Posts Tagged ‘Mergers & acquisitions’

Mergers and acquisitions – positive news

Thursday, May 19th, 2011

Spent some time with Regent Associates – the technology investment bankers –  yesterday, looking at trends in European Technology M&A.  Numbers of acquisitions, valuations and  total value of deals all up during 1st Quarter 2011.   Despite macro economic gloom the technology world is busy grinding its way to recovery. 

Interestingly Regent feel that the quality of companies being purchased is increasing so where as transactions from 12-24 months ago may have been more like “fire-sales” and therefore opportunistic, current activity is being driven by the strategic need to acquire quality organisations.  This is a sign of health.

Mike O’connell, CEO, Isosceles Finance

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The First Time Entrepeneur – Part 3

Tuesday, November 2nd, 2010

The First Time Entrepreneur the final instalment ……

The truth is that if £2M results in a net amount saved of say £750K, a £3M sale results in an increase in amount saved of something like £1.6M more than double.  Holding on just a little bit longer can have a much more dramatic effect on wealth.

The other issue of course is that once the sale is concluded it isn’t the case that the entrepreneur sails off into the sunset.  The new acquirer will be squeezing the entrepreneur for the full value of their acquisition.

Our first time entrepreneur needs to take significant comfort from the fact that a potential acquirer has found them, that a credible offer has been made.  If it can happen once by accident it can surely happen again if planned for properly.  Selling a business is no different to selling your best product or service – it is best done through a considered campaign.  An entrepreneur who sells too early or too readily has plenty of time after to rue their decision.  Frustration may eventually drive our first time entrepreneur to do it all again – breaking all those promises made to partners and family – this too can have a dramatic effect on lives.

A second time entrepreneur now there’s a different story…..

Mike O’connell, CEO, Isosceles Finance

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The First Time Entrepeneur – Part 2

Tuesday, October 19th, 2010

The First Time Entrepreneur continued ……

Perhaps an offer resulting in our entrepreneur making £2M is the one tempting enough to make that sale.  However in my experience of entrepreneurs who sell at this stage, what sounds like a large sum of money quickly depreciates.   For a start the agreed £2M isn’t all cash up front, the deal starts to spread it over 2-3 years.  Part of the proceeds are dependent on the performance of the business, part is put away in escrow.  Lawyer and accounting fees come along -  wow 5% is wiped off very quickly.  Then there is some tax to pay.

Before long our £2M becomes worth £1.5M net, still sounds a lot.  However, once the mortgage has been repaid or more likely a larger house purchased and that new car you promised yourself as a bonus for working so hard.  You may have done a little something for charity or other family members -  perhaps there is £750K left in the bank.   This is still a large sum isn’t it?  Invested properly you can make something like 5-10% a year.  However your lifestyle became more expensive also, you joined the golf club, you go on those more exclusive holidays -  skiing and a summer holiday.  You buy from the more expensive boutiques, after all you’ve earned it. 

Before very long you realise you need a job, you start on the treadmill again. 

At this point I should apologise, it is surely immoral to make an argument in a world still full of poverty that £2M is a small amount of money.  For anyone earning the national average salary please take consolation from the research that shows happiness does not increase once one earns about £10K more than the average wage – anyone can be as happy as our first time entrepreneur by working just a little bit harder or getting a little bit luckier.  However in the context of an entrepreneur who has potentially risked everything for the success of their business, the dream must be to one day sell the company and make enough to have to never work again or at least to work by choice rather than necessity.

The final instalment to follow soon.

 Mike O’connell, CEO, Isosceles Finance

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The First Time Entrepreneur – Part 1

Tuesday, October 5th, 2010

One of the most difficult issues for a first time entrepreneur is when is the right time to sell your business?

Sure the management books tell us to plan 12-24 months in advance develop relationships with the companies that could become potential predators.  Raise your profile in the eyes of the predator; establish relationships, joint ventures, partnership agreements -  where your offerings are complimentary to the target predator, target the predator’s key customers or staff where you are competitive.  Run your business to maximise growth or profitability, whatever you think will be most attractive to your predator.

The truth is very few companies are able to plan like this.  Few first time entrepreneurs are bold enough to engage a banker to sell their business for them. 

A large number of transactions come out of the blue.  Our stressed and stretched first time entrepreneur is dealing with the latest major business challenge when an offer comes from a trade buyer with warning at all.

One of our clients was recently faced with such an issue.  Our entrepreneur will only sell his or her business once – one transaction that will have a profound effect on their life.  The business is likely to have gone through a number of cycles  -  one day all could be lost, the next the company could be the best thing since sliced bread.  It may have taken many years of blood sweat and tears before this business became viable.

So here comes the first credible offer for the business.  What should our entrepreneur do?  It is so tempting to cash in while the going is good.  A few million or several hundred thousand pounds would pay off the mortgage, pay the school fees, buy a new car or that place in Spain.  This represents a chance to take a breath of fresh air, take away the stress, start sleeping at night and do all the things your partner or children have been nagging you to do.  Perhaps the amount isn’t enough to never work again, but it beats losing everything in the next down turn – doesn’t it?

Parts 2 and 3 to follow shortly.

 Mike O’connell, CEO, Isosceles Finance

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Posted in Business Skills, Finance Director, Merger acqusition sale | 2 Comments »

Would now be a good time to collaborate?

Tuesday, September 8th, 2009

It takes a brave management team to actively seek out potentially competitor companies and strike up a relationship.  However the results can be surprisingly positive, we have noticed an increasing trend in collaboration amongst our clients over the last 6 months.

Very few companies are identical, few have the same technical strengths, the same scale and geography of operation.  Likewise rarely does one supplier have the perfect solution to its customer’s requirements.

Back in the  “good old days”  when credit was easy, collaboration was achieved in part through acquisition.  Now more imaginative means of achieving economies of scale and broadening product offering must be sought.

Collaboration at its simplest level may simply involve referring business in a different geography to another supplier or partnering with a services provider who can fill a skills gap in your own  offering.

In its more complex form collaboration may result in a full blown merger, where economies of scale can be achieved. We haven’t seen too many of these yet, but we expect to see more over the next 12 months.

We have certainly been encouraging our client base to accelerate their collaborative activities and to identify complementary product and service providers.   If nothing else it has increased our client’s market awareness.

Mike O’Connell, CEO, Isosceles Finance

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Posted in Business Skills | 6 Comments »