All of the speakers I heard were excellent presenters with valuable insights. Most was in the category of “lessons learned” – that is trying to extrapolate from their specific expereince and expertise to a more general prediction of the consequences of their recommended actions in the M&A market. What was not focused on was how they handled the highly uncertain situations that they found themselves in that lead to their innovations.
Keynote Speaker: Kenneth Marks, High Rock Partners, “Growing Business Value”
- 47% of M&A deal failures are because of the gap between what the seller wants and the buyer is willing to pay.
- Buyers look to the fundamentals (strategic health, Management Team Health, Dependence on Owner, scalability of infrastructure, capital formation) in valuing the business.
- Reference to McKensey March 2009 article “Running a Winning M&A Shop” re drivers behind deals by size.
- Take away: In the end, projected cash flow is the most critical element in the analysis.
Speaker: Time Hebert, Artion Networking Corp., “Leadership and Culture”
- The culture of a company is analogous to the operating system for a PC; anything that goes in or comes out has to pass through it. Problem is that culture, like air, is not noticed until it goes bad.
- Leaders who consciously manage the culture reduce the uncertainty around their people, their productivity and their performance.
- Management means having an ideology (or vision), a core purpose (not just a numeric goal) and core values (who you are, not what you do).
- Take away: A flawed managed culture is better than no culture at all or a toxic culture.
Speaker: Steve Gerard, CEO and Chairman, CBIZ “Insights of a Seasoned Business Acquirer”
- Buy side Process: 1) what is your strategy to reach your 3-5 year objectives, 2) what is the cultural fit between your two organizations, 3) due diligence, 4) what is your strong integration plan, and 5) do not promise what you cannot deliver, but if you do promise, keep your word.
- Sell Side Process: 1) begin planning years in advance, 2) determine who or what , internally, could hold up a deal (client, IP, etc.), 3) create a horse race with more than one buyer, 4) Get the best and most experienced M&A attorney and other advisors you can afford.
- Biggest challenge is changing from relationship-based loyalty to institutional/brand loyalty, and the biggest lie is that the buyer will let the seller run things just like they always have.
- Take away: EBIDTA is important, but cultural fit is more important in successful acquisition.