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The many mistakes startup companies make

February 14, 2007

Analysis of:Giving Startups The Lift They Need | www.investors.com

As this article accurately portrays the life of a small startup, many missteps are pointed out in the text as classic mistakes most companies make during their lifetime.  The problem is that startup companies have little room for error.

Keeping the acquisition pace without proper integration

January 31, 2007

Analysis of:Symantec Continues Quest To Join Giants Of Business Software | www.investors.com

Symantec, like so many fast moving technology companies, is hungry for growth.  To keep the top line moving up while the cash balance is plentiful, more companies are turning to acquiring competitive and/or complementary companies.  With over 80% of all acquisitions failing, its a wonder why these acquiring companies don't properly plan out their integration process better.

Global Growth maybe slowing, but its better than domestic growth

December 20, 2006

Analysis of:Breaking Down Barriers to (International) Growth | www.businessfinancemag.com

 As this article highlights, global economic indicators point towards a slowing trend for international companies. Specifically, this articles points towards a GDP growth of 4.9% in the coming year. Domestically, the US, however, appears to be aimed at a 2.9% year-over-year trend. What this article fails to point out is that few companies are expanding globally in a blanketed approach.

Apparently the NYSE has been reading the articles about new listing rates

December 13, 2006

Analysis of:NYSE axes listing costs to win IPOs | www.financialnews-us.com

Eliminating the first-time/switching NYSE fees is a good gesture for companies looking to make the Big Step. Many companies wanting added stability and recognition may be enticed with this incentive. For the private companies, however, these fees are just the tip of the iceberg.

Different reports, different numbers…but the bottom line doesn’t change, private investment is on the rise

December 7, 2006

Analysis of:Over There: Private-Equity Sets Sail - Private-equity investment has doubled domestically, but increasingly, U.S. firms are bringing their deals to Europe. | www.cfo.com

Depending on the article you read, private investment is either slightly up from a year ago or significantly on the rise. Depending on the statistics quoted, investments into the private sector are increasing over last quarter and year. Most articles I’ve come across are selective in their analysis, either referring only to the IPO or focused on a few market sectors. This article, however, appears to approach their study on a broader range of investment types- M&A, IPO, overseas, equity, and VC investments. While this article points towards a wide range of investment types, it neglects domestic concentration and does not discuss industry focus.

One bad apple does not spoil the applecart

December 6, 2006

Analysis of:Investors Sue 13 Private Equity Firms | www.cfo.com

As with Enron and Worldcom, there will be companies trying to skirt ethical standards to make a buck. I’m not saying that this particular case has merit, but it won’t surprise me if something along these lines doesn’t get settled in the near future. But before we rush to judgment or run for the hills because another investment vehicle has turned sour, let’s look at the situation.

Factors may change return thresholds, but don't forget the underlining assumptions

November 22, 2006

Analysis of:Lowering the Bar (on cost of capital) | www.cfo.com

In determining the cost of capital, corporations place a threshold of capital expenditures, acquisition target, and other uses of idle cash. With the changes in market and company directions, many companies have come to realize their beta (a primary element in the cost of capital calculation) has changes over time. But does the change merit an adjustment in the company’s benchmark. This article seems to miss the mark on the under-lying reason for the calculation.

Old methods are too broad, but new method is unproven

November 22, 2006

Analysis of:A Triple Play in IP Valuation | www.cfo.com

For years, financial executives have been valuing intellectual property using standard and accepted methods such as cash flow calculations to raise capital, value acquired assets, and determine shareholder value. While the NPV calculation is accepted, much of formula is marred with broad based assumptions that can wildly swing the final valuation. Much like valuing a house using a 5-mile radius; using comparable asset purchases, Black-Scholes computations, or forecasted cash flow streams are at best assumptions in the calculations. Finding a better mousetrap could prove to be a more accurate answer.

As the debate on outsourcing continues, Indian companies are gaining market share through acquisitions

November 15, 2006

Analysis of:Small Acquisitions Broaden Indian Outsourcer's Services | www.investors.com

The data is conflicting... how much of an advantage do companies get by outsourcing their IT and call centers to India? My experience through three expansions is the quality is very good, but the cost advantage is diminishing. But that adds to the debate. Companies are becoming slower to move on international outsourcing, and at times, are withdrawing their operations (Apple recently pulled the plans for a 3,000 person call center in Bangalor). If this trend continues with the slower pace, how will these countries continue to expand? Acquire domestic US outsourcing companies.

Great analysis of the market, but article misses competitive landscape

November 15, 2006

Analysis of:(Computer Networking) Up From The Dot-Com Ashes | www.investors.com

The computer networking market is running at full force, consistently introducing new products that help clients bring their networking pieces together to run efficiently. From data storage to communications to switches and routers, this market sector is continuously expanding and refining. As the article points out- its not the growth we saw from some technology sectors in the mid-90’s, but it has strong growth. And with the ever-expanding product lines, the products are certain to find buyers in need. This article presents a very good analysis of the market, however, it misses one critical element that is driving the progress…speed of delivery.

Don’t be quick to judge acquisition strategies…but be clear on intentions

November 9, 2006

Analysis of:Rush to Judgment (HP's acqisition of Compaq) | www.cfo.com

Over the past several years, many (even countless) analysts have discredited HP for their acquisition of Compaq. The companies are too big to merge, the products aren’t compatible, the management is not compatible, they will loss more than they gain…What makes this acquisition unclear, and many others in question, is their intention. If companies who are actively acquiring would spell out their strategies, unanswered questions and potential devaluation could be avoided.

Innocent accounting errors could open other doors

November 9, 2006

Analysis of:Outback Steakhouse Owner OSI Agrees To $3 Billion Buyout Deal | online.wsj.com

Over the past several years, companies by the dozen have made uncalculated errors in reporting. Most recent is the option backdating cases. While these missteps have cost these companies millions of dollars in outside help, it has also brought into question the true value of the companies. Don’t expect this deal to be the last privatization among those viewed through the magnifying glass.

Great article from the tax conscience acquirer view

November 1, 2006

Analysis of:Tax-Efficient Cross-Border M&A | www.businessfinancemag.com

During an international acquisition, an acquirer must consider several areas, before completing the purchase. This article collectively highlights several areas to consider such as tax credits, structure, pre-existing subsidiary structure, foreign tax laws, and wording in the LOI/definitive agreement. But what should the acquiree do to make itself more attractive?

M&A strategies run deeper than the press headlines

November 1, 2006

Analysis of:M&A Synergies? Don't Count On It | www.businessfinancemag.com

This article, like most others written about M&A’s, assumes acquisitions are conducted purely to enhance a company’s revenue stream. Most purchases of this nature are in fact completed to either take out a competitor (negating market share erosion), expand a product line (which may be unproven depending on the stage of the acquiree), expand international markets (assuming traction and synergies), or use of idle funds.

If it’s too expensive to build it, buy it

October 25, 2006

Analysis of:IBM to Acquire Palisades Technology Partners to Bolster Strength in Lending Solutions | www.marketwire.com

As the VC market changes its model from IPO to acquisition, many funding firms have paused to catch their breath. The drawback is most acquiring companies have not lost their appetite for the hunt. This statement leaves one conclusion- be flexible in your philosophy or wait on the sidelines and miss some great opportunities.

While VC funding holds steady, look at the trend to see where the money is moving

October 25, 2006

Analysis of:Q3 2006 Venture Capital Investing Remains Above $6 Billion for Third Consecutive Quarter | www.vcaonline.com

Many recent articles have argued and discussed the slowdown in VC funding; from Austin Ventures' recent investor funding return to misguided year-over-year statistics that truly point to an IPO slowdown.  The title of this article is misleading, as the content points towards a more meaningful outcome.

Not meeting expectations is common for the M&A field

October 16, 2006

Analysis of:Over 20% of M&As fail to deliver shareholder value | www.financialexpress.com

With India’s booming corporate landscape, many young companies have begun to show signs of success. This tends to lend itself to the next phase in corporate development- M&A activity. While India is in a position to learn from the other market leaders, the US, Europe, and Asia, it appears that M&A success is not one of the learned topics.

Pricing an M&A candidate can be full of assumptions and pitfalls

October 16, 2006

Analysis of:YouTube's New Deep Pockets | www.businessweek.com

Google’s recent purchase of YouTube for $1.65B is a huge price to pay for a small private company. Most certainly Google’s calculation took several assumptions into consideration, such as, cost synergies within YouTube’s infrastructure, compatibility of product lines, and an obvious synergies with revenue flow. But what kind of assumptions would Google have to make to make this acquisition a success?

Recent VC market showing signs of strength, but not in IPO market

October 10, 2006

Analysis of:Cooley Godward Report Shows Venture Capital Financing Held Steady in First Half of 2006 | www.vcaonline.com

This article outlines several important signs that the VC financing market is alive and well, but neglects to bring up IPO market trends.  Compared to the companies I've come across over the past three years, much of what the author points out is accurate.

SevinRosen’s Change of Heart Needs Further Explanation

October 10, 2006

Analysis of:A Kink in Venture Capital’s Gold Chain | www.nytimes.com

SevinRosen decided to return $300M of investors' money instead of proceeding with finding private equity companies worthy of investment. By going beyond the first paragraph, you'll find several expert testimonies that the VC market is alive and well. So what is the reason for turning down investment money?

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