It’s a common conversation that many small business bankers will have with a start-up business owner, “I am going to pitch my idea and raise start-up funding, my idea cannot fail.” Stories from earlier days of the Internet .com boom still circulate...
Greg Lustig's insight:
Although debt seems to have multiple advantages for either a startup or a young company,it has some long term affects that should be taken into consideration.From a balance sheet perspective ,it will most certainly have a negative impact as bank and vendor credit will be more difficult to obtain.Secondly,the debt will have to be serviced on a current basis which can greatly impact the borrowers cash flow.Lastly.the debt will have a fixed term that requires a pay off in the not to distant future which may neccessitate liquidation of valuable assets unless a new source of funding can be procured .
There is an old adage,there is no I in team.Unforunately, far too many business owners do not follow that axiom and run their businesses as despot rulers.Not only ,does this create a negative culture ,it wastes the talents of its employees.
In order to create a culture of innovation in the workplace,an organization must empower their employees to engage in independent thought processes.In order to do so, employees must first be fully engaged and vested in the success of their company.Open discussion between all levels of the organization must be encouraged.Companies need to be transparent in order to make their employees feel that they are an integral part of the business process.Lastly,employees must believe that their opinions matter.
Workouts, turnarounds, and profit improvement programs may be necessary to provide more general longer-term solutions. Breakthrough ideas can arise at any time from an entrepreneur who starts an enterprise, or from any ...
Greg Lustig's insight:
A quick situation assessment is often necessary because of the. failure or refusal of the enterprise to recognize a problem that requires immediate reaction.
In my opinion, employees want most of all transparency from their employer.Second is to be treated and compensated fairly.Thirdly,recognition and credit for the work being performed.Fourth,is the opportunity for personal growth and advancement.Fifth,is appreciation for the value of the employees services and contributions.Sixth,a clear definition of employees role and responsibilities in the organization.Finally,the authority and freedom to perform ones responsibilities without being micro managed.It goes without saying that all employees want security as well as the opportunity to work in a positive culture free from stress and the fear of losing ones job.
Trends in M&A Provisions: Indemnification as an Exclusive Remedy Bloomberg Law In merger and acquisition (“M&A”) transactions, the definitive purchase agreement (whether asset purchase agreement, stock purchase agreement, or merger agreement)...
Greg Lustig's insight:
All clauses in an M&A agreement must be carefully analyzed and evaluated for both their long and short tern effect. Clauses dealing with jurisdiction,breach,indemnification,limitation of damages and remedies. deserve particular attention as each one can dramatically effect the rights and remedies of the damaged party.
it is important to remember that MBO partners have their own agenda.MBO financial partners are in business to make money on their money .It is highly possible that your investors goals which are typically short term in nature will conflict with management's primary objective which should be growing their business.
There are several different types of financing that a business can use to operate, each with their own pros and cons. There two main types of financing: equity financing and debt financing. Equity financing is simply funding from the owners of the business. Debt financing is the other form of business financing. There are several forms of debt financing, but they all involve interest and require the debt to be repaid.
In the case of equity financing,there are multiple factors that must be considered.The most important is how the valuation of the company is determined.Although a multiple of EBITA works well for established companies,it doesn't acurately reflect the value for new or emerging companies.Also,at issue is whether the company is valued at pre or post investment .A second factor to consider is whether the equity investor intends to be active or passive in regards to management.VC as well as private equity will often demand multiple board positions as well as input on executive management hiries and key management decisions.Thirdly,and perhaps most importantly,the intended holding period for a major investor must be taken into account.Typically,VC and PE both prefer short holding periods of anywhere between 2-5 years.This may not seem like something to be concerned about until your company is faced with the problem of finding the funds necessary for the redemption of the investors shares.Too often valuable assets or the company itself will have to be sold to pay off the investor(s).Lastly,the cost of the invested capital must be considered in comparison to the fixed cost of alternative debt sources.Although equity looks better on a company's financial statements,VC and PE investors normally are looking for 25%-35% annualized cash on cash returns on a look back basis.Althouth this type of return maybe possible for high tech startups with patented technology and market leading potential ,it is a very high mountain to climb for most companies.
There is a significant difference between rising through the ranks to a position of authority and starting a business where you are instantaneously thrust into a position of power by virtue of your investment.Those who have risen through the ranks with positions of increasing authority are much more likely to understand what it takes to be an effective leader.Where as founders are often so invested in their business that they are driven by the fear of failure .Instead of leading they rule.Employees are marginalized to the point that they work in constant fear of the loss of their job.This not only inhibits the employees development ,it poisons the corporate enviorment.
Allegiance takes M&A global to find best deals Dallas Business Journal Rather than establish offices in all these foreign countries, the founder and chairman of Dallas-based Allegiance Capital Corp joined the Globalscope Partners, a network of 34...
Greg Lustig's insight:
When I resumed my M&A career,I too decided to join a full service global consulting firm,Integral Management Consultancy, composed of 125 former "C" level executives with offices in 35 countries.While America has long been a hotbed for foreign investors,more and more US based companies have opened up offices all over the world making business truly global in scope.From an M&A perspective ,it would appear that its future should be global as well.
Far too often in sales organizations,financial management is ignored or disregarded in the company's quest to drive revenues.When used properly,financial management provides a powerful check and balance perspective that is designed to maximize profitability.
Secondary market M&A surge mystifies industry Pensions & Investments They say it's not clear whether the number of recent M&A deals reflects industry consolidation or a change of partners among secondary firms.
Greg Lustig's insight:
Given the lack if access to capital markets,corporate growth has become much more challenging.In addition, it has become much more difficult to compete with larger better funded competitors. As such, consolidation makes sound economic and business sense for those companies smart enough to recognize the reality of their situation.
Making mistakes is an inevitable event that occurs in all businesses and at all levels of an organization.Although one can and should learn from their mistakes,it is impossible to avoid them or to operate in a mistake free business environment. The key to dealing with mistakes is to deal with them head on an effort to minimize their impact.
Many if not most small business leaders are too busy creating business to effectively manage their business.Others simply are not good managers which is not a prerequisite for owning a business.In either case ,this results in a reactive management style as opposed to a proactive approach based on planning.Even in large corporations where actual management is delegated to the various members of the executive team,leadership can fall prey to the same challenges as they become too focused on producing projected results for their shareholders rather than actually managing the business.In such cases,the business seems to take on a life of its own In which its leaders are forced to react rather than manage.This can be avoided with foresight and careful planing for all foreseeable risks.
Calling yourself an entrepreneur doesn't guarantee you sucess.Success is based on a combination of factors:a sound business concept,needed products or services sufficient capital,marketing talent,sales abilities,and a strong management team. By its very definition,a strong entrepreneur must have the ability to assemble the pieces,mold them into a cohesive unit and lead them to success.Many try,few succeed.
What is the first rule in selecting an investment real estate property ?
Greg Lustig's insight:
What does it really mean?The phrase is based on the common belief that when buying investment real estate,location is the most important factor.It would seem to be relatively easy to find out the best areas for a real estate investment.Just read the paper or ask any knowledgeable commercial real estate broker.However, keep in mind that there is a significant learning curve involved when buying a propery at a location with which you have no familiarity .The less you know about an area or specifically a location,the less likely your investment will be successful.It is far better to select a location and a property type that you know and understand since you will be working within the framework of your own knowledge.
Earlier this year, investment goliath Goldman Sachs announced a job opportunity for a social media strategist. While the B2B banking and securities firm acknowledged the risks of becoming active on social media, it also ...
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