M&A Master Class Series - Part 4 Recap

Dec 9, 2011 - by Joel Lessem

Today we enjoyed our fourth collaborative Master Class with Andrew J. Sherman, author and Partner at Jones Day.  He led us through his best practices to ensure success in post-close integration with a Buy-Side perspective of M&A.

Andrew spoke to the challenges in post-close integration. Citing at KPMG survey, Sherman agreed that cultural and people issues present the biggest challenge during the post deal period. He also referenced specific data points related to post-deal integration, citing a Deloitte survey Sherman highlighted that although the desired outcome of integration may be to rapidly capture cost & revenue, synergies were not achieved in 70% of cases.

The news wasn't all bad though, Andrew provided tips, tricks and checklists for retaining key employees, overcoming cultural issues, establishing a transition team and more.

M&A Master Class Series - Part 3 Recap

Nov 18, 2011 - by Joel Lessem

Today, we once again enjoyed our third collaborative Master Class with Andrew J. Sherman, author and Partner at Jones Day.  He led us through his due diligence best practices and pitfalls with a Buy-Side perspective of M&A.

Andrew likened the due diligence process in M&A to dating, "Some people like to disclose everything on a first date, most of us reveal information about ourselves on a phased basis as we get to know the other party. The due diligence process in M&A is more akin to that, as long as you're not witholding information that would change the nature of the transaction." Transparency and openness are keys to conducting successful due diligence. Sherman added that, "Those who are successful in due diligence leave their ego at the door."

M&A Master Class Series - Part 2 Recap

Oct 20, 2011 - by Joel Lessem

Today, we once again enjoyed an enthusiastic and collaborative session with Andrew J. Sherman, author and Partner at Jones Day.  He took us through the Buy-Side perspective of M&A and focused on how to qualify your seller and uncover hidden value.

Building on his weather forecast in Part 1 of the series, Andrew alluded to the clouds parting for M&A in 2012.  Using a bullhorn he gave the call to action to Buyers, “Attention K-mart shoppers – deals to be had!”  Companies are sitting on $2.5 trillion and this value will be flowing back into the markets. Buyers need to be prepared to capitalize on the buyer’s market that currently exists but not to rush into acquisitions.  Vigilant due diligence is crucial.

How to Lose a Billion Dollars

Aug 4, 2011 - by Joel Lessem

One of my favourite books is Billion Dollar Lessons by Paul Carroll and Chunka Mui.  The book is distilled from researching 2,500 significant business failures.  The authors describe: 

The extent of the failures was stunning. Since 1981, 423 U.S. companies with assets of more than $500 million filed for bankruptcy. Their combined assets at the time of their bankruptcy filings totaled more than $1.5 trillion....Their combined annual revenue was almost $830 billion.

Read More

M&A due diligence: when to negotiate warranties against potential blind spots

Jul 7, 2011 - by István Préda

Cat and mouse warranties
The extent and scope of warranties is one of the trickiest negotiation areas in selling or buying a private company. The buyer wants to make sure that the financial statements were true and fair and it had received all relevant information for his investment decision on closing, while the seller is afraid warranties will allow the buyer to claw back part of the purchase price after the deal. The most important areas to seek warranties are: the valuation of assets, off balance sheet items, related party transactions, pending litigations and potential tax liabilities.

How energy and mining firms are using data rooms to drive growth

Jun 15, 2011 - by Aaron Booth

With long term demand for energy and base metals increasing worldwide, energy and mining companies are looking for innovative ways to grow at a time of economic uncertainty.  From M&A transactions to attracting new capital, many firms are using data rooms to coordinate discussions with potential partners and investors across the world.

To better manage M&A deals and attract financing in innovative ways, leading energy and mining firms are using data rooms to share confidential documents like contract drafts, engineering drawings, and site photos.  A properly configured data room plays a key role in coordinating secure communication across internal and external stakeholders such as board members, financers, bidders, accountants, and lawyers. 

We asked our energy and mining clients to tell us about emerging trends in their industry, and how they are using virtual data rooms beyond the more traditional uses of M&A deals and corporate financing applications:

How Private Equity backed IPOs are attracting investors

May 20, 2011 - by Aaron Booth

The blockbuster LinkedIn IPO is proof of the pent-up demand from investors who have waited out the financial crisis to put their money down.   In the last few years, investors have watched several private equity backed offerings succeed in the market, and the growing attractiveness of the Private Equity market to investors has led to an increase in data room activity.  Private Equity firms are using Firmex for everything from fundraising efforts to ongoing financial reporting and divestments.

Studies show that several private equity sponsors emerged through the financial crisis, with solid portfolios, and the Ernst & Young LLP US IPO Pipeline study reported that of the 125 companies representing $18.4 billion in the IPO pipeline for Q1 2011, almost a third of these companies were backed by private equity and $9.6 billion - more than half of the Q1 pipeline - was represented by just three private-equity backed companies:

Power Sector Surging

Mar 6, 2011 - by Mike Rosendahl

Americans are a demanding group but, when you cut to the chase, we can live with inconveniences. However, lack of power, and the accompanying implications on our life and lifestyles, would not be among those conveniences we could easily do without. Power is integral to all facets of our lives and, as society evolves, demand for power grows. As a result increasing demand for new and cleaner sources of power creates opportunities for investment as companies expand to meet demand or innovate to produce cleaner or more efficient power.

These are a few of the many reasons why the power sector is among the best long-term investment strategies for investors. Corporations and private equity groups understand this and are actively seeking ways to exploit the abundance of investment being funneled into the this sector.

Companies focusing on and serving the power sector are acquisition targets due to long-term investment that will be undertaken in this sector. Demand for new generating capacity is expected to grow an average of 1.5 percent per year in the U.S. through the year 2030. This sustained level of growth over an extended period of time will force utilities and other companies that generate power to invest in the expansion of current facilities and build new facilities as well as improve the infrastructure that transmits power to businesses and homes.

Today, there is limited or virtually no interest in new investment in coal burning plants, which has forced power generation companies to invest in more natural gas plants as well as seek out alternative forms of power generation including nuclear, wind, solar, geothermal and others. The current focus is primarily on the renewable power segment and with good reason. Corporations and people are taking a more proactive view towards the emissions that everyday life creates. As a result, there is a strong investment thesis for companies that can create innovative ways to reduce carbon emissions. The government has been quick to support this sector with President Obama requesting $8 billion of new federal government investment in his most recent budget proposal, in addition to the current tax credits, grants and loan guarantees.

Corporations Choose SaaS Solutions for Secure Online File Sharing

Sep 16, 2010 - by Aaron Booth

In the past six months, we’ve noticed that corporations of various sizes across multiple industries have been turning to SaaS solutions to share large volumes of critical information beyond their office firewall.  More specifically energy, biotech, manufacturing, health care and pension fund sectors have been actively seeking a more secure way to share and collaborate internally and with external parties.  It appears that no matter what business you are in or what your businesses processes are, there is always a need to securely share large volumes of information easily and cost effectively.  Email, FAX and courier are not secure enough and continue to be cumbersome and prone to error.

Historically, sharing documents online in virtual data rooms have primarily been used for due diligence in M&A , fund raising, refinancing, and real estate transactions.  Corporations are now recognizing the value of sharing information online to complement or improve document intensive processes, streamlining real world business challenges such as RFPs, Engineering, Procurement and Construction compliance, financial reporting, audits, board communications or simply having an accessible repository of key legal documents.   Documents are often more secure online than stored on in-house computers, flash drives or distributed as attachments using email.  Using Firmex, clients organize and access literally millions of documents in a SAS 70 compliant environment with encryption transmissions, and fully segmented and secure databases with mission critical redundancy, which is often not the same environment that office computer storage provides.

“Strategic Inflection Points” – PC Revolution and Cloud Computing

Jul 22, 2010 - by Joel Lessem

I am reading Only the Paranoid Survive by Andy Grove, the legendary CEO of Intel.  In the book, Grove focuses on dramatic changes to the economics of an industry, which he calls “strategic inflection points.”    One “inflection point” he discusses is the disruption the PC brought to the computing industry.