Stand By Me

By Joseph Anton and Brad Lucas Business owners have a team of professionals to handle a variety of inevitable events.  They carry insurance to manage risk; they retain attorneys and accountants to handle legal and financial affairs.  But who will help them prepare for the most crucial event in the lifetime of their business—a merger or acquisition? Achieving Super Valuation     Advance planning leads to success Investment bankers are usually retained only after a business owner decides to sell.  By then it’s too late.  The best time to retain an investment banker is before an owner decides to sell.  As part of the retained professional team, an investment banker can anticipate financial, strategic and valuation issues in advance and use his knowledge and experience to set the stage for a super valuation.  Whether you are doing an M&A assignment now or in the future, here’s why you should engage a standby investment banker: Planning for Tomorrow     Strategic decisions to boost long-term value A standby investment banker knows what makes a company most attractive to prospective buyers.  He can help a business owner make ongoing decisions on such issues as management structure, branding decisions, and expansion opportunities—all with an eye toward creating long term value. Join the Dance     Preparing the company for sale Private companies are illiquid and take time to convert to cash.  A standby investment banker anticipates an offering and completes preliminaries so that the client can choose when to go to market.  The approach is proactive, not reactive. Catch the Wave     Monitoring market conditions Industry and market cycles—these trend affect valuation.  A retained investment banker monitors... read more

Why I Am Angry 9.11.01

By Joseph E. Anton I am angry at the inhumanity and barbarism expressed by a bunch of thugs who claim legitimacy through a religious cause.  Radicals in any religion are radicals first and have no attachment to a greater good. These are not crusaders seeking to provide justice in an unjust world—they are sociopaths who have been marginalized and want to do harm for harm sake. I am angry at our government for letting us down.  Have we not been put on enough notice that terrorism is the principle threat to American security? You cannot blame airport security—suicide bombers armed with pocket knives will get through anything.  I blame the failure of our intelligence system to anticipate and track the lurking dangers that face the US.  Consider this: Our military has been focused on a Cold War Strategy for years. We do not have enough interpreters to listen to international phone calls who speak Arabic or Farsi (and who can understand the nuance) Our intelligence agencies have been emasculated for more than a generation, starting with the Church committee though each administration. The Clinton administration, which espoused the Deutch rule, which would not recruit agents who were bad guys! Anyone who can infiltrate a cell is not a paragon on human rights.  Remember that John Deutch almost went to jail for breaching CIA security—what type of culture existed?  (Clinton eventually pardoned him). Jerry Lewis (R. CA) was shocked that “such an attack” occurred!  Where have these people been—have they not watched the nightly news.  I am shocked that they are shocked. I am angry at the Political Correctness mentality... read more

Why The Board Is Broken

By: Joseph Anton Boards of Directors (“Boards”) are anachronistic to major companies in the 21st century.  Boards had their origin in an era when oversight was easily executed. The Board directors of many companies were the owners of significant amounts of stock, or their direct delegates. At a later stage the directors were chosen by the Chief Operating Officers and severed as their advisers.  In a period of rapid growth, companies needed the resources of outsiders to lend their collective genius in an era when outside knowledge, data and experience were expensive to collect. As businesses grew larger, the Boards’ responsibility as “watchdogs” representing the shareholders’ interests, became more important. In law, directors were always the fiduciaries of their corporations, and indirectly of their shareholders. But their advisory and supervisory roles were not always distinguished or evaluated. Today, the supervisory role of the directors has become far more important. The current “Board” model fails for three reasons: Physics: An average Board member probably does not spend more than 60 hours per year (and that’s generous) attending to his duties on the Board – (assume 6 Board meetings per year at 6 hours per meeting, with 4 hours in preparation. The reality is that they probably spend less than 30 hours per year!) The volume of data that they must review is so large that it is humanly impossible to verify to assure its accuracy or validity. Their review is perfunctory. You can’t consume that much data in that little time unless you suspend the rule of physics. A current example is helpful. The CFO of Boeing sat on the Board... read more

The Coming Boom in Global Demand

By Joseph Anton The world is moving toward a more robust and efficient trading market. It has been driven by a series of intentional and unintentional events and is setting the stage for an explosion in world trade. The growth will be led by the migration of people from the Second World Economy (SWE) to the First World Economy (FEW). A simple demographic movement made possible by the confluence of the most distinct events that have occurred in the last half century. There are 6.6 billion people in the world and approximately 2.2 billion people are not poor. They live in developed or developing countries have access to modern technology, clean water, and some health care and essentially make up 90% of the world’s GDP—which is estimated at $66 trillion. They are part of the First World Economy. The balance of 4.4 billion is poor but they won’t be for long. Between 80 million and 120 million people per year are moving to the FWE from the SWE. On a population base of 2.2 billion people that is an annual growth rate between 3% and 5%—and in population terms that is an explosion. There are a number of factors responsible for this phenomenon. In fact, with hindsight it is easy to point to several of the seminal events that have shaped this continuing trend: the fall of the Berlin Wall—which underscored the failure of Communism and the concomitant entry of almost 500 million people into modern society; the expansion of democracy around the world and the absence of World wars. Moreover, growth was enhanced by the continued economic expansion... read more