Consultants

If you're in an M&A trajectory right now as a Director and you're starting to feel a little bit uncomfortable: don't worry: I expect an expanded role of independent advisors to the board likely to follow suit, moving well beyond fairness opinions into the above areas ;-)

Volatile Market

The sky is falling. This is an overdue correction. Start shorting! but don't get caught in the whiplash of the buyers.

Cookson (iancookson [at] gt.com) recommends the following useful shopping list in the "Financial Excutive" of Oct2004 for Key Responsibilities of the Board of Directors during an M&A:

1. What are the integration plans?
   (Short-term actions, Communication plans (immediate and ongoing), Synergy delivery plans (and likelihood they will be
   achieved), Internal controls compliance plan, Individuals accountable)
2. Is the strategic rational robust?
   (Closeness of fit with existing business, Acquisition's ability to leverage strengths and resolve weaknesses, Do economic realities match the story?, Other targets/options explored)
3. How will we manage implications of people and culture?
   (Closeness of cultural fit, Implications for future ways of working, Retention and rewards for key people, What is it that makes the business successful?, How this wilt be retained and built on?)
4. Viewing risks (in above) in context of price
   (Valuation, comparables, financing structure, Fairness opinion is independent, Due diligence is robust and directed to uncovering potential liabilities)
5. Board litigation protection
   (Process, deliberations and analysis documented, Use of independent experts)
6. Value added by board members
   (From personal experiences, Not simply monitoring management, Balanced perspective on weighing risks and rewards)

Dealmakers Attitude

A dealmakers attitude can be killing for long-term value creation. Ertel provides five tips that can help a negotiation team to work with the right (the-real-value-is-created-during-implementation) mindset:

1. Start with the end in mind
2. Help them prepare too (surprising or overbluffing the other side does not make sense)
3. Treat alignment as a shared responsibility (if your counterpart's interests are not aligned, it's your problem too)
4. Send the same one message to both implementation teams
5. Manage negotiation like a business process (prepare in a disciplined way and conduct post-negotiation reviews)

Dealmakers and Value Creation

To win, you have to envision your goal as (just) beyond the finish line so you will blow right past it at full speed. That makes good advice for managers, especially when you're dealing with complex negotiations such as in alliances, mergers, acquisitions and outsourcing. In corporate finance it often pays out to make sure both parties interests are aligned, even if that means leaving some money on the table. The most expensive deal is the one that fails...

Dealmakers and Value Creation

To win, you have to envision your goal as (just) beyond the finish line so you will blow right past it at full speed. That makes good advice for managers, especially when you're dealing with complex negotiations such as in alliances, mergers, acquisitions and outsourcing. In corporate finance it often pays out to make sure both parties interests are aligned, even if that means leaving some money on the table. The most expensive deal is the one that fails...

Achieving valuable growth

just finished reading a superb new book on value based management called "Questions on Value". One of the 11 papers in the book I liked most is about "Achieving valuable growth through M&A - Boardroom lessons for the acquisition game".

This article is a contribution of Mark L. Sirowe, Global Leader of the Mergers and Acquisitions practice of Boston Consulting Group and Professor at Stern University (New York).

It shows Mr. Sirowe is both a seasoned M&A consultant and an excellent lecturer. The article reads indeed like very good lessons at boardroom level on:
- how companies can establish strategic M&A processes and become an "always on company" as Sirowe calls it, and
- what boardrooms should go through on proposed deals.

To give you just a taste of the article, as a final M&A racing diagnostic Sirowe recommends boards to ask/think over the folowing questions:

• Is there evidence this deal emerged from a clear strategic perspective?
• How is this deal consistent with our long-term objectives for customers, markets and products/technologies?
• What are then stand-alone expectations of acquirer and target?
• Where will performance gains emerge as a result of the merger?
• Are the projected performance gains in line with the premium being paid?
• Which competitors are likely to be affected by the deal and how will they respond?
• What are the milestones in a 12-24 month implementation plan?
• What added investments will be required to support the plan?
• Who are the key managers responsible for implementing the plan?
• Which pieces of either company are good candidates for sell-off or split-off?
• Why is this deal better than alternative investments?