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

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?

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.

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.

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

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

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?