Tag Archives: management

Strategic Mergers and Acquisitions for Fast Growth Firms

I’m working on a “How To” series on Strategic Mergers and Acquisitions for Fast Growth Firms. It covers the tools, skills and processes needed by firms pursuing acquisitions as a tempting path to growth. This is an audio presentation accompanied by detailed notes, checklists and templates.

Strategic Mergers and Acquisitions for Fast Growth Firms, Series 1 – Buy Side, Capturing Value Beyond Price

Highlights from Series 1: Buy Side

  • The M&A Process from the buy side
  • The Wealth Esteem M&A Checklist Methodology
  • Special types of M&A deals
    • the true “merger”
    • “Bolt-on” acquisitions
    • Vertical and horizontal integration
    • Diversification
  • M&A target identification and deal flow
  • Managing the M&A Project
  • Key roles and members of the M&A team
  • Valuing the business
  • M&A Negotiation
  • Earnouts
  • Financing the deal
  • M&A Due Diligence
    • Finance
    • Legal
    • Intellectual Property
    • Human Resources, learning & development
    • Marketing
    • Sales
    • Manufacturing and operations
    • R&D and innovation
    • Logistics and distribution
  • Integrating the Acquisition – the forgotten part of the Deal
    • the whole is greater than the sum of the parts
    • mitigating risk
    • integration planning
    • measuring integration success
    • practical integration improvement
  • Good to great: Post-Acquisition Review

Coming soon: Strategic Mergers and Acquisitions for Fast Growth Firms, Series 2 – Sell Side, Your Exit Strategy.

MBA Update 2008 Term 1

So this term I’ve been doing my first Organizational Behavior OB subject: Managing People and Organisations. I’ve received two distinctions so far on the assignments, despite being ridiculously busy at work. Now I have to knuckle down and review in preparation for the coming exams.

The subject matter is exciting and fascinating on both practical and intellectual levels.

Two major aspects for me are “It’s always about leadership” and a model of Compliance < Understanding < Internalisation

I’ll write something on them later.

Channel Ten finally on Foxtel’s EPG

Channel Ten Australia has finally signed a deal to allow digital broadcast to Foxtel’s cable and satellite subscribers. Until now channels Ten and Seven has only been available on Foxtel cable as an analogue retransmission. This meant that Foxtel’s digital Electronic Program Guide did not list Ten’s or Seven’s schedule.

In the new media world not being in an EPG make you invisible. It doesn’t matter that I can scan while channel surfing, I rely on the description that pops up on screen or on the EPG. Until last year I would go online and look it up, but I finally got tired of that. So as a result my family watch precisely one (1) hour of channel Ten per week. We watch less channel 7.

What amazes me is that the management of these businesses obviously thought cutting a deal to be on Foxtel’s digital would not impact their ratings. Instead it allow the other Foxtel digital channels to capture eyeballs and forget about their programming. So the only way I discover their programming is to see their expensive advertising in other media.

My informal pub chat poll shows my household is not unusual. Foxtel subscribers love their remotes, their electronic program guides and their planners.  Media analysts counter that very few Australians watch Foxtel’s channels other than sport or movies. It doesn’t matter, enough of us have stopped watching Seven and Ten because it is not accessible.

Lesson: Do not get between your product and your customer.

Thankfully Ten is has now joined the party. Now seven needs to get over their C7 digital hissy fit and make their schedule available.

A&R Scandal: Tower Books’ Michael Rakusin Replies

Michael Rakusin, Director of Tower Books replied to Charlie Rimmer‘s letter. I’ve emailed a request to reproduce Michael’s email here, but in the meantime you can read it at Susan Wyndham’s Undercover blog. That way the conversation can allow trackbacks around the blogosphere.

I look forward to watching the fall-out in the industry over this. When a major market player decides to flex their muscle, they should make sure they are a big enough player. I suspect that at a claimed 18% of the Australian book retail market Angus & Robertson will find it is not enough to succeed.

Bunnings on the other hand does have enough market share. But more on that later.

Update Michael Rakusin has granted permission to reproduce his letter below Continue reading A&R Scandal: Tower Books’ Michael Rakusin Replies

Angus & Robertson Scandal: Demands cash from 40% of suppliers

Angus & Robertson letter to unprofitable suppliersAngus & Robertson sent a letter to 40% of their suppliers demanding cash payments and rebates as a condition of continued business. The scandal broke at Susan Wyndham‘s Undercover blog over at the Sydney Morning Herald, firstly in Bookshop chain puts bite on small publishers and then in more detail today A&R Dumps Books.

A friend describes it as “Bookselling, The MBA way”. This is bound to be one of the case studies I’ll use in my MBA.

Here is the text of the letter for the screen readers and the blind:

 

Angus & Robertson

30th July 2007

Michael Rakusin
TOWER BOOKS
Unit 2 / 17 Rodborough Road
Frenches Forrest
NSW 2086

Dear Michael

I am writing to inform you of some of the changes to the way we manage our business.

We have recently completed a piece of work to rank our suppliers in terms of the net profit they generate for our business. We have concluded that we have far too many suppliers, and over 40% of our supplier agreements fall below our requirements in terms of profit earned. At a time when the cost of doing business continues to rise, I’m sure you can understand that this is an unpalatable set of circumstances for us, and as such we have no option but to act quickly to remedy the situation.

Accordingly, we will be rationalising our supplier numbers and setting a minimum earnigs ration of income to trade purchases that we expect to achieve from our suppliers.

I am writing to you because TOWER BOOKS falls into this category of unacceptable profitability.

As a consequence we would invite you to pay the attached invoice by Aug 17th 2007. The payment represents the gap fro your your business, and moves it from an unacceptable level of profitability, to above our minimum threshold.

If we fail to receive your payment by this time we will have no option but to remove you from our list of authorised suppliers, and you will be unable to complete any further transactions with us until such time as the payment is made.

I have also attached a proforma for you to complete wand return to me, with your proposed terms of trade for our financial year commencing Sept 1st 2007. We have the following expectations:

  • All agreements contain a standard rebate, a growth rebate and a minimum co-op commitment to enable participation in our marketing activity.

  • Growth rebates activate as soon as our purchases with you increase by $1 on the previous year.

  • All rebates are paid quarterly for the previous quarter’s performance, you must make sure that your remittance, with calculations, is received by us by the 7th of the month following the preceding quarter. Any remittances not received by this date will attract a daily 5% interest charge.

I am also including a copy of our ratecard, and our marketing calendar, to enable you to begin planning your promotional participation now.

If you would like to discuss this with me in more detail, I am delighted to confirm an appointment with you at 1.00pm on Friday 17th August for 10 minutes at my offices at 379 Collins St, Melbourne.

Best Regards

[signed]

Charlie Rimmer
ARW Group Commercial Manager

Enc: A&R Ratecard
A&R Marketing calendar
Trading Terms Proforma
Invoice

Theory of Constraints spelling

Yeah I misspelled Theory of Constraints in my rush to post earlier. I don’t normally spell it Thoery of Contraints.

I thought I’d add another point that I learned from The Goal. In business accounting Inventory is an asset, which normally means it is a good thing. However inventory must be insured, counted, protected and marketed. Inventory becomes obsolete. Inventory consumes working capital. You can go broke with inventory.

As an exercise, value your inventory at fire sale prices. Then realise that someone, somewhere in the world is offering a product that is a replacement for yours at a fire sale price.

Inventory is only an asset at the moment it is turned into cash – not sold, but when you actually get paid.

Theory of Constraints

I got a question on my mention of Theory of Constraints (TOC) in an earlier post.

As my factory production has reached capacity, my most critical goal is to introduce TOC into my production facility. I first heard of the Theory of Constraints in the book The Goal by Eliyahu M. Goldratt and Jeff Cox.

The TOC is based on the view that there is some essential limiter in a system, i.e. at least one bottleneck. Overall increases in production can only be achieved by increasing the throughput of that bottleneck.

The steps to implement TOC are:

  1. Identify the constraint (bottlenecks are identified by inventory pooling before the process)
  2. Exploit the constraint (increase its utilisation and efficiency)
  3. Subordinate all other processes to the constraint process (other processes serve the bottleneck)
  4. Elevate the constraint (if required, permanently increase bottleneck capacity)
  5. Rinse and repeat (after taking action, the bottleneck may have shifted or require further attention)

source wikipedia article on Theory of Contraints

I’ll provide updates here on how the process at my factory goes.

You can buy the book from Amazon

Deal with the Micro Manager

Over the Shoulder, micromanager wayA former CEO of mine was a micromanager. I knew this before I took the job as the company was a client for a couple of years. Socially, I like my boss and we’ve know each other for many years. I’d even call us friends.

Given my interest in entrepreneurship, I have strong feelings against micromanaging. Fool that I am I thought there was no way he’d try to micromanage me. Surely I was immune. Ha!

So I chaffed at the bit — I’d left lucrative contracts before when a client attempted such behaviour. I got stellar results: sales were up, gross margin was up, profit was up, costs were lower. I should have got all the freedom to run my division as I pleased.

But my boss comes from a retail background. I think retailers especially like to run things by the book. They love an operations manual which clearly spells out the detail of every step from opening in the morning to closing at night.

I then realised that it wasn’t his problem, it was mine. I try to deal with what is rather than what should be. Once I accept the reality I can start doing something about it.

Then I accepted I’m never going to change my boss. As a matter of fact until we worked together I liked spending time together. So how will I deal with this?

Understand the boss’s priorities. What are the top 5, 3 and 1 items for me to focus on? Reconfirm regularly to ensure they haven’t changed.

Use my communications skills. I am an excellent communicator. Start tracking the list of assigned tasks, negotiating deadlines that I can meet and renegotiating priorities as they change. This involves instigating planning discussions with my boss and organising my calendar to clearly show available resources.

Commit to frequent and regular updates. When I delegate to one of my team, I want to know if the task is on track and I want early warning if it’s leaving the rails. Other than that I don’t need the detail. The micromanager needs to know every step of every task. This means anticipating update requests but at the same time scheduling time in advance for progress briefings.

Document agreements. Followup verbal briefings, requests and agreements with an email to avoid confusion.

Micromanagers fear disorganisation and idleness. The best way to contain their excesses is to be organised. That’s tough as I am not a naturally organised person, but if I want the freedom to run my division I’ll need to meet the boss’s expectations. That’s what he pays me for.