ron rhodes accelerating growth and avoiding “surprises”
TRANSCRIPT
Ron Rhodes
Accelerating Growth and Accelerating Growth and Avoiding “Surprises”Avoiding “Surprises”
Ron Rhodes
The #1 challenge facing The #1 challenge facing companies today is the slow companies today is the slow growth of their core productsgrowth of their core products
Ron Rhodes
The #2 challenge is The #2 challenge is profitabilityprofitability
Ron Rhodes
Are you satisfied with your Are you satisfied with your current growth rate?current growth rate?
Are your profits growing at a faster rate than your sales?
Ron Rhodes
There is a way to increase the There is a way to increase the number and quality of your new number and quality of your new
growth opportunitiesgrowth opportunities
And it is a proven, repeatable business building process that is guaranteed to
deliver results
Ron Rhodes
Executing and Managing Executing and Managing GrowthGrowth
• Sell more units & services• Raise prices• Introduce new products• Reduce costs• Acquire external opportunities
Ron Rhodes
External OpportunitiesExternal Opportunities
• Company acquisitions
• Product acquisitions
• In-out licensing of products and technology
• Joint ventures, alliances and partnerships
• Distribution agreements
Ron Rhodes
Are you following a “reactive” Are you following a “reactive” rather than a “proactive” rather than a “proactive” business development business development
strategy?strategy?
Ron Rhodes
““Reactive” StrategyReactive” Strategy
You sit back and wait for outside deal makers to present over-priced and questionable business fit proposals while they are showing them to your competitors at the same time.
Ron Rhodes
““Proactive” StrategyProactive” Strategy
You use a proven program to uncover and pursue product and company acquisitions, in-out licensing of technology, joint ventures, alliances and partnerships before your competition finds out about them.
Ron Rhodes
Strategic Acquisition Strategic Acquisition ObjectivesObjectives
• Build value – higher profits and cash flow• Use strategic acquisitions as an integral part
of your growth strategy• Strengthen your management team• Expand customer relationships
• Provide more products and services• Increase the number of your customers
Ron Rhodes
Strategic Acquisition Strategic Acquisition QuestionsQuestions
Does the new opportunity fit with your long-term strategic objectives?
After the closing, how will the business function operationally and will there be near-term operational synergies?
Are the key managers people you can work with?
Ron Rhodes
Strategic Acquisition ProcessStrategic Acquisition Process
Plan + Uncover + Due Diligence + Integrate
Ron Rhodes
• Plan and prepare to increase your number of good opportunities
• Uncover opportunities before the become “for sale”
• Avoid “surprises” with a management due diligence
• Integrate to strengthen management team
Ron Rhodes
Plan and Prepare to Increase Plan and Prepare to Increase Your Number of Good Your Number of Good
OpportunitiesOpportunities
• Plan your business realistically going forward
• Develop focused criteria for each component of growth
• Establish external opportunity contribution goals
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Uncover Opportunities Before Uncover Opportunities Before They Become “for sale”They Become “for sale”
• Identify target companies of interest in your market universe
• Search and uncover company intelligence
• Prioritize potential opportunities by fit
• Making initial contacts before your competition with networking + direct marketing
Ron Rhodes
Avoid “surprises” with a Avoid “surprises” with a Management Due DiligenceManagement Due Diligence
• Holding preliminary discussions - establishing relationships
• Determining business and people fit
• Conducting management due diligence
Ron Rhodes
Why a management due Why a management due diligence?diligence?
Eliminate surprises Reduce risk Building relationships and team Identifying the Hidden Assets and Liabilities Understanding where the potential acquisition best
fits operationally Need to balance the financial and legal aspects of
acquisitions with operational, people and business considerations
Ron Rhodes
What is it?What is it?
• Conducting a “through investigation”• Asking & re-asking questions• Digging up facts• Dealing with people as well as financial and legal
issues• Understanding the real picture of the business you
are acquiring including the Hidden Assets & Liabilities• Looking past “what people say’• Determining “what they think”
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What Hidden Assets & Liabilities do What Hidden Assets & Liabilities do not appear on traditional financial not appear on traditional financial
statements?statements? Management team Organization culture,
politics, competency & skills
Information flow, know how & databases
Market Position Distribution channels Customer
Relationships Brand Image Alliances &
partnerships Patents & trademarks
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Questions to keep in mindQuestions to keep in mind
• You can’t get the right answer if you are asking the wrong question
• The wrong person asking the right question will not get you the right answer
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Integrate to Strengthen Your Integrate to Strengthen Your Management TeamManagement Team
• Identify key management
• Determine if they want to work with you and if they will fit into your culture
• Move quickly to integrate to get all of your employees back focused on business building
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Merger SuccessMerger Success• When do you know if an acquisition has been a success?
• Probably not until three years after the closing• Most of your merger integration issues will have been dealt with• You will know which of the acquired people you can count on• You will understand how much growth you can get out of the acquired products
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Key M&A pointsKey M&A points
It is not the “art of the deal” that determines your success with acquisitions but how well you manage the new business going forward
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Key M&A pointsKey M&A points
People are more important than numbers and products in buying businesses
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Key M&A PointsKey M&A Points
Strategic acquisitions where the buyer understands the business and can bring value-added benefits represent the best opportunities
Ron Rhodes
Key M&A pointsKey M&A points
The price you pay is not as important as how long it will take you to double the acquired company’s sales
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Key M&A PointKey M&A Point
Don’t expect the acquired company’s key executives to work harder for you after the closing especially when they receive a large payout from the transaction
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Key M&A PointKey M&A Point
Initiate synergies early and at one time so your workforce can re-focus on achieving the strategic leverage and accelerating growth
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Key M&A PointsKey M&A Points
“Mergers of equals” like joint ventures only work if one CEO takes leadership for the strategic, operational and cultural integration
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Why Do Mergers Fail?Why Do Mergers Fail?
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Reasons for merger failure Reasons for merger failure
Inadequate management due diligence Lack of a compelling strategic plan and rationale Unrealistic expectations of possible synergies Paying too much for the new business Not recognizing different agendas and cultures Poor communication to employees Failure to move quickly to integrate the company Top management agenda out of line with
stockholder interests
Ron Rhodes
Strategic Acquisition ProcessStrategic Acquisition Process
Plan + Uncover + Due Diligence + Integrate
will
Accelerate Growth and Eliminate “surprises”
Ron Rhodes. . .40 Years of Ron Rhodes. . .40 Years of Strategic Business BuildingStrategic Business Building
• Due Diligence Group. . .strategic business development consulting
• ATTLAS Directory. . .created and built licensing and technology transfer print and online information service
• Revlon Health Care. . .as VP Planning took $60 mil co. to $1.5 bil with 50 strategic acquisitions
• ITT. . .Business Analyst for conglomerate that added $4+ bil in diversified acquisitions