It is common for larger companies to divest units that are underperforming or otherwise do not meet strategic goals. This practice is likely to increase. Whether the M&A market is hot or not, divestitures are a challenging activity requiring strong support from equity stakeholders and management. The divestiture activity should not be treated as an inferior activity to acquisitions. Divestitures have its own set of challenges. Confidentiality needs to be maintained and this may harm both the seller and the buyer. The selling company may not adequately understand what is going on in the unit being sold. For the seller,…
Category: Decision Making
Why North America?
For companies located outside of the United States with plans to grow, entering the U.S. market is an important part of any long term business strategy. For American firms, the domestic market can offer substantial opportunities. North America should probably be the first market of choice, for most firms. The United States is probably the most dynamic and possibly lucrative market in the world. In fact, combined with Canada and Mexico, the region will possibly be the main economic driver of the world in the 21st century. Despite the back and forth and the re-negotiation of NAFTA, these three are…
The Challenge of Strategic Market Entry
Companies are expanding into new geographic markets to achieve growth now more than ever. For a business that wants to grow and achieve substantial scale, globalization has made conducting business on an international basis a necessity. The need to reach beyond a company’s traditional markets into the global marketplace is an essential activity for growth. Besides looking at revenue growth, sometimes operations need to be located overseas to realize the necessary cost advantages to be successful at home. It really is no longer a choice. This is a process containing risk. While any new market entry carries the risk of…
So You Want To Start A Business: Part 2 – Know The Business
This is a continuation of my last post. In Part 2, I discuss in general terms the positive characteristics of the proposed business you should consider. There have been libraries written on what makes a startup successful. I will not repeat any of that here, as it would take a river of ink (pixels). Instead here are some items I have personally found useful to consider. This discussion is definitely not comprehensive! Just things to consider. Why are you trying to start this particular business? Maybe you have a killer, versatile skill set that would make any entrepreneur jealous. And…
So You Want To Start A Business: Part 1 – Know Thyself
Starting a new business enterprise is a formidable undertaking. It involves both the mind and the heart for the new venture to succeed. It can be quite fun to imagine what a new business started from nothing may look and feel like. But prospective entrepreneurs should do some very hard, steely-eyed thinking before starting this task. Good planning is essential. At the risk of being a curmudgeon, and dampening the excitement, here is a quick guide for how to think through and plan for many of the decisions that need to be made. This topic will be covered in two…
Happy Employees = More Profits
Can treating employees well increase profits? Does the so-called “Golden Rule” – treating others as you would like to be treated – pay off in the end? The answer is yes. Owners of successful privately held businesses know that a happy and contented workforce is a critical component of their success. How do happy employees contribute? Three basic ways. First, there will be lower employee turnover. This reduces new employee hiring and training expenses. It eliminates the learning curve for new employees. Second, a well-treated employee is more likely to put in the additional hours to get the job done…
Speed Is Your Friend: Keep The Transaction Moving Forward
There are many things that can slow down and prevent a business from being sold. But time delays are probably the most likely reason a deal will not occur. There are other possible reasons, of course, but time delays are a big one. The more time that goes by, the more likely the parties involved (read buyer) will become tired and frustrated. As time goes by, the seller is in a condition of uncertainty. Expenses will increase and other potential buyers will be missed. Eventually, one side or the other will just give up and move on. The length of…