The Successful Business Acquisition Process –The Final two summaries: -step-#15-Closing the Deal and step-#16-After the Deal is closed

Closing the Deal

This chapter reviews the closing of the deal. The key aspect of this step is the preparation and signing of the purchase agreement and other documents needed for closing.

Beyond the legal requirements of having a purchase agreement, the preparation of the document itself is an important aspect of the due diligence process.  Because of the representations and warranties a seller is obligated to vouch for, frequently, problems surface during this period that you may not otherwise uncover.  For this reason, it is very important to begin work on the purchase agreement as soon as the letter of intent is signed and you begin formal due diligence.

The momentum of closing and emotions attached to it may vary substantially, depending upon the type of seller with which you are dealing.  With a divesture from a large corporation, you are less likely to deal with a fear of closing.  The company has strategic reasons for spinning off the particular division you are buying.  On the other hand, you may not have the closing momentum and urgency that builds when dealing with the private seller.

In addition to working out details of the purchase agreement during the due diligence process, you should concurrently work on the action plan for the days and weeks after closing.  Chapter 15 covers some of the key points to consider in developing such an action plan

After the Deal is closed

Once you close the deal, you need to be prepared to go in the very next morning to meet with your management team as well as your entire staff.  What you do in the first days and weeks will set the tone for your relationship with your employees for some time to come, possibly even the duration of your ownership.  Remember that the chief concerns of your employees and managers may be somewhat different than your own agenda. Employees will be concerned, first and foremost about their own job security and future with the company now that it is under new ownership. Management shares this concern, and may also have more narrow issues facing them in their own departments, that nevertheless they may feel requires immediate attention.  An easy model to follow includes a short initial introductory meeting with management, an all-employee meeting to include all management and non-management staff, and then a third more formal meeting with management.  These meetings will set in motion the planning to carry out the three objectives of the transition: addressing your key constituencies (employees, customers, suppliers and bankers), revision of the action plan, and implementation of significant changes outlined in the plan.  Other meetings will follow in the first days and weeks, but it is essential to try to fit these first three meetings into the first day if at all possible. Continue reading The Successful Business Acquisition Process –The Final two summaries: -step-#15-Closing the Deal and step-#16-After the Deal is closed

The Chief Executive Officer

Alexis Papachelas is a guest editorial writer to The Business Thinker. He is currently the Executive Editor of the long standing and highly respected daily Greek newspaper “Kathimerini”.

You will have noticed that these days (many) big companies have a chairman and a chief executive officer. The chairman is not involved with the day-to-day running of the business; he is responsible for its strategy and image, and he keeps an eye on its administration from a distance. The CEO is involved with the “dirty work;” he knows all the facts and figures, is in constant contact with all the company’s executives and sets measurable targets for all of them. I feel that if Greece were a company, we could say that it has a good chairman but is lacking a capable CEO.

It is evident that our chairman, Prime Minister George Papandreou, does not get excited by issues pertaining to management, with following through on a project etc. On the contrary, his strength is his relationship with people abroad, negotiating major issues and setting targets. He is the most exportable prime minister this country has had for many years and no one can deny the fact that he has a modern agenda for reform. Continue reading The Chief Executive Officer

Understanding Derivatives: Beyond Good and Evil

H. Nejat Seyhun, contributing writer to The BusinessThinker magazine, is the Jerome B. & Eilene M. York Professor of Business Administration and professor of finance, Ross School of Business, University of Michigan. He is an internationally  recognized authority on financial issues and Derivatives.

Derivatives are often viewed as mysterious and dangerous instruments and they are much maligned these days.  The most famous investor, Warren Buffet, referred to derivatives in Berkshire Hathaway’s 2002 Annual Report as ‘I view derivatives as time bombs, both for the parties that deal in them and the economic system.’ Buffet continued:  ‘The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.’  These are strong words from a wise man.  Since we cannot put the genie back in the bottle, we have no choice but to deal with the genie. Continue reading Understanding Derivatives: Beyond Good and Evil