Posted by Mark Brousseau
In these days of economic dislocation, the concepts of government, business and technical innovation are more important than ever. When it comes to entering, creating, or dominating markets, disruptive innovation is the most powerful tool available. Unfortunately, most companies find disruptive innovation difficult to achieve and virtually impossible to replicate.
In Innovate the Future, renowned innovator and executive David Croslin provides the structure and framework to analyze one's own innovation dilemma, and to beat competitors in generating new ideas and delivering those ideas to market first.
Drawing on his experience leading innovation in organizations ranging from start-ups to the Fortune 20, Croslin explains the top ten steps for optimizing the entire innovation lifecycle:
1.Isolate Drivers of User Value - Function, look, adaptability, price - or all of the above. Focus on triggering a decision to buy versus passive interest.
2.Define Good Enough - A product with more positives than negatives will sell. Focus on this goal before refining for enhanced features and niche crowds.
3.Understand Your Delivery Chain - Separate innovative, value-additive suppliers from passive ones. Focus on suppliers who make your products better.
4.Isolate Delivery Chain Pain Points - Underperforming suppliers may not improve. Find an alternative.
5.Align Viewpoints Within Your Organization - Evaluate team for ability/inclination to increase product potential. Pinpoint inhibitors, plan to minimize their impact.
6.Kill Assumptions - Base evaluation of success or failure upon known facts, not subjective interpretation.
7.Isolate Intellectual Property - Break products into components, so intellectual property behind each can be recombined into new products.
8.Identify New Markets for IP - Coke is not marketed strictly as soda - think Coke Slurpees for 7-Eleven and A&W Root Beer candy for Brach's.
9.Don't Confuse Invention for Innovation - A highly inventive product won't necessarily move markets. A highly innovative one will. Know your market.
10."Cool" Is Not Key - Cost, availability, consistency and ability to integrate within consumers' lives matter much more.
What strategies have worked in your organization?
Showing posts with label management strategies. Show all posts
Showing posts with label management strategies. Show all posts
Sunday, September 26, 2010
Tuesday, August 3, 2010
Connecting through conflict
Posted by Mark Brousseau
It happens to the best of us. An upset client calls to complain about a product or service, and you’re completely caught off guard. How do you react? Do you fly off the handle right along with him? Or do you respond in a calm, thoughtful way that salvages and even strengthens your relationship? Author Maribeth Kuzmeski says that a high-pressure scenario doesn’t have to blow your client relationship sky-high—in fact, you can use it as an opportunity to truly connect with your client and keep him around for the long haul.
“Conflict is a normal part of business, and we all need to learn how to deal with it in the right way,” says Kuzmeski, author of The Connectors: How the World’s Most Successful Businesspeople Build Relationships and Win Clients for Life. “Some clients are just plain difficult. And yes, ‘easy’ clients can also become dissatisfied for a variety of reasons. The good news is that there are effective ways to handle conflict and resolve issues—and these methods will actually strengthen your relationship.
“Remember that quite often, unhappy clients will not even tell you that they have a problem,” she adds. “They simply move their business elsewhere. So, if a client thinks enough of you to give you the chance to repair a bad situation, take it. Play an active role in making your customer happy so that you can be sure to keep him or her on board with you.”
Creating clients for life is all about building relationships based on real human connections, and that’s the message found in Kuzmeski’s book. The Connectors describes how some of the world’s most successful professionals develop better, more profitable connections. And a big part of the way they do it is changing the way they think about conflict.
As much as we all hope for smooth sailing in our interactions with clients, conflicts are bound to occur. If they never happened, anyone could be a great connector. It’s what you do when there’s a problem that separates the (proverbial) men from the boys. Here are a few tips that will help you keep your business relationships from going bad...and rescue those that have started to sour.
Extend a peace offering. It’s easy to reach out to clients when things are going well. However, it’s all too easy to avoid them when hard feelings are present. Don’t succumb to the temptation. Proactively reaching out to your clients can squash any negativity they may feel for you. Even the simplest of gestures can be effective: Offer an apology when you’ve made a mistake. Then, make things right by extending a peace offering. It doesn’t need to be anything extravagant. It can be as simple as a hand-written note, a refund, or a coupon.
“I know the peace offering works on clients, because it has worked on me,” says Kuzmeski. “At one point the relationship my firm and I had with a technology consulting group had turned sour. They had missed numerous project deadlines and just weren’t satisfying my expectations. I stuck with them, though, in hopes of repairing the relationship. Then one day, my contact Jeremy and I discovered we had something in common—a love for hockey! In fact, one day I mentioned that my son’s favorite team was the Pittsburgh Penguins, and that he and I would be watching them play in the Stanley Cup later that evening.
“Well, the Penguins ended up winning, and much to my surprise, Jeremy sent my son copies of magazines featuring their big win, a copy of the actual Pittsburgh newspaper from the day they won, and a few other items,” she adds. “None of what he sent cost very much, but the impact of his gesture was significant. My son was beyond thrilled. He couldn’t believe that one of my contacts had sent something for him! As for me, it immediately changed the way I felt about the company. My feeling was, ‘Really, they can’t be all that bad. I mean, they are hockey fans, and they were nice to my son.’ Jeremy may not have known it, but he extended a peace offering that helped preserve my company’s relationship with his.”
Don’t follow your “strike back” instincts. If an angry client calls you fuming mad, your knee-jerk reaction might be to argue. Remember, though, fighting anger with anger seldom works. No matter how tough it is, do the opposite of what you feel like doing. Take a deep breath and remain calm. And most of all, diffuse your client’s anger by immediately assuring her that you will make it right.
“When faced with difficult situations with clients, instead of giving a reactionary, defensive response, offer solutions,” says Kuzmeski. “Your first reaction may be to explain why you are right, why the client is overreacting, or to give her additional information so she can better see the situation from your point of view. However, if you check those reactions and instead start working toward a resolution, your chances of keeping that customer are much greater.”
When confronted with an angry client, say something like, “I know we did not satisfy your needs, and I assure you that we will do better in the future. Can I offer you a free gift the next time you stop in, or a discount off your next service?” Your client may still want to fight, but you are dispelling her anger by staying calm and offering a helpful response. Just smile, take responsibility (even if you feel you haven’t done anything wrong), and offer solutions. You can’t control the way your client is going to act, but you can control your own actions. If you are reasonable, your client will eventually come around.
The solutions you offer may not be exactly what the client wants, but you are trying to smooth things over instead of arguing; therefore, the results will no doubt be better. The legendary retailing genius Marshall Field once overheard a clerk in his store having a discussion with a customer. “What are you doing?” he asked. “I’m settling a complaint,” the clerk answered. “No, you’re not,” said Field. “Give the lady what she wants.” We can all learn a thing or two from that.
Get them to listen to you by…listening to them. Customers will listen to what you have to say if you respectfully listen to what they have to say first. Knowing that you are truly listening to their concerns can cause your customers to agree to your suggestions much more quickly.
“Very few people in this world take the time to practice ‘Curious Listening,’” says Kuzmeski. “We instead partially listen, get ready to respond, and let our minds drift. But if you can practice Curious Listening, which is a form of active listening, you will differentiate yourself as someone who really cares.”
Have a standard service protocol at the ready. Creating standards, procedures, and methods of dealing with clients and servicing their needs can really help when it comes to resolving conflicts or handling a dissatisfied customer. By creating a service protocol in advance, you provide a way to “enforce” how client conflict situations are handled. This allows you and your employees to more easily resolve issues and deal with those impossibly and consistently difficult clients.
“When developing a service protocol, start by recalling past situations,” says Kuzmeski. “Consider how and when a difficult client became difficult. Was a resolution reached? If so, when and how? By examining how difficult clients were handled in the past, taking into account both good and bad examples, you and your staff can begin to set boundaries regarding what is and isn’t a proper way to react. Creating a protocol allows you to chart your path to resolution and figure out what you’re going to say before a problem arises.
“Your service protocol empowers your employees to become connectors,” she adds. “Often, they might think offering a discount or a coupon is the right way to handle a situation, but they may be worried that you, their leader, won’t approve. With the protocol, they know exactly what they can immediately offer to the client. You’ll find that effectively resolving problems with clients actually makes them more loyal to you because they see that you care about their business.”
Ask for feedback. Obviously, you don’t have to sit around, anxiously wondering when a problem is going to arise. There is a way for you to avoid some (unfortunately, not all!) client conflicts. You can do it by ensuring that customers aren’t suppressing problems. And you do that by constantly asking for feedback. (It’s amazing how rarely businesspeople do this—they’re usually just keeping their fingers crossed that all is well—but a sincere inquiry about a client’s satisfaction is a true pathway to making a connection.)
“Don’t be afraid to engage your clients,” says Kuzmeski. “Ask them what you can do better, how you can improve. Supply them with feedback surveys so that they can anonymously share their thoughts, ensuring that they are as honest as possible. And when a problem has been solved, ask them if you handled it to their satisfaction and find out if there is anything they would like for you to have done differently. Asking for feedback is a great way for you to rectify any possible or growing problems before they become so great that they sour a client relationship.”
“Clients who feel a connection with you are loyal and will stay with you—sometimes forever. Dissatisfied clients not only go elsewhere, but they also tell others of their dissatisfaction,” says Kuzmeski. “Actually, for every one complaint you receive, an average of nine others remain unspoken. What’s even worse is that all 10 of those dissatisfied clients will each tell an average of five other people about their displeasure with you. That means for every complaint, you could have up to 60 people who are walking around with a negative image of you and your company—and are talking about it!
“By actively and sincerely playing a part in resolving conflicts with your clients, you’re showing them that you are willing to do what it takes to make them happy,” she concludes. “You are not just fixing a problem for them. You are also turning those dissatisfied clients into delighted ones who may even become evangelists for your company! And we all know there is no marketing force more powerful than a customer who shares her delight with others.”
It happens to the best of us. An upset client calls to complain about a product or service, and you’re completely caught off guard. How do you react? Do you fly off the handle right along with him? Or do you respond in a calm, thoughtful way that salvages and even strengthens your relationship? Author Maribeth Kuzmeski says that a high-pressure scenario doesn’t have to blow your client relationship sky-high—in fact, you can use it as an opportunity to truly connect with your client and keep him around for the long haul.
“Conflict is a normal part of business, and we all need to learn how to deal with it in the right way,” says Kuzmeski, author of The Connectors: How the World’s Most Successful Businesspeople Build Relationships and Win Clients for Life. “Some clients are just plain difficult. And yes, ‘easy’ clients can also become dissatisfied for a variety of reasons. The good news is that there are effective ways to handle conflict and resolve issues—and these methods will actually strengthen your relationship.
“Remember that quite often, unhappy clients will not even tell you that they have a problem,” she adds. “They simply move their business elsewhere. So, if a client thinks enough of you to give you the chance to repair a bad situation, take it. Play an active role in making your customer happy so that you can be sure to keep him or her on board with you.”
Creating clients for life is all about building relationships based on real human connections, and that’s the message found in Kuzmeski’s book. The Connectors describes how some of the world’s most successful professionals develop better, more profitable connections. And a big part of the way they do it is changing the way they think about conflict.
As much as we all hope for smooth sailing in our interactions with clients, conflicts are bound to occur. If they never happened, anyone could be a great connector. It’s what you do when there’s a problem that separates the (proverbial) men from the boys. Here are a few tips that will help you keep your business relationships from going bad...and rescue those that have started to sour.
Extend a peace offering. It’s easy to reach out to clients when things are going well. However, it’s all too easy to avoid them when hard feelings are present. Don’t succumb to the temptation. Proactively reaching out to your clients can squash any negativity they may feel for you. Even the simplest of gestures can be effective: Offer an apology when you’ve made a mistake. Then, make things right by extending a peace offering. It doesn’t need to be anything extravagant. It can be as simple as a hand-written note, a refund, or a coupon.
“I know the peace offering works on clients, because it has worked on me,” says Kuzmeski. “At one point the relationship my firm and I had with a technology consulting group had turned sour. They had missed numerous project deadlines and just weren’t satisfying my expectations. I stuck with them, though, in hopes of repairing the relationship. Then one day, my contact Jeremy and I discovered we had something in common—a love for hockey! In fact, one day I mentioned that my son’s favorite team was the Pittsburgh Penguins, and that he and I would be watching them play in the Stanley Cup later that evening.
“Well, the Penguins ended up winning, and much to my surprise, Jeremy sent my son copies of magazines featuring their big win, a copy of the actual Pittsburgh newspaper from the day they won, and a few other items,” she adds. “None of what he sent cost very much, but the impact of his gesture was significant. My son was beyond thrilled. He couldn’t believe that one of my contacts had sent something for him! As for me, it immediately changed the way I felt about the company. My feeling was, ‘Really, they can’t be all that bad. I mean, they are hockey fans, and they were nice to my son.’ Jeremy may not have known it, but he extended a peace offering that helped preserve my company’s relationship with his.”
Don’t follow your “strike back” instincts. If an angry client calls you fuming mad, your knee-jerk reaction might be to argue. Remember, though, fighting anger with anger seldom works. No matter how tough it is, do the opposite of what you feel like doing. Take a deep breath and remain calm. And most of all, diffuse your client’s anger by immediately assuring her that you will make it right.
“When faced with difficult situations with clients, instead of giving a reactionary, defensive response, offer solutions,” says Kuzmeski. “Your first reaction may be to explain why you are right, why the client is overreacting, or to give her additional information so she can better see the situation from your point of view. However, if you check those reactions and instead start working toward a resolution, your chances of keeping that customer are much greater.”
When confronted with an angry client, say something like, “I know we did not satisfy your needs, and I assure you that we will do better in the future. Can I offer you a free gift the next time you stop in, or a discount off your next service?” Your client may still want to fight, but you are dispelling her anger by staying calm and offering a helpful response. Just smile, take responsibility (even if you feel you haven’t done anything wrong), and offer solutions. You can’t control the way your client is going to act, but you can control your own actions. If you are reasonable, your client will eventually come around.
The solutions you offer may not be exactly what the client wants, but you are trying to smooth things over instead of arguing; therefore, the results will no doubt be better. The legendary retailing genius Marshall Field once overheard a clerk in his store having a discussion with a customer. “What are you doing?” he asked. “I’m settling a complaint,” the clerk answered. “No, you’re not,” said Field. “Give the lady what she wants.” We can all learn a thing or two from that.
Get them to listen to you by…listening to them. Customers will listen to what you have to say if you respectfully listen to what they have to say first. Knowing that you are truly listening to their concerns can cause your customers to agree to your suggestions much more quickly.
“Very few people in this world take the time to practice ‘Curious Listening,’” says Kuzmeski. “We instead partially listen, get ready to respond, and let our minds drift. But if you can practice Curious Listening, which is a form of active listening, you will differentiate yourself as someone who really cares.”
Have a standard service protocol at the ready. Creating standards, procedures, and methods of dealing with clients and servicing their needs can really help when it comes to resolving conflicts or handling a dissatisfied customer. By creating a service protocol in advance, you provide a way to “enforce” how client conflict situations are handled. This allows you and your employees to more easily resolve issues and deal with those impossibly and consistently difficult clients.
“When developing a service protocol, start by recalling past situations,” says Kuzmeski. “Consider how and when a difficult client became difficult. Was a resolution reached? If so, when and how? By examining how difficult clients were handled in the past, taking into account both good and bad examples, you and your staff can begin to set boundaries regarding what is and isn’t a proper way to react. Creating a protocol allows you to chart your path to resolution and figure out what you’re going to say before a problem arises.
“Your service protocol empowers your employees to become connectors,” she adds. “Often, they might think offering a discount or a coupon is the right way to handle a situation, but they may be worried that you, their leader, won’t approve. With the protocol, they know exactly what they can immediately offer to the client. You’ll find that effectively resolving problems with clients actually makes them more loyal to you because they see that you care about their business.”
Ask for feedback. Obviously, you don’t have to sit around, anxiously wondering when a problem is going to arise. There is a way for you to avoid some (unfortunately, not all!) client conflicts. You can do it by ensuring that customers aren’t suppressing problems. And you do that by constantly asking for feedback. (It’s amazing how rarely businesspeople do this—they’re usually just keeping their fingers crossed that all is well—but a sincere inquiry about a client’s satisfaction is a true pathway to making a connection.)
“Don’t be afraid to engage your clients,” says Kuzmeski. “Ask them what you can do better, how you can improve. Supply them with feedback surveys so that they can anonymously share their thoughts, ensuring that they are as honest as possible. And when a problem has been solved, ask them if you handled it to their satisfaction and find out if there is anything they would like for you to have done differently. Asking for feedback is a great way for you to rectify any possible or growing problems before they become so great that they sour a client relationship.”
“Clients who feel a connection with you are loyal and will stay with you—sometimes forever. Dissatisfied clients not only go elsewhere, but they also tell others of their dissatisfaction,” says Kuzmeski. “Actually, for every one complaint you receive, an average of nine others remain unspoken. What’s even worse is that all 10 of those dissatisfied clients will each tell an average of five other people about their displeasure with you. That means for every complaint, you could have up to 60 people who are walking around with a negative image of you and your company—and are talking about it!
“By actively and sincerely playing a part in resolving conflicts with your clients, you’re showing them that you are willing to do what it takes to make them happy,” she concludes. “You are not just fixing a problem for them. You are also turning those dissatisfied clients into delighted ones who may even become evangelists for your company! And we all know there is no marketing force more powerful than a customer who shares her delight with others.”
Monday, April 26, 2010
Building your deal team
Building Your Deal Team - Assembling the Right Players
by Kenneth H. Marks
Thinking about selling your company, buying a competitor, or maybe raising capital? You need a deal team with the right mix of talent and experiences to get the best value and to assure the transaction happens. As economic activity is starting to pick-up, some small and mid-sized companies are testing the waters and seeking to launch strategic initiatives to move their businesses forward. In some cases this means raising capital and in other cases it means partnering with or selling to an investor or buyer with deep pockets or where there’s a strategic fit. No matter what the case, having the right team can make the difference - not just in the value and quality of the deal, but whether you actually get the deal done.
So, before you jump into a transaction and start negotiating, make sure you have the right players on your side -
1. Legal Counsel – a critical member of the team. As management considers its alternatives and potential actions, it needs to understand the issues and potential ramifications. Your lawyer should be experienced with transaction structuring and securities law issues, and should be someone whose judgment you value and trust. There are many issues that arise out of the various corporate finance and M and A (mergers and acquisitions, which includes selling a business) transactions. It’s important to have a lawyer who is a “deal doer” as opposed to a “deal killer.” Deal doers have the best interest of the company and shareholders in mind and are focused on completing deals and finding ways to make transactions close. In all deals, there are obstacles and emotions that arise even after the business principals have agreed on the major terms. A lawyer who can think creatively can facilitate solutions to overcome these obstacles.
Though you may have a long and successful relationship with personal counsel that may be strong in real estate, estate planning, or some other discipline, that lawyer may not be the right counsel for corporate finance and M and A transactions. Typically these folks will focus on the wrong issues and spend too much time getting up to speed, the end result being either a poorly done deal or a failed transaction. If current counsel lacks the skills you need to achieve a successful transaction, ask him to help you locate and evaluate new counsel with the right skills; do this before you begin the transaction process, not afterwards.
Having counsel that is known for doing deals and for expertise in transactions can be invaluable in the process and will lend credibility in reaching your goals. Lastly, some law firms have partners that cross over from counsel to an informal investment banker. This is not bad if they have the marketing skills, deal instincts, experience, and available staff time; but it can be problematic if their role is not well understood and defined.
2. Investment Banker / M and A Specialist - if you are selling your company, this role is a must. If raising capital, others on the team may be willing and able to assume the position; it depends on the stage of the company and the type funding required. Investment bankers and M and A specialists are intermediaries that drive the transaction process, help present and market the company and may actively participate in negotiating the deal. You can think of them as the “deal quarterback”. In some cases you will find a strategic advisor or consultant filling this role, which is fine too. The process of a selling a business is reasonably complex and requires an integrated effort of the entire team to get the best results. The key is to have a partner-level professional with transaction AND business experience that understands the entire process, the subtleties, and the inter-related issues and opportunities.
3. Accountants - we use the plural tense because there are usually multiple accountants involved in the process. First there is the need to have financial statements that comply with generally accepted accounting principles (GAAP). Valuations tend to boil down to a multiple of EBITDA (earnings before interest taxes depreciation and amortization) or cash flow. The audit accountant can help your team insure that you have defensible earnings information that will likely be required in negotiating the deal. Without it, you will be operating from a position of weakness and constantly being second guessed by the investor’s or buyer’s team.
Second, there are the tax accountants. Particularly in the sale of a company (vs. financing), there are a number of decisions that can directly impact the eventual after-tax cash proceeds to the shareholders. Your ally and partner in making these decisions is either your tax accountant, which should have corporate finance or M and A transaction experience, or a tax attorney with the same.
4. Board Members and Management - no one knows your business better than you and your management. There is a dual purpose in choosing your internal players: (a) to have multiple eyes and minds focused on the deal that understands the intricacies of the business and its industry, and (b) to represent the interest of the shareholders and key stakeholders that will be required to get the transaction complete. A critical investment component for many investors and buyers is management. In addition, having your senior team members on-board early in the process is usually key to successfully presenting and marketing the company. It enables outsiders to observe the breadth and quality of management, and allows management to evaluate potential investors or buyers in real-time as the process progresses. At a minimum, expect to have your CFO or controller, and key board members ready to engage as required.
Carefully interview and assemble a group of professionals that have the focus, expertise, network, and mind share to enable you to make sure-footed, solid decisions as you contemplate and execute on the financing or M and A process. Keep in mind that not all advisors are needed at once - prioritize, and be aware of the cost and benefits of the engagements and timing of support. The mix of these professionals and their firms is a function of the credibility of your company’s management, size of the business checkbook, stage and industry of the company, and the realistic growth opportunity of the business.
Kenneth H. Marks a Managing Partners of High Rock Partners, providing growth-transition leadership, advisory and investment. He is the lead author of the Handbook of Financing Growth published by John Wiley and Sons, www.HandbookofFinancingGrowth.com. You can reach him at khmarks@HighRockPartners.com.
by Kenneth H. Marks
Thinking about selling your company, buying a competitor, or maybe raising capital? You need a deal team with the right mix of talent and experiences to get the best value and to assure the transaction happens. As economic activity is starting to pick-up, some small and mid-sized companies are testing the waters and seeking to launch strategic initiatives to move their businesses forward. In some cases this means raising capital and in other cases it means partnering with or selling to an investor or buyer with deep pockets or where there’s a strategic fit. No matter what the case, having the right team can make the difference - not just in the value and quality of the deal, but whether you actually get the deal done.
So, before you jump into a transaction and start negotiating, make sure you have the right players on your side -
1. Legal Counsel – a critical member of the team. As management considers its alternatives and potential actions, it needs to understand the issues and potential ramifications. Your lawyer should be experienced with transaction structuring and securities law issues, and should be someone whose judgment you value and trust. There are many issues that arise out of the various corporate finance and M and A (mergers and acquisitions, which includes selling a business) transactions. It’s important to have a lawyer who is a “deal doer” as opposed to a “deal killer.” Deal doers have the best interest of the company and shareholders in mind and are focused on completing deals and finding ways to make transactions close. In all deals, there are obstacles and emotions that arise even after the business principals have agreed on the major terms. A lawyer who can think creatively can facilitate solutions to overcome these obstacles.
Though you may have a long and successful relationship with personal counsel that may be strong in real estate, estate planning, or some other discipline, that lawyer may not be the right counsel for corporate finance and M and A transactions. Typically these folks will focus on the wrong issues and spend too much time getting up to speed, the end result being either a poorly done deal or a failed transaction. If current counsel lacks the skills you need to achieve a successful transaction, ask him to help you locate and evaluate new counsel with the right skills; do this before you begin the transaction process, not afterwards.
Having counsel that is known for doing deals and for expertise in transactions can be invaluable in the process and will lend credibility in reaching your goals. Lastly, some law firms have partners that cross over from counsel to an informal investment banker. This is not bad if they have the marketing skills, deal instincts, experience, and available staff time; but it can be problematic if their role is not well understood and defined.
2. Investment Banker / M and A Specialist - if you are selling your company, this role is a must. If raising capital, others on the team may be willing and able to assume the position; it depends on the stage of the company and the type funding required. Investment bankers and M and A specialists are intermediaries that drive the transaction process, help present and market the company and may actively participate in negotiating the deal. You can think of them as the “deal quarterback”. In some cases you will find a strategic advisor or consultant filling this role, which is fine too. The process of a selling a business is reasonably complex and requires an integrated effort of the entire team to get the best results. The key is to have a partner-level professional with transaction AND business experience that understands the entire process, the subtleties, and the inter-related issues and opportunities.
3. Accountants - we use the plural tense because there are usually multiple accountants involved in the process. First there is the need to have financial statements that comply with generally accepted accounting principles (GAAP). Valuations tend to boil down to a multiple of EBITDA (earnings before interest taxes depreciation and amortization) or cash flow. The audit accountant can help your team insure that you have defensible earnings information that will likely be required in negotiating the deal. Without it, you will be operating from a position of weakness and constantly being second guessed by the investor’s or buyer’s team.
Second, there are the tax accountants. Particularly in the sale of a company (vs. financing), there are a number of decisions that can directly impact the eventual after-tax cash proceeds to the shareholders. Your ally and partner in making these decisions is either your tax accountant, which should have corporate finance or M and A transaction experience, or a tax attorney with the same.
4. Board Members and Management - no one knows your business better than you and your management. There is a dual purpose in choosing your internal players: (a) to have multiple eyes and minds focused on the deal that understands the intricacies of the business and its industry, and (b) to represent the interest of the shareholders and key stakeholders that will be required to get the transaction complete. A critical investment component for many investors and buyers is management. In addition, having your senior team members on-board early in the process is usually key to successfully presenting and marketing the company. It enables outsiders to observe the breadth and quality of management, and allows management to evaluate potential investors or buyers in real-time as the process progresses. At a minimum, expect to have your CFO or controller, and key board members ready to engage as required.
Carefully interview and assemble a group of professionals that have the focus, expertise, network, and mind share to enable you to make sure-footed, solid decisions as you contemplate and execute on the financing or M and A process. Keep in mind that not all advisors are needed at once - prioritize, and be aware of the cost and benefits of the engagements and timing of support. The mix of these professionals and their firms is a function of the credibility of your company’s management, size of the business checkbook, stage and industry of the company, and the realistic growth opportunity of the business.
Kenneth H. Marks a Managing Partners of High Rock Partners, providing growth-transition leadership, advisory and investment. He is the lead author of the Handbook of Financing Growth published by John Wiley and Sons, www.HandbookofFinancingGrowth.com. You can reach him at khmarks@HighRockPartners.com.
Monday, March 9, 2009
Top Priorities of CIOs
By Mark Brousseau
Linking business and IT strategies is the top priority of CIOs in 2009, up from the second-highest priority in 2008, Colleen Graham said today at the Gartner Business Intelligence Summit 2009 in Washington, D.C. “Here’s where you can really see the impact of the economy coming out; it’s forcing CIOs to be more strategic and more focused,” Graham said, explaining the findings of Gartner’s survey of 1,500 CIOs.
Reducing cost is the second-highest priority of CIOs – up from the tenth most important priority last year, Graham said. The other key priorities of CIOs: projects that deliver growth; and attracting, developing and retaining IT personnel.
As for technology spending, business intelligence is the No. 1 priority. Conversely, a lot of organizations are looking particularly at hardware as an area where they can reduce cost in 2009, Graham said. “Organizations have to make some very tough choices about where budgets are going to be. They are not going up. They are going to be flat, at least for 2009 and maybe beyond.”
Out of the top 10 spending priorities identified by CIOs, document management comes in last, having dropped in priority ranking each of the past four years that Gartner has done the study.
Graham noted that the budget situation is very different today than it was 7 or 8 years ago. “We’re seeing more and more of the IT budget getting eaten up by nondiscretionary projects such as maintenance.
What do you think? Post your comment below.
Linking business and IT strategies is the top priority of CIOs in 2009, up from the second-highest priority in 2008, Colleen Graham said today at the Gartner Business Intelligence Summit 2009 in Washington, D.C. “Here’s where you can really see the impact of the economy coming out; it’s forcing CIOs to be more strategic and more focused,” Graham said, explaining the findings of Gartner’s survey of 1,500 CIOs.
Reducing cost is the second-highest priority of CIOs – up from the tenth most important priority last year, Graham said. The other key priorities of CIOs: projects that deliver growth; and attracting, developing and retaining IT personnel.
As for technology spending, business intelligence is the No. 1 priority. Conversely, a lot of organizations are looking particularly at hardware as an area where they can reduce cost in 2009, Graham said. “Organizations have to make some very tough choices about where budgets are going to be. They are not going up. They are going to be flat, at least for 2009 and maybe beyond.”
Out of the top 10 spending priorities identified by CIOs, document management comes in last, having dropped in priority ranking each of the past four years that Gartner has done the study.
Graham noted that the budget situation is very different today than it was 7 or 8 years ago. “We’re seeing more and more of the IT budget getting eaten up by nondiscretionary projects such as maintenance.
What do you think? Post your comment below.
Thursday, March 5, 2009
Leadership in Chaotic Times
Posted by Mark Brousseau
An interesting article from Monday's USA TODAY:
Chaotic economic times call for CEOs to show optimism
Management consultant Ram Charan has had the ear of dozens of Fortune 500 CEOs. A native of India, Charan received a Harvard MBA after getting an engineering degree from Banaras Hindu University. He is known for living in hotel rooms and without an apartment for much of his career, traveling from meeting to meeting with top executives. Charan, 67, spoke last week to USA TODAY corporate leadership reporter Del Jones. Following are excerpts, edited for clarity and space.
Q: Publicly, CEOs seem worried about the economy. Privately, are they frightened to death?
A: When somebody (such as Moody's or Standard & Poor's) calls the CEO and tells them their bond rating is on watch, it causes a huge anxiety. Most companies cannot escape a warning, and so they are anxious. They worry if their customers will pay, if their suppliers will go bust. They are watching accounts receivables daily and with intensity.
Q: Should they be expressing their fear to employees and shareholders, or is it best to put on an optimistic face?
A: Leadership is judged in times of crisis. They must be optimistic about weathering the storm, that solutions will be found. But don't sugarcoat. Figure out what the reality is, and communicate that reality. Give everyone the facts. Engage employees in defining problems and solutions.
Q: What steps are you telling them to take?
A: It's largely out of their hands. About 10 people in Washington need to come up with a coordinated plan. Everything is being done piecemeal. Unless these Washington guys deal with it, there's not much companies can do.
I just came back from India, and government action there is much more coordinated.
Q: There's nothing corporate leaders can do?
A: They must manage cash. Cash is king, and corporate boards should build in the incentives of cash and financial safety. Companies must raise cash so that when it's time to do refinancing they don't get shut out of the commercial markets. Companies that can't raise cash need to merge, and they need to do it before the 11th hour.
Q: Some companies, such as Intel, are well known for expanding into past downturns and being better positioned than competitors when the economy turned. Isn't this one of those moments in history to take a chance?
A: Under certain circumstances, but do not take risks with cash.
An interesting article from Monday's USA TODAY:
Chaotic economic times call for CEOs to show optimism
Management consultant Ram Charan has had the ear of dozens of Fortune 500 CEOs. A native of India, Charan received a Harvard MBA after getting an engineering degree from Banaras Hindu University. He is known for living in hotel rooms and without an apartment for much of his career, traveling from meeting to meeting with top executives. Charan, 67, spoke last week to USA TODAY corporate leadership reporter Del Jones. Following are excerpts, edited for clarity and space.
Q: Publicly, CEOs seem worried about the economy. Privately, are they frightened to death?
A: When somebody (such as Moody's or Standard & Poor's) calls the CEO and tells them their bond rating is on watch, it causes a huge anxiety. Most companies cannot escape a warning, and so they are anxious. They worry if their customers will pay, if their suppliers will go bust. They are watching accounts receivables daily and with intensity.
Q: Should they be expressing their fear to employees and shareholders, or is it best to put on an optimistic face?
A: Leadership is judged in times of crisis. They must be optimistic about weathering the storm, that solutions will be found. But don't sugarcoat. Figure out what the reality is, and communicate that reality. Give everyone the facts. Engage employees in defining problems and solutions.
Q: What steps are you telling them to take?
A: It's largely out of their hands. About 10 people in Washington need to come up with a coordinated plan. Everything is being done piecemeal. Unless these Washington guys deal with it, there's not much companies can do.
I just came back from India, and government action there is much more coordinated.
Q: There's nothing corporate leaders can do?
A: They must manage cash. Cash is king, and corporate boards should build in the incentives of cash and financial safety. Companies must raise cash so that when it's time to do refinancing they don't get shut out of the commercial markets. Companies that can't raise cash need to merge, and they need to do it before the 11th hour.
Q: Some companies, such as Intel, are well known for expanding into past downturns and being better positioned than competitors when the economy turned. Isn't this one of those moments in history to take a chance?
A: Under certain circumstances, but do not take risks with cash.
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