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.