Finance Monthly speaks with former tech entrepreneur Gary Moon, who turned tech investment banker 16 years ago. He is currently the Managing Partner of the boutique investment bank Nfluence Partners, which focuses on M&A and capital formation advisory across various technology, media & telecom sectors, as well as having a new growth capital fund for mission-aligned businesses.

What challenges arise in advising clients on their M&A strategy given the fluctuating nature of the sector?

If you are not active in the market across a significant number of assignments, it can be difficult to understand the nuances of what drives buyer behavior in various technology sectors where valuations can range from < 1x revenues to > 16x revenues. You need strong historical understanding and pattern recognition on how technology adoption cycles impact M&A. With the lack of an IPO market, consolidation of middle market companies by the tech elites and significant increases in private equity activity in the tech sector, the dynamics of what attracts various buyers and the valuations that they will pay shift regularly as well.

What have been the trends in the corporate M&A sector in the US in the past twelve months?

Over the past year, we’ve noticed that strategic acquirers are more selective and require a higher degree of strategic value to transact. The long-term trend of pursuing companies of more meaningful scale has continued, while a mix of deal consideration to ensure management continue for several years post-acquisition is also increasing.

What issues can bring a deal to a standstill? How would you overcome these?

The biggest and most common issue is missing revenue forecasts. While one can be optimistic, it is more important to have a realistic set of projections that can be delivered within a few percentage points of accuracy. The other common mistake for companies that are not well advised is not getting in front of bad news. Diligence teams are thorough and you can count on them to find any outstanding issues. Better to deal with them up front than to have a surprise as you are trying to close a transaction. Otherwise, not only will you have to deal with the issue, but you’ll also have to deal with the breakdown of trust given the lack of disclosure.

What advice would you give to a company considering a potential merger or an acquisition?

Make sure that the most likely companies to acquire you know who you are in advance through partnership or other market-based activity. The majority of transactions happen between companies that know each other in advance. It also provides you potential competitors in the sale process, as you do not want to be in a position where you are only negotiating with a single party for your acquisition.

What are the companies that Nfluence works with?

We work with expansion and growth stage companies across a number of sectors within TMT including both venture ecosystem and entrepreneurially financed. We are also excited about working with growth stage companies in the purpose economy - mission-aligned and/or impact-driven. These companies tend to have unique requirements from capital formation to acquisition and liquidity and we are spending a lot of time working in and developing this ecosystem.

About Gary Moon & Nfluence:

Spun out in 2018, Nfluence was originally founded in 2011 as the Technology, Media & Telecom (TMT) group at Headwaters MB. Gary Moon and his partners built Headwaters into a top 10 technology-focused boutique investment bank ranked by closed transactions in 2017. Over the past 12 years, Gary and the senior team at Nfluence have managed the completion of nearly 200 transactions, repeatedly demonstrating tenacity, creativity and effectiveness on behalf of their clients. Gary has been a strategic and financial adviser to numerous technology and growth firms and has extensive experience with both institutionally financed and founder financed ventures. Gary has advised on client exits to such prominent companies as AT&T, Cisco, Equifax, Microsoft, Nuance, Tyco International and WeWork, and has helped firms raise growth capital and complete private equity recapitalizations from name brand institutional investors.

Prior to joining Headwaters, Gary was the Managing Director of Europe for Ridgecrest Capital Partners, a boutique investment bank focused on technology mergers & acquisitions. In this capacity, Gary led the efforts of the firm in growing the European practice which ultimately comprised a significant percentage firm’s revenues. Prior to joining Ridgecrest, Gary led the Mobile, Wireless and Communications Technology practices for Viant Capital, a boutique investment bank in San Francisco. Prior to embarking on his advisory career, Gary was the founder and CEO of Luna Communications, a North American focused wireless systems integration firm. Luna Communications was sold to a publicly traded competitor, where Gary became the CTO and Managing Director of Client Services.

Wesbite: http://nfluencepartners.com/

This week we learnt that two of the UK’s top supermarkets are merging, shaking up grocery shopping for generations to come. The £13 Billion merger between Walmart-owned Asda and Sainsbury’s, which recently bought out Nectar, is set to create a grocery powerhouse that can finally compete against Tesco Stores.

Following the announcement shares rocketed and the public was happy to hear prices would receive a 10% cut as a consequence of the merger. Rpeorts indicate no jobs will be cut, nor will any stores be closed. So what is this merger all about?

Finance Monthly spoke to Dr Naaguesh Appadu, Research Fellow at Cass Business School and member of the Mergers & Acquisitions Research Centre, who comments on Sainsbury's and Asda agreeing to £13bn merger.

Dr Naaguesh Appad said: “This deal is about market share. Neither Sainsbury’s nor Asda can afford to stay quiet. You just have to look at the grocery sector right now: Tesco has acquired Booker and Morrisons supplies products to Amazon. Therefore, it is key to show the leadership in terms of groceries for the Sainsbury’s/Asda merger to happen. It should be noted that they neither company can grow organically, and they don’t have the option of staying away Tesco, from the current market leader.

“This deal with see the consumer win two-fold. First, customers will be able to access more products and second, they’ll enjoy lower prices (execs have stated 10%) on common products due to competition on suppliers. It will be interesting to see how this plays out in terms of competition, now that executives have stated there are no plans to close Sainsbury's or Asda stores.”

Ramphastos Investments is a venture capital and private equity firm focused on driving top-line growth in enterprises in all stages of their evolution: from start-ups to scale-ups to high-growth medium-sized companies and mature enterprises.

The firm was founded in 1994 by Marcel Boekhoorn, who left a career in accountancy at Deloitte after becoming the Netherlands’ youngest Partner to pursue his passion for entrepreneurship. Within a few years, Marcel had grown the firm’s portfolio and invested capital exponentially after realising spectacular returns through several high-profile exits. In this period, he also laid the foundations for the approach toward building businesses that the firm pursues today: a focus on driving growth on the revenue side of the equation through buy-and-build strategies, marketplace innovation, internationalisation, management empowerment and strategic partnerships.

Today, Marcel is joined by a team of seven partners who share his passion for and hands-on approach to business building as well as his upbeat, solutions-focused and status quo-challenging mindset. As founders, builders, operators and investors in businesses of all sizes and in all phases in their evolution across multiple sectors and geographies, Ramphastos’ partners have successfully turned around businesses, created and sold start-ups, launched IPOs and completed de-listings, achieving outsized average returns on investment throughout the firm’s growth.

The firm currently holds interests in more than 20 companies with a cumulative revenue above 3.5€ billion and more than 8,000 people employed across a range of sectors from financial services, gaming, new materials and advanced manufacturing and energy and across all continents. Ramphastos is focused primarily on acquiring majority stakes in companies that meet three criteria: a unique competitive position (through a patent, brand or operational efficiency), strong intrinsic growth potential and favorable underlying trends in the industry or marketplace. As an investor of its own capital, the firm has the financial independence and appetite to take on complex transactions and special situations.

This month, Finance Monthly had the privilege to catch up with Marcel Boekhoorn and hear about the exciting journey that founding and running Ramphastos Investments has been to date.

What was setting up your own investment company in the Netherlands back in 1994 like? What were some of the hurdles that you were faced with?

When I left my job as a Partner and M&A Expert at Deloitte & Touche, I had no money of my own to invest, so my first step was to set up shop as an independent M&A consultant. That work brought in enough money, and when one of my clients was unable to pay for my invoices, I decided to take a stake in his business. I made just about all the mistakes you can make, starting with taking a minority stake and having no control over the direction of the business. I also witnessed first- hand that a Founder’s entrepreneurial creativity doesn’t necessarily translate into day-to-daymanagement or leadership skills.

Within eight months, the company had folded, and I was on the verge of bankruptcy. But poverty breeds creativity, and within a year, I had earned enough to try it again, this time taking control of a struggling wood box maker and turning it around by focusing production on cigar boxes. We produced boxes for Davidoff, Tabacalera and other global brands, and I sold my shares for a good profit – enough to branch out into more investments.

My strategy from the start was to focus on unconventional companies that no one was interested in, like small wheelbarrow or spray can manufacturers, and to build them into market leaders through buy-and-build strategies. By realising significantly higher margins as market leaders through premium pricing strategies, these companies were able to accelerate outsized growth in their sectors. By purchasing them when they were small and selling them quickly as market leaders, I was able to realise outsized returns in the process.

Now, almost 25 years later, we’ve moved on to larger, different and more complex investments, but our fundamental emphasis on top-line growth, as well as our preference for taking a majority stake in our investments and our interest in companies, markets or complex transactions and special situations that others shy away from, are still our main priorities.

A key component of any successful PE investment is to turn the business around; what are the considerations in terms of operational integration? What are the typical challenges you face?

When we consider investing in a business to turn it around, we look to see how we can add value on the revenue side of the equation – through a buy- and-build strategy or by challenging the status quo with the introduction of a new channel strategy, internationalisation, or a new product portfolio or pricing strategy. We have seen that it’s on this side of the equation that we can make the biggest difference and add the most value. It’s also where we’re most at home. We are entrepreneurs and business builders first and foremost.

This sets apart from much of the private equity world, with its emphasis on the cost side of the business. Don’t get me wrong: all of the revenue- driving strategies I just mentioned will only succeed if the organisation and operations are structured effectively to deliver on them. And any successful turnaround includes robust cost control and simplified, streamlined operations. Getting that right will always be part of our turnaround strategy, but we are fundamentally more about catalysing growth through entrepreneurial innovation and management support on the revenue side rather than driving profit by slashing on the cost side of the equation.

A hallmark of our approach to turning businesses around is to focus on company leadership. The company’s management and its employees – the people – are the ones who will make or break the business. Our work starts at the top, getting the leadership bought into and aligned on the new direction, ensuring that they embrace the same vision of the future, the same sense of who we are today and where we are headed. We make it a point to be there for leadership teams and help them work through such processes. We’re hands-on builders, and this is a role we love to play. Getting a turnaround right throughout the organisation – not just among leadership’s direct reports but company-wide – hinges on consistent, well-aligned communication. We find time and again that executing consistent communication – from instilling an understanding of strategy to fostering a growth-focused culture among employees. This is one of the most important operational KPIs for a successful turnaround.

You ask about typical challenges. Well, for starters, most people aren’t hardwired for change, and if the change isn’t something that they introduced themselves, it scares them. They don’t like it – until they see that it works and benefits them, of course. Take the example of introducing a channel strategy to move a retail business entirely online – or vice-versa. We’ve done both in different sectors, geographies and cultures, and we have found that three things help mitigate resistance and galvanise employees to deliver on the new strategy: first, a clear and consistent communication about the strategy and its benefits, second, creating and showing progress against a roadmap with compelling short- and mid-term milestones and third, cultivating a culture of listening and dialogue among employees.

What is the state of the market in relation to venture capital right now? What challenges are faced by businesses looking for funding?

Looking at the markets for venture capital and private equity, we see that increased competition has driven up valuation multiples up consistently.

From 2009 to today, sustained low interest rates have made debt cheap and have driven investors’ money toward VC and PE in their search for higher returns. Strategic buyers with strong balance sheets and big cash reserves are competing with one another, driving prices up.

In spite of this overall pattern, there are plenty of businesses who struggle to find funding. In the VC space in particular, we see that geography plays a role. If you’re a start-up based in the States looking for, say, two-to-five-million dollars, you’ll be well served by the market. If you’re a European company looking for the same investment in

Europe, you’ll struggle. The VC market is far less developed than the market in the States, with investment concentrated around a handful of potential unicorns.

At Ramphastos, we have always focused as much as we can on companies in underserved markets and in investments that others avoid. Conversely, we’ve always stayed as far away as we can from competition with other investors. Our point of view is that if you have to compete in an auction with

20 or 25 other players, then you’ll always end up paying too much and struggle to reach your target IRR.

We build businesses with our own capital, and in doing so, we pursue the high-risk, high-return opportunities that others avoid. We’re currently focused on turning around larger enterprises that face complex challenges. Unlike typical private equity firms that are happy with 25 or 30% IRRs, we are looking for driving significantly higher returns. So far, our approach – which plays to our strengths as creative thinkers and hands-on business builders – has paid off. In our 24 years as a firm, we’ve realised average multiples of money invested above ten.

How are most of your investments structured? To what level do you, as the investor, want a say in the day-to-day running of the business?

We do the majority of our investments on our own.

We invest our own capital and value our financial independence. This keeps us flexible and agile as investors. We usually take majority stakes to allow us to do what we do best – roll up our sleeves to help company leadership hands-on as they build their business. As founders, builders and leaders of businesses of all sizes and in all phases in their evolution, our partners have first-hand experience with just about anything you can encounter as an entrepreneur. We usually take a board position in our portfolio companies working side-by-side with company leadership to shape strategy and – if needed – give them tactical counsel, talent, tools and innovations to deliver on their plans.

Whereas we’ve been successful to date in the VC space across multiple sectors from flight simulators (Sim-Industries) to online brokerage (TradeKing) to flooring technologies (Innovations4Flooring) and open to opportunities, we are increasingly focused with our investments in larger, more mature companies, particularly ones with three qualities: one, a unique competitive position through a patent, brand or operational efficiency; two, strong intrinsic growth potential; and three, strong underlying trends in the industry or marketplace. We also love helping companies tackle tough, complex problems and turn themselves around. We’re actively looking at opportunities in that space, particularly among larger enterprises.

How are exit strategies agreed and structured? What are typically the common areas of disagreement regarding exit timing and strategy between the business owner and Ramphastos Investments?

We don’t have a predefined exit strategy, but we never buy into an enterprise without having a good idea about whom we’re going to sell it to. If we don’t know our exit, we won’t buy it – it’s as simple as that. And because we invest our own money, we have no pressure or obligation to sell. Our capital is patient: we’re in no hurry. Rather than working towards a specific exit, we focus on the execution of a predefined strategic value creation plan. When companies continue to grow, they will sooner or later attract buyers. We are all about value creation, and that can take time. We exit when the time is right.

To date, we have never had disagreements with the management teams on timing or nature of the exit strategy. The social dimension is important to us. With a good deal, everyone should be happy: buyer, seller, management, employees, partners – everyone. When the ABN AMRO bank dared to support us with 200€ million on our first really big deal, we rewarded them with a discretionary 10€

-million premium at exit, without any contractual obligation to do so. They had never experienced anything like that before. We don’t do deals where we can’t make such things happen.

Out of all of Ramphastos Investments’ success stories, what would you say are your three biggest achievements?

The first is without a doubt Telfort, a Dutch mobile telecom provider, which we acquired as majority shareholder, grew exponentially and sold within nine months to market leader KPN for more than a billion € in 2005. That deal was a milestone for Ramphastos, because it earned us our first half billion. It’s also a good example of the success of a robust top-line strategy. While part of our success involved getting the costs under control, we grew the company’s value explosively by swiftly migrating the business from an online- only platform to the high street retail channel, through creative retail and consumer incentives, and we raised the consumer price sharply while remaining the market’s price leader, driving profits from 50€ million to 150€ million in just eight months. We also capitalised on excess network capacity by opening our network to mobile virtual network operators, and we closed a unique deal with Huawei, as the company’s European launch customer.

A VC success story that we’re super proud of involves Sim-Industries, a developer of flight simulators that we launched in 2004 and sold to Lockheed Martin in 2011. The story is a good one, because it shows how being flexible and thinking out-of-the-box can steer a start-up to success. Sim started out in the software business, developing software for flight simulators. When the market leader in that space stood in our way, we asked ourselves: Why not go further and build simulators too? We fought hard to gain a place in an oligopolistic market, with incumbents poaching our employees and trying to scare away our suppliers, clients and us. In the meantime, by taking a fresh look at design, we built a superior product, overcame legacy issues, installed a senior management team, focused on execution excellence and became market leader in civil aviation simulators for leading aircraft types.

A third story I’d like to share has less to do with business, but everything to do with deal-making. It’s a deal that centres on an issue that is close to my heart: the preservation of species; and it’s a deal that fulfils a dream that I worked personally, persistently and patiently to fulfil over 17 years – making a home for two giant pandas in the Netherlands. That dream began when I bought a zoo located to the east of Utrecht and returned it to profitability. After hundreds of hours’ worth trips back and forth to China, education, complex relationship building with the Dutch and Chinese governments - across three Dutch prime ministers and three Chinese presidents, the dream became a reality in October 2015, when I travelled with a trade delegation and our King to the Great Hall of the People in Beijing to sign a ten-year agreement in the presence of Xi Jinping. The agreement includes an annual contribution of one million dollars to the preservation of the panda and the conservation of its natural habitat in China. The pandas arrived almost exactly a year ago at the zoo and are thriving in their new home, which was voted this year as the world’s most beautiful panda enclosure.

Over the years, what has kept the company moving forward? What sets you apart from the competition?

What’s kept us moving forward first and foremost is that we absolutely love what we do. We love building businesses. We love wrestling with thorny challenges and innovating our way with management teams toward successful turnarounds and outsized growth. We love closing deals that make everyone a winner.

It hasn’t been smooth sailing every year. I founded the company with plenty of fits and starts, as you heard, and when the Great Recession hit, it didn’t look at us and say: They’re a nice bunch of people, let’s give them a break. I’m happy to report that all of the companies in which we hold a majority of shares are turning a profit today.

What’s gotten us through the tough times is a combination of our unbreakable optimism and solutions-mindedness, our deep respect for one another and our collective creativity.

There’s also the fact that that we nurture close, trusting relationships with the management of our portfolio companies. We’re open with one another, and all of us here are ready and willing to jump in and contribute. We’re able to anticipate problems before they surface or tackle them quickly before they spin out of hand.

To put your finger on what makes us different, add to that our resourcefulness, boundless energy and appetite for challenging the status quo. We thrive on pushing ourselves and our companies to innovate and adapt constantly to drive revenue and margin growth, and in today’s world, if you don’t have the mindset and wherewithal to be agile and adapt, you’re in serious trouble. As a financially independent investor, we are free to take risks, tackle problems that others avoid and make the kinds of bold moves that catalyse truly breakthrough growth.

What do you hope to accomplish in the near future? Are there any exciting new projects that you can share with us?

I have an important role to play as the chief motivator, inspiration and driver of creativity within our team, and I hope to continue to do so for many years. Entrepreneurship is what fires my heart and gives all of us here energy, inspiration and strength. And all of us at Ramphastos see the kind of creativity-driven value that we’ve been creating here pays itself forward to beyond Ramphastos to the management teams and employees and suppliers of our companies and markets they serve. We have been doing well for almost a quarter of a century and aim to continue to steer this course.

As for projects on the horizon, we have some really exciting deals on the way. I wish I could tell you more, but I can’t. Stay tuned - there are more chapters to come.

Website: http://www.ramphastosinvestments.com/

Disney’s acquisition of 21st Century Fox means that the House of Mouse now controls a huge amount of our most beloved films and television series.

Announced in December 2017 and expected to take until at least 2021 to complete, this $66.1bn deal (that included taking on a sizeable debt portfolio from Fox) ranks amongst the largest mergers of its kind in history.

We’ve compared these media giants, looked at the potential impact of the deal on both their own employees and the end user and demonstrated how Disney is looking to leverage this deal to break into new markets.

Read on to see how the merger will affect everything from television and the cinema box office to streaming platforms and sports broadcasting with our comprehensive infographic:

(Source: ABC FINANCE LTD)

With this week’s market commentary from Rebecca O’Keeffe, Head of Investment at interactive investor, Finance Monthly learns about global markets, the US-China trade war and about recent activity in the M&A sphere.

A turnaround in Asian markets has seen US futures rise and eased the pressure on European equity markets. The last two months have seen global sentiment become more fragile, but the one thing that has kept markets going is the reliance on investors to buy on the dips. The last week had undermined that position in what was a worrying sign for the wider markets, but investors appear to be feeling slightly more resilient this morning.

Steve Mnuchin has taken on the unenviable task of attempting to resolve the trade dispute between the US and China via negotiation – however, he may be trying to reconcile the irreconcilable. The idea that, as one of the largest holders of US treasuries, China will be expected to help finance the growing US fiscal deficit but is also expected to reduce its trade surplus with the US by as much as $100bn to satisfy Trump’s demands appears to be a major contradiction. The question for investors is whether this adds up.

Another day, another flurry of activity in what has become one of the most vitriolic and antagonistic hostile merger bids since Kraft purchased Cadbury in 2010. GKN and Melrose investors have just three days to wait until the final count is in and much will depend on short versus long term investors. This bid has raised several questions about the difference in UK takeover rules versus other European countries and, irrespective of the result, may provide a catalyst for the Government to review the current rules to make sure they have the right balance between competition and protection.

Venture capital trusts (VCTs) remain front of mind for both SMEs and investors. In the 2016/17 tax period, fundraising stood at £542m – the highest figure in more than a decade – according to the Association of Investment Companies (AIC). Also, measures in last year’s budget and recommendations in the Patient Capital Review indicate that policymakers continue to see the strong value VCTs provide for both SMEs and investors and so, for 2018, the signs point to another strong year for the sector.

Here, Bill Nixon, Managing Partner at Maven Capital Partners, looks at the growth of VCTs as an asset class, their appeal to investors, and gives his view on the continuing value of VCTs as a source of SME finance.

The success of new share offers by the leading managers over the past few years illustrates how VCTs have increasingly been recognised as a mainstream asset class in investment planning and are becoming a common part of tax efficient and income-focused portfolios. Fundraising across the VCT sector as a whole has climbed steadily in each of the past five years, including a rise by around a fifth in 2016/17.

This burgeoning demand for VCT investments has been driven by strong long-term returns. Research by the AIC last year revealed that the top 20 VCTs returned on average 82 per cent by share price total return (a measure which takes into account both capital returns and dividends paid to shareholders) over the past decade. The very best performers achieved overall returns well into triple digits: for example, Maven’s Income and Growth VCT returned 187 per cent in that period. Top up share offers by Maven VCT 3 and Maven VCT 4 remain open, for both 17/18 and 18/19 tax years, with around £27m already raised from more than 1500 investors.

VCTs are attractive partly because they enable investors to enjoy significant tax benefits when putting their money into smaller, entrepreneurial UK businesses and participating in their growth. Investors in VCTs receive a 30 per cent upfront tax break, as well as tax free capital gains and dividends – provided they are willing to remain invested for at least five years.

The Government's aim in providing these reliefs is to encourage more capital to flow into riskier, early-stage companies. While this investment risk is an inherent feature of VCTs, it can be managed effectively for an investor by carefully choosing the VCT manager. The leading managers have up to 20 years’ experience of VCT investment and will employ a range of measures to achieve significant diversification and robust asset selection. An experienced manager will work closely with every business it backs, providing strategic counsel and operational expertise as the business grows.

Despite some concerns ahead of last year’s Budget that the levels of tax relief might be reduced, it instead adjusted investment criteria to ensure than VCT schemes continue to focus on investment in companies for long-term growth and development, rather than ‘lower risk’ investment primarily aimed at preserving capital. These changes confirm the position of VCTs as a vital means of drawing private investor capital to the SME sector and should ensure that VCTs remain attractive for investors. The continuing availability of long-term patient capital, at what is an increasingly important time for the UK economy, should give comfort to dynamic smaller businesses that they can continue to access vital equity finance, whilst allowing investors a route to participate in their success.

During the past couple of years it had also become clear that significant improvements were needed to HMRC’s Advance Assurance process, which had resulted in unnecessary delays to receiving VCT clearance on a large number of potential VCT deals. Streamlining Advance Assurance had been highlighted by managers across the sector as an important step in more efficiently directing capital to entrepreneurial businesses, and potentially boosting returns for investors. It was therefore encouraging that the Budget also announced that HMRC aims to enhance that approval process during the early part of 2018, which should help to improve the rate of new investments receiving VCT clearance and allow VCT managers to provide funding to the best available companies in a timescale that suits their growth plans.

Overall, VCTs have shown their worth from both an SME and investor perspective and this year’s fundraising is going well, with one or two VCT offers having already closed to investments. In the three years to mid-2017, VCTs had injected around £1.4bn of investor money into SMEs, illustrating their role as growth company funders and their performance and returns should see them further consolidate their position as an increasingly mainstream asset class in tax efficient and income-focused investment portfolios.

In good times and bad, M&A remains one of the best ways to get ahead of the competition and increase opportunities – and returns – for businesses. It also represents an immense commercial activity that drives significant macroeconomic value across the globe. But why are still so bad at it? Below Finance Monthly hears from Carlos Keener, Founding Partner at BTD Consulting, on M&A tactics and the value in improving on our own.

Even during the ‘Great Recession’ of the last decade, the worst since the 1930s, the poorest year for M&A saw over 35,000 global deals representing $2.25tn – equivalent to more than 3% of global GDP. M&A impacts national economies, individual businesses, and everyone involved.

Yet far too many deals still fail to achieve their objectives. By most measures, long-term M&A success rates remain very low compared to other growth or investment activities. Underneath many celebrated cases of outright merger collapse lies a general prevalence of underperformance, one that has remained unchanged in over 30 years. An Accenture report, Who says M&A doesn’t create value, published in 2012, actually celebrated the view that as many as 58% of all acquisitions added shareholder value 24 months post-close. Problem solved? We think not.

We do not believe such figures deserve the complacent optimism they receive. If you ‘play the M&A odds’ and do no better than your peers, your business is likely to be walking away from approximately half of a percent of its enterprise value with every single deal. That could easily add up to millions if not tens of millions of pounds.

Even so, this is about more than just the numbers. Underperforming acquisitions damage shareholders, careers, brands, communities and opportunities for companies and people alike. Executive survival in serial acquirers is notoriously short: according to one study, disciplinary replacement of CEOs is 77% higher than in non-acquisitive companies.

This endemic level of failure rarely prompts serious remedial action or increased rigour the next time there’s an M&A opportunity. The reason stems from the unique ‘gain today, pain tomorrow’ nature of deal-doing which can be typified by a few characteristics such as:

• Not a perfect world: Business is inherently risky, and M&A especially so. When that is the world view, some failure is simply seen as ‘coming with the territory’.
• Not today’s problem: The long-term outcomes of most deals, regardless of whether they are good or bad, are usually only apparent years later. But corporate, board and investor attention spans are short.
• Not my fault: Outside corporate management, it’s nobody’s job to care about the long term. Regulatory bodies focus on potential competitive impact, not the likelihood of deal success. Traditional external deal advisers are not interested in or responsible for what happens post-close. Shareholders and boards are too far removed from the detail to constructively influence deal decisions. New executives are always keen to draw a line between them and any past errors.

Studies of M&A and integration best practice are widespread and largely focus on tangible, concrete ways to improve individual steps along the process. They might advocate more due diligence, earlier integration planning, increased focus on culture or better communications. These can certainly help individual cases, and yet overall levels of M&A success remain largely unchanged. Best practice is available, understood, widely applied, and yet it is clearly insufficient.

Our own experience and research suggests that success rates are stuck because in most cases both organisations and the external groups that support them fail to understand and grapple with the leadership behaviours that really underpin M&A performance. These behaviours embody the culture, mindset, motivations and actions necessary for sustained success. Our detailed research report Inconvenient Truths identifies 10 critical leadership behaviours both pre- and post-close that impact M&A performance. Here are three of the ten to consider before embarking on your next deal:

1. Avoid anything that generates deal fever: Over 90% of professionals surveyed believe deal fever has a significant, if not critical, impact on M&A performance - and we don’t mean a positive impact. Does your M&A process consistently eliminate the personal agenda, and discourage equating ‘deal doing’ with ‘deal success’? Ensure you have a clear understanding of the motivations – hard and soft – of the deal team from the outset.
2. Minimise the influence of politics and egos in rational, objective deal debate: This is easy to say, but difficult to implement. In our study, 90% of executives at least occasionally withheld objections to a deal where there is widespread group support for proceeding. And 29% do this most of the time if not always. It is critical to use your deal process and your influence at the top table to set the right tone. This means building an environment for open, constructive debate, allowing everyone around the room to have a valid voice, and preventing any one individual from dominating the discussion.
3. Ensure those doing the deal are accountable for delivering its benefits: As one Corporate Finance VP told us, “Getting the deal done is all we do; integration isn’t really of interest to us.” But without this, the pre-deal team will typically only have a passing interest in whether benefits are realised, while the post-deal business may not support the deal from Day 1. Making sure the group assessing a potential deal includes those who must make it work in the long term is key, as is giving the executive responsible for post-close success the ability to veto the deal itself.

All of this might seem obvious. But these points are rarely tackled head-on, and in part that’s because they can by difficult to address. A strong, robust M&A process can help encourage these ‘good behaviours’, or at the very least highlight when they’re not being followed. Those who think this might not be worth the pain and effort might want to know that according to our study, leaders who successfully follow our 10 ‘good habits’ consistently see M&A deliver long-term benefit 72% of the time. That is more than four times more than those who don’t follow the habits. They also saw an increase in share price of 46% over the three years of our study, which is more than twice that of their ‘badly-behaving’ peers.

So here we are in 2018, year in which, if the deal-junkies at Citi are to be believed, portends to be a ‘monster year’ for M&A. Given the globally-synchronised economic upturn, continuing low interest rates, suppressed inflation and roaring capital markets, they could very well be right. Below Carlos Keener, Founding Partner at BTD Consulting, talks Finance Monthly through some of the most anticipated M&A activity of the year.

Indeed the deal frenzy has already begun, with the final half of 2017 witnessing GVC’s takeover of Ladbrokes Coral and the Standard Life/Aberdeen Asset Management merger among others. But a word of caution, at least for those considering acquisitions in the UK: Brexit – soft, hard, or otherwise, is now less than 13 months away, and still we’re without (at time of writing) any certainty on even the outline shape of our future relationship with Europe.

No doubt the lawyers and bankers will continue to talk up the Brexit boom, but the reality on the ground may be rather less clear. At a recent conference, a leading M&A professional representing a FTSE100 organisation disappointingly stated "I think someone in the company is looking into the likely impact of Brexit, I’m sure they’ll tell us if we need to do anything differently as soon they’re ready.” While we all can sympathise, that’s not nearly good enough.

Making a rational assessment of the likely risks UK firms may see over the coming years doesn’t require a crystal ball view of what form Brexit will ultimately take. A look at some upcoming or predicted deals for 2018 illustrates this well.

1. Prompted by its recent struggles, Capita, the outsourcing and professional services group, has just announced that it will be disposing of its less profitable and strategically-central assets and services. Firms heavily reliant on professional service revenue are typically the first to be hit hard in a downturn or in times of uncertainty, and even with a clear, decisive Brexit, lack of business certainty may extend for many years as post-Brexit regulatory and trade conditions – and how they are to be applied – crystallise and settle.

Divesting in an effort to return to core is a traditional approach when the future is relatively predictable and fairly speedy recovery is anticipated. But that’s not exactly the scenario ahead of us. Capita will need to prepare its balance sheet for an extended period of uncertainty while retaining sufficient service diversity and operational agility to accommodate new market demands, conditions, constraints (and yes, opportunities) as they emerge. It is adaptability and not strength which may win the day.

2. The global Pharma sector is likely to see significant M&A activity in 2018 as new drug pipelines soften and US corporate tax reductions take effect. One of the most prominent deals in recent years in this sector was the asset swap and joint venture creation between GlaxoSmithKline and Novartis. And last month GSK’s new CEO, Emma Walmsley, expressed an interest in acquiring Pfizer’s Consumer Health division, estimated to be valued at over $15bn.

Like any global manufacturing organisation with highly-complex supply chains in which materials may cross borders multiple times before reaching the market as a finished product, GSK will need to be extremely careful to scenario-plan the potential impact of new hard, soft or otherwise cross-border tariffs and associated regulations as they come into force.

Business cases that assumed free trade across the EU should be re-examined, and supply chains reviewed to minimise any potential increased cost. Acquisitions of EU-based manufacturing capabilities with the ability to serve local markets may help buffer the firm against any emerging trade barriers.

3. News appeared in January that Fox still wants full control of Sky, despite rejection of the deal by British regulators. The rejection shows the growing importance of political and economic nationalism which can trump investor returns, competition or corporate tax repatriation.

A report in October 2017 by Latham & Watkins describes governments and regulators taking an increasing interest in ’foreign’ acquisitions of nationally important companies in the name of national security. In a twist on this, at the time of writing GKN, the FTSE100 aerospace and automotive giant was fending off an unsolicited £7bn takeover bid by Melrose. While a ‘UK only’ deal, politicians including Vince Cable were commenting on the risk the deal may pose to the UK’s industrial strategy.

Economic nationalism begins at home. So, any UK business looking to buy or sell across borders will need to consider how the deal would look to the public and politicians, not just the shareholders.

4. One area in which everyone agrees change is upon us is FinTech. 2017 deals included Vantiv/Worldpay and JPMorgan Chase/WePay. Brexit’s impact on London’s financial sector will accelerate M&A in the coming years within a sector that’s evolving at warp speed. It will be more important than ever to predict the effects of changes. How will the financial regulatory landscape diverge between the UK and the EU post-Brexit? How will GDPR, data protection and safe haven legislation and practices impact market opportunities and operational challenges across borders? And more tactically – if the FinTech gravity moves or disperses (say to Paris), how will FinTech firms find and retain the top technical talent they need?

As ever, change provides an opportunity and a threat to businesses doing M&A. Size alone will not guarantee success. The successful organisation will pull ahead through a clear strategy and use M&A to expand or adapt their propositions and capabilities in the market. Whatever form Brexit takes, one thing is certain – interesting times lie ahead.

Agave Partners is a cross-border investment bank specializing in the access to the Chinese market for innovative product companies in such domains as Semiconductors, Telecommunications, Data Centres, Artificial Intelligence, Robotics, Automotive and Avionics.

With offices in San Francisco, Beijing and Chicago, Agave Partners represent US and European companies interested in developing strategic partnerships in China for their commercial development and for restructuring their capital. The company realizes Corporate Financing and M&A transactions.  

Agave’s ability to source the right strategic partners in China is in their unique blend of banking and operational experiences allowing to align corporate strategies and structure transactions beyond the aptitude of traditional investment banks. Founder and Managing Director Robert Troy tells CEO Today more about it.

Could you tell us a bit about Agave Partners’ M&A practice?

Our M&A practice focuses on mid-market US and European innovative companies, to which we provide our expertise in identifying Chinese industrial groups able to acquire companies whose offering fits the domestic needs.

Our unique positioning in this practice comes from the combination of our effective presence in China with an office in Beijing dedicated to developing strategic relationships with large industrial and private equity groups, and our expertise in technologies at the core of capital-incentive domains that align with the strategic roadmap of these groups.

These are critical ingredients to maximize the outcome of a deal that is beneficial to both parties, while efficiently navigating through the multiple hurdles, be they administrative, financial, or cultural.

Can you detail a recent transaction that Agave Partners advised on? What were some of the issues that you were faced with?

Agave Partners Advisors was mandated by Kalray SA to source a strategic partner in China with interest in using Kalray technology in its application domain and interest in investing in the company.

We prospected industrial groups that we know to be innovation hungry in highly competitive segments of the Chinese market, including data centres, avionics and automotive; searching for a company which can get a strong strategic advantage at adopting Kalray technology for serving its clients.

Because Kalray technology is very advanced, we found various industrial groups in China, among the most sophisticated, curious about it and genuinely interested in discovering how this technology can be put into practice in their product lines; how it offers a discriminant competitive advantage in better serving their clients; and questioning how fast the market can adopt.

On the buyer’s side, we were confronted to the challenge of promoting a disruptive technology and navigating the full cycle of technology assessment in situations involving product designs and many other steps driving to the strategic decision. Our blend of technologists and bankers’ expertise happened to be of critical importance.

On the seller side, we enjoyed a high-level cooperation with an agile client, not short of commitments when extensive travels and endless negotiations were required to match interests, assess the risks, commit on future developments and overall demonstrate a willingness to engage in a powerful but controlled relationship. Our key contributions have of course been to assist in structuring a complex deal negotiated by parties which were not even speaking the same language and belonging to extremely different business cultures. Our multicultural team made of people used to work and deal in Europe, the US and Asia has certainly been the second key factor of success.

What do you think the next 12-24 months hold for the global M&A market?

Antagonist forces are shaping the global technology market. We see growing altogether (i) a renewed interest of corporations for technology innovations, (ii) a levelling of industrial capacities between continents, (iii) a global awareness of not-to-miss massive game-changer disruptions on their reach to maturity in a variety of application domains including but not limited to automotive, robotics, avionics or healthcare, (iv) the adoption by entrepreneurs and CEOs of worldwide reach as a new normal.  We also see necessary geopolitics considerations creating a growing level of uncertainties with high potential for delaying the trend toward a global reach.

This push-pull situation makes it extremely difficult to predict what the future might hold, but in the short term, we don’t see any possible inflexion of the growing M&A trend in the technology sector for a variety of reasons.

What are some of the current projects that Agave Partners is working on? What lies on the horizon for the firm in 2018?

Agave Partners is working for entrepreneurs and CEOs having a worldwide development strategy. As long as 2018 is concerned, we are primarily working at increasing our capacities to respond to a fast-growing deal flow of high quality companies which see China as their next frontier.

We also have the ambition to become an investor in our most promising clients. For this purpose, we recently signed an agreement with China Electronic Corporation Corporate Venture and their HDSC branch to launch a multi-corporate fund involving European and American electronic corporations as well. Agave Partners Funds is a work in progress with expectation to be launched in the spring of 2018.

Contact details:

Address: 4 Embarcadero Center, Suite 4000

San Francisco, CA 94111

Email: info@agaveph.com

Website: www.agaveph.com

A new report from VentureFounders, in conjunction with Beauhurst, has found that 56% of UK tech founders expect that their business will sell for £50m or less, but 80% want to re-enter the tech ecosystem and support it post-exit.

Other key findings:

• Most UK tech founders are intending to exit within 2-5 years, despite recognising the risks of exiting too early.
• If founders think they will sell for more than £50m, it would be to an overseas buyer.
• The longer a company has been generating revenue, the lower the valuation they expected on exit.

Quoted respondents include James Meekings of Funding Circle, Justin FitzPatrick of DueDil and SwiftKey's Jon Reynolds.

No ambition gap 

James Codling, CEO and co-founder of VentureFounders, believes that, despite the £50m figure, there is no ambition gap among UK tech founders:

"Our report highlights the challenges faced by scale-up entrepreneurs and how critical it is for the UK to continue to nurture the scale-up ecosystem. While UK founders do expect to exit earlier, 80% of them want to go back in to the ecosystem and support it, after they've exited their own business. We hope the government's Patient Capital Review will address some of the key findings from this report.

"We are also commissioning a further piece of work to look at the cost to scale a business in the UK and the funding gap that businesses experience. On the back of this, we expect to make a number of policy recommendations."

Toby Austin, CEO at Beauhurst, commented: “At Beauhurst, we have observed what I suspect are the beginnings of a shift in the funding landscape. Late-stage companies have been able to find the support and capital they need in the UK recently, although much of the money has come from foreign investors. The findings of the report support my belief that the UK is brimming with exciting, ambitious businesses and the ecosystem simply needs to catch up — hopefully it has already started to do so.”

(Source: VentureFounders)

Uber is close to securing an investment deal with Softbank, which if succesful, could amount to £10bn according to reports.

TechCrunch were given the following statement: “We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment. We believe this agreement is a strong vote of confidence in Uber’s long-term potential… strengthening our corporate governance.”

Uber have said the money is going to aid them in their international expansion and technological advancements. The aim of the expansion is partly due to the competition they are currently experiencing.

As well as an initial $1bn investment, Softbank will attempt to buy up £6.8bn ($9bn) worth of shares, resulting in a total stake of 14% in Uber. However, this is reliant on the agreement of a fairly complex tender offer.

The tender offer is set to take place on November 28th and could go on for 20 business days, making it possibly the biggest secondary transaction ever.

Given that any deal would be reliant on existing Uber shareholders selling their stakes, the process will require more work before it can be finalised. To help spread the word about their tender offer to existing shareholders including venture capitalists and ex-employees, Uber plan on putting adverts into newspapers.

According to TechCrunch, the following statement was given to reporters via Softbank on behalf of Rajeev Misra, CEO of SoftBank Investment Advisors: “After a long and arduous process of several months it looks like Uber and its shareholders have agreed to commence with a tender process and engage with SoftBank. By no means is our investment decided. We are interested in Uber but the final deal will depend on the tender price and a minimum percentage shareholding for SoftBank.”

The statement made by Softbank reveals that the deal has not been confirmed and will depend on the agreement of the tender price and percentage shareholding for Softbank.

This investment is seen by many as potentially crucial for Uber. Up until now, employees were unable to sell shares of the company and this investment will aid them in turning paper riches into cash.

It’s been a difficult year for Uber so far with legal battles involving Alphabets self-driving car division, the loss of their licence to operate in London and attacks on their company culture. The CEO Travis Kalanick was also forced to step down in June this year amid several scandals and legal wrangling with investors.

The investment made by Softbank might not only provide a welcome boost at a difficult time, it could very well be vital for Ubers future.

Jumping into a big company merger can be daunting, and while legal and financial steps take place, actual company operations, staff and systems are also a massive part of the merger. Here Ian Currie, ‎Director of EMEA business development, Dell Boomi walks Finance Monthly through some key considerations to make in the internal merger process.

Merger and acquisition (M&A) activity is booming. One thing is for certain there are a number of considerations business leaders need to take before embarking on a merger or acquisition. In particular, in the current political and economic climate, it is critical for investors to analyse all aspects of the company in question – from its value to customers, its business model and growth plans, all the way through to its existing IT infrastructure.

Digital or die

In today’s digital age, ensuring that IT not only works, but enables and drives business performance has never been more important in a merger or acquisition. A slick, digital-first approach ultimately sets one company apart from the competition.

Failure to get digital right can have a disastrous impact for any company. New players in the industry have been designed with a ‘data-first’ approach and are agile and flexible enough to meet customer expectations. An inability for legacy businesses to digitally transform and adapt at speed - or at least faster than the competition - is, therefore, one of the main reasons businesses fail. In fact, two-thirds of executives predicting that 200 Fortune 500 companies will no longer exist in 10 years’ time due to digital disruption.

With this in mind, and as the world becomes increasingly reliant on the digital economy, it is clear that IT should not be an after-thought when considering an acquisition.

However, with some many apps across an organisation and with huge amounts of data sitting in various siloed systems, IT in M&A can be incredibly challenging. Coupling this with the size, scale and complexity of any takeover or merger, how can businesses ensure they are set up for success?

Merging not displacing

Following the completion of a merger, a company’s CEO will typically request the CIO to just ‘combine the IT systems’. This often involves a painfully long procedure in which all data, applications and systems are forced into the incumbents systems. By not necessarily taking into account the complexity and hurdles that must be overcome, these efforts often result in wasted time, lost efficiency and reduced performance.

What’s more, making this change also typically forces the acquired company to alter its business model, potentially altering the aspects of the business that made it such an attractive proposition in the first place. This mindset of one company, essentially, displacing another must change.

A merger shouldn’t be the prerequisite to changing how a business works - after all, they wouldn’t be making the acquisition if the business model needed change. Businesses, therefore, need to consider what each company can bring to the party. For example, while a firm can buy the incumbent’s immediate revenue, it cannot maintain and strengthen its existing customer relationships without real-time, accurate and intuitive business intelligence to ensure its communications with customers and prospects are contextually relevant.

By having a clear understanding of the digital landscape, executives can make smart decisions for new models of working, whereby IT can enhance operations rather than hindering them.

Integration is integral

Making an acquisition should enable firms to ‘buy’ immediate revenue and customer opportunities, but without the aid of business intelligence, companies may struggle to build on, or even, maintain customer relationships. After all, it is widely accepted that the easiest way to grow a company is to cross-sell and upsell to its existing customer base.

However, with customer data in silos, organisations cannot keep track of what information their teams are putting in front of them and how the relationship is being maintained. Without this knowledge, relationships can be weakened or even finalised. With dedicated technology to integrate data, apps and systems quickly and efficiently, companies can quickly regain control, ensuring all the dots are joined up.

Integration solutions prove invaluable here. They provide a fast and flexible user experience, centralising the creation, maintenance and updating of integrations through simple drag-and-drop interfaces that eliminate the need for coding - bringing both sets of date, apps and systems together at speed and with ease.

Only by ensuring processes, applications and data can be integrated quickly and effectively can companies truly benefit from their newly merged firms. If the predictions are correct and more companies look to merge in the coming months, it will be critical for businesses to look to integration solution to join the dots and set themselves up for success.