Monthly Archives: April 2016

Key Due Diligence Activities In A Merger And Acquisition Transaction

download (61)Proper due diligence at every stage will make the M&A a grand success

By planning the merger activity carefully and analyzing every issue that may arise, the target company will be better prepared to successfully consummate a sale of the company. The buyer is concerned not only with the likely future performance of the target company as a stand-alone business but must understand the extent to which the company will fit strategically. Evaluating the commercial attractiveness of an M&A deal involves validating the target company’s financial projections and identify the synergies.

The primary goal of due diligence in the M&A process is for the buyer to confirm the seller’s financials, contracts and customers. Due diligence starts the moment the letter of intent (LOI) is signed. All due diligence information must be made available to the buyer from the seller. Due diligence is a vital activity in M&A transactions, and may consume several months of intense analysis if the target firm is a large business with a global presence.

First and foremost, the buyer must evaluate all of the target company’s historical financial statements and related financial metrics. It must look at the reasonableness of the target’s projections of its future performance. The buyer must look at the extent and quality of the target company’s technology and intellectual property. It must focus on the domestic and foreign patents and whether the company has taken appropriate steps to protect its intellectual property including confidentiality and invention assignment agreements with current and former employees and consultants.

The buying company must look at customers and sales. The buyer must fully understand the target company’s customer base across all geographies including the level of concentration of the largest customers as well as the sales pipeline. The company must look whether there will there be any issues in keeping customers after the acquisition and what are the sales terms or policies, and have there been any unusual levels of returns or exchanges offered by the target company to acquire new customers.

The company must look at the target company’s employee and management issues. The buyer must understand the quality of the target company’s management and employee base and look at information concerning any previous, pending, or threatened labor stoppage. The buyer must look at employment and consulting agreements, loan agreements, and documents relating to other transactions with officers, directors, key employees, and related parties. Since integrating the employees is the most difficult part in any deal, the buying company must evaluate every aspect of the deal.

Lastly one must look at the tax issues depending on the operations of the target company. Central, state and foreign incomes sales and other tax returns filed must be look into. To make a deal successful, experienced due diligence and integration managers must be involved in these mergers, and there must be high-profile, executive-level participation from both sides. A strong analytical team must drive the market and competitive assessment, and the human resources team needs to focus on organizational and cultural issues. If there are areas of consolidation, functional representation is critical to ensure buy-in from management.

The due diligence must focus on all functional areas like human resources, information technology, finance, operations, and even R&D and marketing. The company must draw team members from all of these areas of the organization as this will add valuable expertise, and will help the team attain the goal. One must ensure that the diligence team is co-located within a secure environment, such as a corporate headquarters. It is important to bring in an outside expert who can look at every aspect critically and give a road map for a deal to work. A proper due diligence will make the M&A a grand success.

 

Breaking and Making Habits – And Consequences For The Workplace

download (60)Understanding how habits are formed, how they can be broken, and how more favourable ones can replace them, is an area of interest to both neuroscientists and business leaders.

Our decisions dictate our lifestyle choices and form the habits that contribute to our health and wellbeing; and, in the workplace, without the power to take control over habitual behaviour, improvements in performance are less likely and changes in organisational culture less effective.

A recent neuroscience study has shed light on the chemical reactions occurring in the brain when making decisions, and which influence our choice between habitual behaviour and goal-oriented behaviour; this may pave the way for greater understanding of how to break old habits and form new ones.

What are habits?

Habits are basically reflexive behaviours that have become engrained into our everyday actions. Brushing one’s teeth or shaving are ‘habits’ – actions that we do without thinking or conscious effort. These are perhaps ‘neutral’ type actions that everyone does, and which are necessary for everyday functioning.

Other habits can be classed as ‘good’ or ‘bad’. ‘Bad’ habits can lead to addictions and health problems; in the workplace ‘bad’ habits lead to consistent poor performance.

And, of course the reverse is true of good habits. But the problem is that it can be very difficult to change engrained patterns of behaviour, even if we want to.

Breaking habits

In order to change behaviour, a conscious decision is required to make decisions based on goal-oriented actions. We need the capacity to ‘break habits’ and perform a goal-directed action based on updated information – and this requires a shift of emphasis, and often a concerted mental effort.

This is easier said than done. Goal-directed behaviour and habitual behaviour are centred on different parts of the brain; serious failure to shift between the two can lead to certain disorders such as obsessive-compulsive disorder and the aforementioned addictions.

But, in fact, most of us have difficulty being able to make this ‘shift’ at various times. For instance, think about when your normal ‘wake up’ and ‘get to work’ routine is disrupted and how that can make you feel.

The latest neuroscience on habit formation

A recent study, published in the journal Neuron, has shed some more light on how the brain controls the basic process of forming and breaking habits.

A team of neuroscientists was able to pinpoint a self-made neural mechanism that reduces the flow of information to a part of brain known to participate in goal-oriented behaviour.

The lead researchers said:

“Our results suggest that alterations in the brain’s endogenous endocannabinoid neuromodulatory system could be blocking the brain’s capacity to “break habits” as observed in disorders that affect switching between goal-directed and habitual behaviors. In other words, endocannabinoids act as a brake in the OFC, allowing for habit formation.”

While that quote may sound confusing, it’s relatively simple to break down and ‘translate’. The OFC is the orbitofrontal cortex, which is known to be involved in goal-oriented behaviour. Reducing activity in the neurons here has long been considered one of the keys to habit formation, and the neurochemicals called ‘endocannabinoids’ are known to reduce the activity of neurons. This study has effectively ‘connected the dots’ between the two.

For medical researchers, this could have important consequences for breaking addictions. Quite what this means in the workplace remains to be seen; but the role of endocannabinoids is set for more research.

Apart from the importance of these neurochemicals in understanding more about how habits can take over and subdue goal-oriented behaviour, interest has been generated in everything from their role in the body’s reward system during exercise, to their mood enhancement, analgesic, and anti-inflammatory properties.

Expert Tips For Effective CRM

download (59)Today’s store owners don’t need to manage their operations all on their own like the salespeople in more ancient times did. These days, technology is available to make everything from the simplest to the more complex retail processes easier and faster to accomplish, resulting in benefits all around. Here are some of the crucial software tools that make retail management a cinch for today’s enterprising individuals and organizations.

CRM. Most retailers require a system for effective customer relationship management which would enable them to keep track of every single interaction with their existing as well as future customers. At the most basic level, CRM software lets retailers store their current and prospective clients’ contact information, social media profiles, details on the calls made and emails sent, and such. More advanced systems would allow the creation of meeting schedules, display of sales forecasts and pipelines, and the like. Thanks to this solution, sales and customer service reps won’t have a hard time looking up client information for lead generation purposes and after sales functions, which helps them build stronger interactions and relationships.

POS. Step into any physical store, gather up the products you mean to buy, and take it to the store’s sales counter to pay for your purchases. You’ll see that the cashiers use specific equipment such as a barcode scanner, cash register or drawer, computer, touch screen display and receipt printer. This is the store’s point of sale or POS system, and it requires the appropriate software to successfully tally the cost, conduct the sales transaction and create and maintain records of all transactions. The best POS software makes managing multiple retail processes (business intelligence store operations, inventory control, payment solutions, merchandising, and such) smoother and more productive. The result would be simplified processes, reduced costs, and increased revenue for the business.

Ecommerce. Most retail businesses today complement the performance of their physical stores by incorporating the use of an online platform. Setting up the best ecommerce platform for your business lets you take steps toward valuable benefits: providing customers with a new and different channel to access your offerings, building customer loyalty, streamline inventory management, increase revenue, and improve overall customer experience. What’s more, this software can seamlessly integrate the management processes for both your physical and online store, making monitoring your sales across all channels simpler and more effective.

 

How Does a Certified Equipment Appraiser Help

download (58)A majority of businesses depend on modern equipment to produce their products. The equipment helps in making production, logistics easy and fast. It is important to keep such useful equipment well maintained. These equipment are real assets of any business. The equipment should be properly valued. However, it is not easy to appraise the equipment. It requires help from certified equipment appraisers to know the value of the equipment.

Why Appraise Your Equipment?

There are various reasons for companies to know the value of the machinery. Since they are valuable assets of the company they help in times of:

– Mergers and acquisitions
– Filing bankruptcy
– Obtaining loans
– Filing taxes
– Selling the machinery

The value of machinery is essential to assess the worth of the business.

Various kinds of Appraisal Reports

Businesses currently accept two types of appraisals as per the Uniform Standards of Professional Appraisal Practice or USPAP.

1. Complete Appraisal Reports – It contains all the information about the equipment, it’s market value, the condition of the equipment, salvage value, number of years if operation, etc. It is one of the most common kind of appraisal.

2. Restricted Appraisal Reports – It’s an in-house report which can be used for internal purposes. This report is prepared when the client and the user of the appraisal report are the same. The report should not be used for external purposes.

Certified Machinery Appraisal Process

It’s a systematic process where the equipment is assessed diligently considering every piece of information.

1. Appraisers gather all the information about the equipment. They heck its make, model, year of purchase, it’s condition, it’s serial number, chassis number, the number of years it has been in operation, some repairs it has undergone, the upgrades carried out to the machinery, etc. They gather as much information about the equipment or machinery as possible to provide an accurate assessment.

2. A certified machinery appraiser maintains complete secrecy, and may not inform the client in advance while preparing the appraisal report. The appraiser gives time to the client to provide all the documents required to prepare the assessment report.

3. After all the information is gathered; the certified equipment appraiser will assess the value and write the report certifying the report. The appraiser should be neutral and not biased. He should use the fair and transparent process of assessing the equipment.

It is always good to choose knowledgeable appraisers with sufficient experience and good track record. It helps business to have the right value of their machinery. The correct value can increase the worth of the firm. Even if the value is low, a proper appraisal will help business to take steps to enhance the value of their business by having right machinery and equipment.