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All Photographic Images on this blog are Copyright of Mark Edwards and should not be published without permission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 . 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 I think you will enjoy it! Give the video one minute to really get going and then you will understand.