is based in Austin, Texas, and has approximately 700 employees. The transaction is expected to close in the second half of calendar 2009 and is subject to customary closing conditions, including approval by Vignette's shareholders, Hart-Scott-Rodino anti-trust clearance, Securities and Exchange Commission clearance and stock exchange approvals.

First Comment:
Vignette’s bleeding stopped today when Open Text announced its intent to acquire the troubled company. The handwriting has been on the wall for a long time as Vignette’s 2008 results were very poor, down almost 30%. Several years ago Vignette did a reverse 1 for 10 stock split, which foreshadowed their doom.

This acquisition continued Open Text’s spending spree and intent to acquire some big players in the market. Open Text have paid approximately just 2X revenue, (1 X revenue if you substract the $150M cash Vignette were sitting on) which is low considering it's size and prominence, and is in part due to Vignettes lack of profitability. This is in comparison to a 9% operating margin for Open Text so they need to make some economies to avoid diluting their own profitability. This should be achievable once they have made some cost cuts. It does give Open Text access to Vignette's customer base but from a technology viewpoint there is a lot of overlap. They do however, gain a java based portal product which could value to their offering. Maybe they are also looking to improve their maintenance stream and at the same time create a $1 billion dollar ECM powerhouse. Being the biggest "specialist" fish in the pond has in the past shown a good return for companies.

The key question will be; can the whole be greater than the sum of its disparate parts? Can also these separate pieces build into a cohesive offering suite and can they make sufficient cuts to make the business profitable. My guess is that they will.

Wednesday, 22 April 2009

Flash, Burn & Crash!

Acquisitions, like moths to a naked flame!

Too much to do, too much information to absorb and so too little time in which to do it! How many senior managers have spare time and would relish yet another time absorbing project to be dumped on their desk?

The real answer is actually, quite a high percentage - if you mention the magic word “acquisition”. Talk of acquisitions will attract the attention of company managers like a moths to a flame. In the same way that a naked flame can be deadly for the moth so too, can time consuming, attention grabbing acquisitions prove to be just as deadly for senior executives.

Add on the extra work of an acquisition and many top managers will be spreading their time too thinly. Acquisitions have almost a magical quality to attract attention and use up management time which results in them neglecting their core business.

The problem of lack of time has never been so acute a problem as it is today; the business world and the rate of change, moves at an ever increasing pace. Senior managers must, more than ever, keep their eye firmly on the ball when it comes to managing their business. This is not a recessional issue and as a consequence it will not go away. In fact, it will become more and more of an issue. The old saying that, “The only thing that is constant is change”, is so true but, with the ever increasing pace of change, we now have a new dynamic. The business landscape now changes faster and more often than at any time in the history of mankind. If you don’t believe me then watch this video. http://tinyurl.com/ctlacf I am sure that, as I did, you will find it thought provoking.

If management is allowed to become defocused from the core business, it is, in effect, throttling back on the engine that drives a company forward. More than ever before this will have a negative effect on personal effectiveness and company results.

Buying the competition, adding new vertical expertise, market share, technology, expertise, global spread, increased revenue / profit or an established brand name could all pay dividends, especially when the recession cycle has ended and the economy picks up again, as it inevitably will. The real question is how do you make the acquisition work? Loss of revenue momentum is one reason why so many mergers fail to create value for shareholders. Just as importantly, how do you make the acquisition work, whilst battling current economic challenges and without harming your existing business?

In a time of global opportunities, fast paced technological developments and an ever faster-changing economic landscape, perhaps, if I may be so bold to suggest, you need an M&A partner who will not defocus your company management time and perhaps bring you the previously unknown and the pleasantly unexpected from what was previously the unattainable.

If you would like to discuss acquisition strategy or possible opportunities in this sector, please contact me direct for any of the regions we cover - North America, Continental Europe, United Kingdom or Asia Pac, via email mark at documentboss.com

Tuesday, 21 April 2009

SUN set or SUN rise for SUN Microsystems

Due to the media speculation about IBM acquiring Sun Microsystems many crystal ball gazers were surprised (even if they don't admit it) when it was announced that Oracle will acquire Sun later this summer. Oracle have agreed to pay $7.4B at $9.40 for each share which when subtract the cash and money owed to Sun means a true acquisition price of $5.6B. Enough money to bail out a few banks!

Many analysts said that Sun would fail to find another buyer after talks with IBM broke down. Then within days they were proved wrong. A few raised eyebrows at first as Oracle were not commonly predicted and then some nods of approval as the synergy was realised. Sun's Solaris operating system is the leading platform for Oracles database software. Sun also makes "middleware," which allows business computing applications to work together. Oracle's middleware is built on Sun's Java language and software, so there is a fit but many elements of Sun and Oracle’s businesses are quite different from each other.

Outside of IT the mergers and acquisitions the trend has been for large conglomerates to split up their products and services. To spin them off or sell so that they can focus upon their "core competencies" on the whole this has been reasonably successful. However, within IT the trend seems to moving generally the other way.

However, can the same management make a success of the future? Is this a rising or setting sun we see before us?

Tuesday, 7 April 2009

Open Text Acquires Vizible

Open Text acquired Toronto-based Vizible Corporation, a privately held developer of media interface solutions. The addition of Vizible expands Open Text's set of Digital Media solutions, which help companies manage rich-media content such as video, audio, graphics and photography.

Vizible's solutions will give Open Text a strong set of digital media solutions suitable for the fast growing demand for social media applications, for marketers and advertisers, as well as media and entertainment organizations looking for new ways to extend the value of their intellectual property in a social media world.

Sunday, 5 April 2009

Anacomp acquired by Formscan

Formscan, led by Chris Haden, has acquired the UK business of Anacomp for an undisclosed sum. The acquisition brings to Formscan, staff, secure offsite archiving facilities, and outsource document process management capabilities. These complement Formscan's existing software solutions and document management services, positioning the company as an all-round document services provider.

Monday, 30 March 2009

First Light of US Economic Improvement?

Last week in the US we may have seen the first light of some economic improvement.

The US has a big knock-on effect to the rest of the world so this could be good news for all.

Three important measures of US economic performance all moved in the right direction last week:

1) both existing and new home sales rebounded by around 5% in February after a very poor January
2) consumer spending rose for a second consecutive month
3) durable goods orders, a leading indicator of investment, rebounded in February after dipping sharply in January

Perhaps more important than the data was the feedback following publication of the detail on the US Treasury’s financial rescue plan, the Public-Private Investment Program, or “P-PIP”. This was met with resounding approval by financial markets.

The S&P 500, for example, staged a strong rally to recover from what had been the lowest level since 1996. The plan aims to use a combination of public and private funds to buy up ‘toxic assets’, untradeable loans and securities that have weighed upon banks’ balance sheets and impeded lending. Many private sector players have already confirmed that they will participate in the scheme, raising hopes that it will be successful.

What does the current economic situation do for the mergers and acquisitions markets is so far not clear. Many owners will look at the low interest rates they can obtain on cash investments as a reason to hang on to their business assets. However, there is mounting pressure on some companies as the credit crunch squeezes them hard. If they can’t obtain credit many more companies will go under this year.

Companies sitting with cash in the bank will look at profitable and stable companies more than ever as a good place to put their money. A profitable company that can be acquired for instance 5X EBITDA despite the higher risk must look more attractive than the current interest rates returns being achieved by just parking the cash? Where else will you get a 20% return?

This ignores the benefits that the right strategic acquisition/s could do to leverage value from the acquirers existing business. Right NOW could be an excellent time to raise your company above the size of your closest competitors. Like the old boxing says;

“A good big un usually beats a good little un

All Photographic Images on this blog are Copyright of Mark Edwards and should not be published without permission

Wednesday, 18 March 2009

IBM Could Be Acquiring Sun

It is rumoured that IBM may acquire Sun Microsystems possibly within the next two weeks. Nothing has been confirmed as yet but IBM is likely to pay at least $6.5 billion. That would equate into a premium of more than 100% over Sun's closing price on Tuesday

Friday, 13 March 2009

Tridion Performance

Tridion (WCM player) was acquired by SDL for $94m in May 2007. Looking at SDL's year-end financial results I can see that Tridion saw revenue growth of 16% in 2008. Tridion’s revenues in 2008 were just under $49M which is not as high growth as they achieved in 2007 but still significant.

SDL Tridion now claims about 600 customers in total which is a solid increase up from the 500 a year ago. The company is strong in Europe, with its largest market in North America.

Web Content Management as I have mentioned previously is still performing despite economic pressures and there is more potential from this sector. There are opportunities to claim the high ground for an acquirer who is prepared to enter the WCM market strongly with focus and beat the less focused larger players who have acquired their way in to the sector.

Who has the appetite the strategy and the cash to make the splash in WCM?

Thursday, 5 March 2009

Getting Your Ducks Aligned for Peace of Mind and Acquisition Success

“Spectacular achievement is always preceded by unspectacular preparation.”
Robert H. Schuller

What's Waiting For The Unprepared Down the Acquisition Path?
OK, so we know that the failure rate with acquisitions is so high that such work should commence with a government health warning but let’s focus a bit more on the important issue of why. Well as always in business there is not a single simple answer. If it was so simple then the problem would not exist in the first place. You could just simply log-on to one of those specialist blogs written by some highly irritating industry know-it-all and find out what the problem is and how to…………………. Errrr??? Anyway where was I.

The area I would like to focus upon in this post is in the preparation and planning stage what I call the “Formulate Stage”.

5 Stage Acquisition Process
In the process that I use for acquisitions there are 5 major stages these are:
  1. Formulate –
  2. Locate –
  3. Investigate -
  4. Negotiate –
  5. Integrate -

Getting the correct work completed during the formulate stage is critical. Now this next point is very important: This work will be twice as difficult and take you three to four times longer than you expect. So many companies I have come across that have failed to reach their acquisition objectives have made major mistakes in this step of the process and it has cost them dearly further down the line.

Once you have invested weeks and months in an acquisition it can be difficult if not painful to back away, just because you made a mistake back at the start. Many acquisitions gain a momentum of their own.

Communication and Process are Key!
During the early “Formulate” stage it is important that a clearly defined profile of the ideal company is created and communicated with all the key influencers and stake holders. I have a process to achieve this that has been refined over the years that I call “Success Profiling” which is a methodology for pulling out the essential questions that need to be asked sooner rather than later.

The key steps in the process must also be agreed and communicated to avoid later confusion and this must be updated throughout the acquisition process to maximize your chance of success.

The Information that is gathered and the processes that are agreed and put in place before commencing a structured search will be a major factor in the final success of the acquisition not just immediately following the acquisition but 1, 2 or 3 years later when you really want to reap the benefits.

Want to Know More?
If you would like to know more about all the steps in the formulate stage or details on the rest of the process just send me an email (Mark at Documentboss.com) . It is such an important first step the vast majority of acquisitions failures can be back tracked to failure in the initial “Formulate” stage of the acquisition.

And Finally………. for those who decide that planning for your next acquisition is just a waste of time and gets in the way of business, I have a recommendation for a new hobby. Have a look at this http://vimeo.com/1778399 I think you will enjoy it! Give the video one minute to really get going and then you will understand.

Friday, 27 February 2009

“Never interrupt your enemy when he is making a mistake”

“Never interrupt your enemy when he is making a mistake” – Napoleon

One of the strategies used by Napoleon, when faced with superior numbers, was the use of speed and focused attack to gain the central position. This allowed Napoleon to drive a wedge to separate the enemy armies. He would then be able to overwhelm his enemy in smaller targeted battles against mightier forces.

The reason I mention this, was that it occurred to me late last night that the WCM sector is still very segmented and may be vulnerable to such a strategy against some of the less focused players, who also operate in the sector. By a few well timed strategic acquisitions there is an opportunity to gain a dominant hold on the WCM sector.

Although there are massive repercussions across all industries and sectors due to the credit crunch the WCM sector will probably do better than most. This is a technology that is coming of age. There are still massive opportunities as companies continue to buy WCM solutions.

FatWire Software has reported 40% revenue year-over-year growth in 2008, taking it to $44m. The company reportedly rebuffed acquisition approaches last year, as it focused on growth and updating its product line under new management.

The opportunities for consolidation are evident. Vignette have been a potential likely target for some time despite with 2008 revenue down 11.6% from 2007 and Q4 specifically down 29.4% year over year. License revenue is especially weak, with just 19.5% ($7.3m) of total Q4 revenue coming from licenses. Overall, the company reported a net loss of $6.3m for the year. However, this could be seen as systematic of them possibly struggling with internal issues of integration and capitalisation, given their acquisition of Tower Software in 2004, when they added workflow and imaging.

Sitecore claimed 100% growth in its fiscal 2008, which ended June 30. However it must be taken in to consideration that this is from a relatively small base circa $10m for fiscal 2007. Sitecore's fiscal 2009 revenue is expected to be in the $30m range.

There maybe an opportunity to gain new business against slower less focused forces. The likes of Interwoven who have been recently swallowed by Autonomy, are one of a number of larger but less focused players in the WCM sector.
Would a multiple consolidation in this sector gain battle advantage by following the Napoleon strategy, to create a relatively large but more importantly focused and specialist force in WCM?

Monday, 9 February 2009

Perceptive Software YTD revenue UP 41% over previous year

Pereceptive Software seem to be flying high despite the economic recession.

Perceptive Software completed the second quarter of the 2009 fiscal year with revenue of $18M year to date global revenue is $40m up 41% on the previous year.

Their CEO Scott Coons is quoted as saying: "Todays adverse economic conditions are compelling businesses to purchase technologies that provide quick bottom-line results".

There are a number of companies in this area that continue to grow whilst others falter. Is this an inevitable result of "right technology" / service or right attitude, right marketing effective sales?

Friday, 6 February 2009

Acquisition Opportunity (Europe): Document Production Software Vendor

I said that from time to time I would be able to bring to you some M&A opportunities from this sector. Well here is the first. Should you have an interest and want to know more please contact me in strictest confidence:

Document production (assembly/composition) software vendor seeking acquisition. The market for document automation and production tools is growing tremendously. Companies like to increase and enhance the personal communication with their clients and put more emphasis than ever before on their communication processes. A recent survey indicated that 63% perceived document based communication as business critical for their organization whereas only 16% indicates having a “best of class” solution in place. Our client has taken advantage of this market by focusing strongly on having the most innovative and industrial strength solution in the market by focusing on the large insurance and banking companies. This has resulted in having >50% of the top 20 insurers and 30% of the top 10 banks in their domestic market as clients. Our client is now looking to expand outside their domestic marketplace via acquisition from a company that operates internationally.

Their solutions empower organizations to:-

  1. Automatically, create and personalise all business documents.
  2. Render the created output into all most formats such as Local print, Mass print, Web output, Fax/Mail etc.
  3. Deploy the system in a variety of environments for large enterprise systems (runs natively available on IBM OS/390, zOS, AIX, Unix, Linux, Sun Solaris and Windows servers).
  4. Access native data in databases such as Oracle, DB2 etc.
  5. Control every aspect of the document production whether batch or interactive productions based upon its internal workflow component.
  6. Flexible for end user but system controlled centrally (IT).
  7. Embed or integrate the system into their existing infrastructure or applications (black box).
  8. Fully web deployable

This solution covers the entire spectrum of document automation and can replace a myriad of solutions by one centrally managed system. Some of their clients have installations with >10,000 users (in operation since 2003). The company has an attractive list of clients and continues to win new deals with blue chip clients in central Europe. Typical deals are from €500K and upwards. If you feel this proposition might be of interest for, than please do not hesitate to contact me Mark at DocumentBoss.com

Thursday, 29 January 2009

Mergers & Acquisitions and High Marriage Divorce Rates

When the mean average success rate for acquisitions is just 45%, acquisitions must be seen as a high risk strategy. The spend is high and so is the risk. However, the statistical scatter of successes is very broad and with the right knowledge and processes your risk can be dramatically reduced.

When looking at studies that have been conducted on post acquisition success rates, it is obvious that executives have choices to make throughout the acquisition process that, when made thoughtfully, with the right know-how, guidance and more than a little insight they can tilt the odds of success strongly in their favour.

Some Factors for Increased Success
When examining the studies conducted on M&A success one of the most important distinctions that can be drawn between best and worst performances, is that the best deals are more often made in related fields. The worst acquisitions often occur in much less related fields, where the buyer has less market knowledge and expertise. The strategic decision to acquire in a totally new field can seriously effect your chance of success. In-depth market intelligence therefore, is vital.

Secondly, an opportunistic acquisition strategy, as opposed to a proactive approach, has been shown to yield a significantly lower success rate. The reasons behind the higher failure rate (63%) of the opportunistic approach are manifold. However, the problems can be tracked back to a lack of pre-acquisition planning during the early stages of the acquisition process and a lack of choice due, to a passive approach in the identification of a range of prospects.

I have had numerous conversations with senior executives who tell me that their strategic growth plan is via acquisition, yet almost proudly pronounce that their tactical plan is to be “OPPORTUNISTIC”, since they are regularly presented with opportunities from a variety of sources.

To me that makes as much sense as someone hanging around bars and clubs in an “opportunistic” attempt to try and pick-up their future wife (partner)…………………………………. Someone remind me again as to what the average divorce rates are in North America and Europe! Hmmm interesting!

Thursday, 22 January 2009

Autonomy buys Interwoven

Breaking News:

Autonomy have just acquired Interwoven for $775M

See http://www.businessreviewonline.com/blog/archives/2009/01/index.html#000859

Boss M&A Whispers Comment:
If you are a regular reader of Boss News then this was predicted by The Buzz and so would be no surprise. The M&A Market in 2009 is alive and kicking. This acquisition shows that valuations have not nose-dived as some have predicted. Without being one of the dreaded "crystal ball gazers", which most industries have more than a surplus, consolidation at the high, medium and lower end of the market will continue in 2009.

Autonomy expect to have a cash balance of at least $75M after the deal has been completed so they will prove to be some force in the ECM sector. Watch out OpenText, EMC Documentum, Filenet (IBM) and Stellant (Oracle) "The British are coming". This should give much needed life to Interwoven as they battle forward with added weaponry a new lease of life and probably a new name as well.

"What is this life if, full of care, we have no time to stand and STARE?"

William H. Davies
1871-1940, British Poet

Not Knowing What You Don’t Know

The Unknown
As we know,
There are known knowns
There are things we know we know
We also know
There are known unknowns
That is to say
We know there are some things
We do not know
But there are also unknown unknowns
The ones we don't know
We don't know.
Donald Rumsfeld: Feb. 12, 2002, Department of Defense news briefing

Sitting on my desktop and printed in my meeting folder is a mindmap that I created a few years ago. The title is “The Common Causes of M&A Failure”. I refer to the mindmap at least every week. It is a constant reminder to me in my work with my clients of the things to avoid. Our M&A assignment delivery process is based upon avoiding these dangers by preventative action EARLY in the process. This follows the great statistician William Edwards Deming model.

In this blog every now and again when the inclination takes me or when I see a good example from our industry, I will focus on one particular element of the “Common Causes of M&A Failure”. Some of the titles I am intending to write I have listed below, to hopefully entice you to come back:

  • Get Your Ducks Aligned BEFORE you Start
  • Key Hole Vision
  • M&A more a cross country race then a marathon or a sprint
  • Admiring the beautiful flowers and driving in to an oncoming truck
  • Controlling the “BEAN Counters” in M&A
  • M&A & Marriage Divorce Rates
  • Selling in a telephone box
  • In search of the five legged sheep
  • DIY M&A = Crafted Skills or Amateur Bodge
  • Culture Misfits
  • The M&A Process as a Runaway Train
  • Magic M&A Truth Serum

This will be in addition to the latest M&A news within this industry as it happens (or very soon after dependent on my work schedule). Go to the RSS feed above on the right so you can be automatically notified as a new blog post appears.

Wednesday, 21 January 2009

Pegasus haven't sat on their hands in 2009

Following on from my last post about “No Fear” and the M&A opportunities in this recession I thought it worth bringing to your attention that Pegasus Imaging Corporation are definitely not sitting on their hands.

So far in 2009 they have made two acquisitions ...

Pegasus(R) Imaging Corporation acquires AccuSoft® Corporation's imaging business

and ...

Pegasus Imaging Acquires Tasman Barcode SDK Company

As you Americans are prone to say ... “Way to go Pegasus”.

No Fear

“It's a recession when your neighbor loses his job; it's a depression when you lose yours.”
Harry S Truman, in Observer, April 13, 1958
33rd president of US (1884 - 1972)

The Bank of England made history last week when it cut the bank interest rate to 1.5% the lowest rate since the bank was formed in 1694. In the US even Mr Obama’s inauguration oratory promised that an activist Government would move quickly on a massive stimulus programme of public spending but at the same time asked for patience from the American people, warning that it would take time for measures to work. He made no promises that the current situation could be easily overcome and in fact emphasised the importance of the American people had to play in the changes that are needed.

During November UK industrial production saw its largest decline since 1981 (-6.9% y/y) forecasts suggest little chance of a near-term bounce in activity. New orders contracted sharply as the fear factor set-in and horns are pulled in. As a consequence unemployment figures were also hit. Input price inflation eased, but the biggest worry for firms now is demand, not costs. Weakness remains broad-based, with services and manufacturing registering negligible improvements, while construction fell to yet another record low.

However, there are still companies within the eDM, ECM & BPM sector that are continuing to grow profitably. Is it that they have yet to be hit by the credit crisis or is it something else?

I recently read a very interesting fact that more millionaires were made per capita during the Great Depression of the 1930’s than at any other time in history. How could that be? Could it be that they were the few that were not frozen by fear who did not just “stand and watch”?

Fear is the biggest killer of success. It can consume your mind and thoughts and create pictures in your head, so that you are constantly looking to where you really don’t want to go. Those who give in to fear and anxiety, become paralysed by uncertainty and confusion are likely to do two things with their hands, either sit on them and do nothing or hold them up and surrender to what they have created in their own mind as an inevitability.

The reality is that you have to work harder and you have to invest in your future. Take the recession as a time to zig when the others zag so that you will stand-out head and shoulders amongst the rest who have their heads bowed in their inevitable defeat. Lift your chin and look towards your goals. Waiting for things to change are not the actions of a winner. You need to take control of the things that are within your control. Take action that takes you in the direction you really want to travel. This recession will make others react often in a negative manner, including your competitors. What opportunity does that open up for you? That point is worth repeating:

Many of your business competitors will be paralysed by the recession so what opportunity does that give you? List them. Make a plan then take action. Activity within regarding acquisitions is still strong but we are seeing a new group of companies come to the fore. Companies looking to merge or sell may see the recession as too testing a time if they have limited resources. Companies that have cash to spend are thinking this may be a good time to act and make up ground on their competitors. I think the next year will be an interesting time for M&A in this sector and will probably surprise some of the crystal ball gazers.

93-year-old John D. Rockefeller during the Great Depression wrote, "These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again."

Murders & Executions

I can hardly believe I am doing this?
When I first came across the concept of blogs I must admit I did not foresee myself one day being a blog author. At the time it seemed all a bit too geeky and trendy but as time has passed I have found myself visiting a few blogs of interest on a more and more regular basis. To the extent I now see their value.

So who is this Blog for?
Predominantly, senior executives who work in the ECM, EDM & BPM technology sectors; companies that supply any of the above technology solutions including hardware to end users. You may think that this is a highly niche area and you are right to an extent but worldwide most people would be amazed at how many companies operate in this sector.

This blog will be a commentary and source of news regarding ECM, EDM and BPM mergers and acquisitions for senior executives with an eye on growth or divestment opportunities.

I intend for the blog to be direct, informative, sometimes humorous without the commonly heard “corporate speak” that can so quickly bore and rarely prove useful. I also hope that this blog will be uplifting for those that operate in this sector. Despite the current financial crisis there are many rays of light and opportunities for those of us that have our eyes open and our blinkers off.

This blog will also be a “heads up” for potential opportunities to acquire. Obviously due to the nature of my work (more of that later) I cannot always present as many opportunities in this medium as I wish but there may be opportunities for me to provide an anonymous profile.

So what do I think readers of this blog will get out of “Boss M&A Whispers”?
Well as the name suggests I will be publishing and commenting on many things that I think need to be said. It is very much a personal comment from me and is not a “Document Boss blog”. I don’t doubt that at times it will be controversial and upset a few people but for that I make no advance apology. I want this blog to be direct and to the point.

Over 50% of acquisitions in our sector fail to reach their business objectives. Many are a disaster and some even bring down the acquiring company. However, this is not unique to our sector just look at the following high profile acquisitions:

• AOL - Time Warner ($164B)
• MCI - WorldCom ($42B)
• Daimler Benz - Chrysler ($37B)
• Sprint - Nextel ($36B)
• HP - Compaq ($25B)
• JDS - Uniphase - SDL ($13B)
• Alcatel - Lucent ($11B)
• Excite - @Home ($6.7B)
• Mattel - The Learning Company ($3.5B)
• Borland - Ashton Tate ($440M)

Some of the above brought down the combined companies. My interest is not in any of the above sectors just eDM, eCM & BPM software companies across Europe, North America & AsiaPAC but they can sometimes illustrate the point without me upsetting anybody from our industry.

Summary: Why write this blog?
So this blog will provide news and comment on current acquisitions to let you know what is happening with your competitors, partners and maybe inform you to new players to enter the sector. This blog will also help put you in a position where your next acquisition success does not have worse odds than the flipping of a coin. As well as opening your eyes to the true vista of opportunities that can be had for the executives who are “in the know”. So if you are considering growth for your company via acquisition or maybe divestment to gain return your equity and you operate in this sector (ECM, EDM or BPM) then read on.

I also promise to make my blog articles much shorter than this first introduction so they are just a quick dip-in to that can be slotted in to your busy work schedules.

To end with a quick funny story.
A few months ago I had arranged to meet a friend of mine. I knew this chap through my interest in photography but we had never discussed our work. On this particular occasion he had brought his eleven year old son with him who sat listening intently whilst he had something to eat.

My friend asked me “so what is it you do? I saw your company, Document Boss but was not clear what you did” (note to marketing: we need to be clearer). I decided to give him the short answer as most people don’t want to be bored with the details if you are not in this sector, “Mergers & Acquisitions” I said. I noticed my friends son stop eating and look up with a puzzled look on his face. The conversation continued and I did not think anymore about it.

The next time we met, my friend said “Oh by the way if my son is a little nervous of you, don’t be concerned it is just a misunderstanding” apparently he thought I had said that I was involved in “Murders & Executions”. If I had been involved in the above acquisitions perhaps he would not have been too far from the truth :-)