The recent Capital Conference, hosted by the Association for Corporate Growth, served up some useful thoughts for those who might be in business acquisition mode:
----From Ray Kong, Senior VP, Ipsos Reid (market research) re. buying in Canada,
- Skate to where the puck is going, not where it is (investing is like hockey?). In today’s volatile and exponentially changing environment, it’s always too late to invest in today’s big winners. Spend time and effort analyzing trends to know what will be big and take the risk that you are right.
- Demographics explain a lot. For example:
- 53 % of the population are women
- 25 % (of the population)are single women
- By 2015 seniors will outnumber children
- Social media are now credible information sources
- Four societal forces to keep in mind:
- Individualism is expanding (try customizing sports footwear on-line)
- Ephemerality (as in temporary possession) is the new owning. E.g. Zipcar is expanding
- Debt is growing in the 65-80 age category. A new market.
- Worry amongst young people is chronic. Relieve their pain in your marketing.
- All key players have to have their own skin in the game. Keeps them honest
- On compensation, position base pay at 75 % of market and performance pay to reach 150 % of market
- Flatten the organization. Key market information changes too much going up the ladder. Top executives need to spend 30 % of their time with customers.
- Sell once, profit twice. Add new product or service offerings to existing customers to leverage the selling efforts.
- Acquire with care. Must pass the sniff test before the analysis. Double the time estimate to achieve synergies, half the cost reductions assumed…..you get the picture, be a wary acquirer.
------ From the blue chip investment banker panel, there is more money available than quality deals right now. This should last up to 18 months as they see it. Sellers are taking lower multiples than the norm, hence it’s a good time to be a buyer.