Concept and Perspective - CNP

05/14/2024

Over time, speaking in public is something that I've come to (mostly) enjoy. I know that's not the case for many people! I'm still honing my skills, but I've learned a few things that work: when developing content start with the end in mind (i.e. what is the key idea that you want people to take away), slides should provide structure (not distract from what I have to say), my delivery is 10x when I'm talking about subject matter I really know, the flow of the presentation matters almost as much as the substance, and - of course - practicing, practice, practice!

Last week I spoke about post-merger integration at the Project Management Institute's Houston Chapter meeting. This was a discussion, with input from the project management professionals in the room who shared insights from past integration projects. The importance of cultural fit, how/when to announce the deal to staff, retaining employees and the critical role of the integration management team, were all topics that fueled engaging discussion.

For those of you who couldn't make this session, here are the slides: https://prezi.com/i/view/71WCdLHW7DXkSVbcoECZ/

If you like to learn more about post-merger integration and how the Concept and Perspective, LLC team can help, then please reach out.

04/25/2024

Have you ever been required by your employer to sign a non-compete agreement or a 'business protection agreement'. Well, they are about to become a thing of the past and that's good news for workers, entrepreneurs and consumers.

A non-compete agreement is a contract whereby a person agrees not to work for a competing business or start a similar business for a certain period after leaving their current job.

Non-competes erode one of the great strengths of the US free market: the free movement of labor. They lock people into jobs, blunt competition, a price paid by the consumer. They also stifle entrepreneurship.

So what's happened this week...

The Federal Trade Commission published a rule prohibiting the enforcement of non-competes. When the final rule comes into effect (later this year):

❎ Employers will be prohibited from trying to put in place NEW non-competes with employees at any level of the business

❎ All existing non-competes with employees (other than senior employees) will no longer be enforceable

✅ Existing non-competes with senior employees (who represent less than 0.75% of workers) can, however, remain in force.

✅ The enforceability non-competes will be preserved in business acquisitions. The FTC's rule does not apply to non-competition agreements made by an individual during the legitimate sale of their ownership stake in a business entity or the sale of most or all of a business's operating assets.

Businesses have (and will retain) other ways to protect legitimate business interests including non-disclosure agreements and protection under trade secrets laws. And, of course, more enlightened employers will protect their commercial interests by incentivizing employees to stay!

Have questions about non-competes in M&A transactions? Reach out today, we know M&A!

The Federal Trade Commission

04/23/2024

Bet on the jockey, not on the horse.

A friend asked me 'Aside from financials, what is the thing that receives the most attention from buyers?'

Answer: 'Leadership.'

In almost all businesses, senior leaders (the management team, functional leaders, technical experts) are critical to to the future success of the business.

Business owners thinking about what they need to do to get their business ready for sale should therefore ask:
- do we have the right people in the right seats?
- are our leaders unified around a clear vision for the business's future?
- do we recognize and reward behaviors that drive growth and development?
- are we investing in our leaders, equipping them to navigate change: in our markets, amongst our competition and in technology?
- do we have a talent pipeline that can fill leadership roles as we grow and as existing leaders retire?

Have questions about M&A? Get in touch today.

03/26/2024

When it comes to evaluating a business, what do buyers really care about?

Twice a year the Alliance of M&A Advisors commissions a survey that asks thousands of deal professionals just that. Here are the results for Q1 2024.

For business owners trying to figure out how to maximize the value of their business, the critical take-away is that financial fundamentals (growth opportunity, revenue consistency and EBITDA margin) as well as the strength of the management target's team are consistently THE MOST IMPORTANT THING for buyers.

03/12/2024

One of the aspects of M&A that is often neglected is what's referred to as post-acquisition integration (or just 'integration'.) This is the process of stabilizing an acquired business and then combing it with the buyer's existing business. This process is critical to the success of M&A, not least because the employees and customers of an acquired business might leave (or worse, get disgruntled and stay!). I've worked on many integrations over the years and recently decided to seek an integration manager certification, through Intista. I successfully completed the course of study and received my accreditation last week! 😀🎉🥂🍾

03/03/2024

In recent years a 'valuation gap' has opened up between buyers and sellers in M&A. What can you do if faced with this challenge? One way is to use alternative deal structures to bridge misaligned expectations. These structures make greater use of seller finance (with performance conditions), earnouts and rollover equity.

Bain & Company's recent M&A Market report (https://www.bain.com/insights/topics/m-and-a-report/) highlights the growing gap between the public corporation valuations and M&A EBITDA-to-EV multiples.

If you need help finding a creative way to structure your deal, reach out today. We know M&A!

02/27/2024

One of the most rewarding aspects of CNP’s work is seeing a business idea evolve from concept to fruition. Over recent months, we’ve been supporting Erin York in her journey to launch a consulting business, Parentmind. Parentmind's mission is to provide advice and support to parents of kids with learning or behavioral challenges, allowing those moms and dads to better understand and navigate the public education system.

Parentmind is now open for business. 🚀 Erin, we would wish you good luck, but we know that your passions and drive will ensure that you make your own luck 😊!!

Introducing Parentmind, where parents of children with learning and behavioral challenges gain clarity and confidence. A Katy/Houston-based consulting firm that provides parents of children with learning and behavioral challenges specialized guidance to inform strategic decision-making and managemen...

02/13/2024

M&A continues to drive consolidation in the oil patch. A couple of weeks ago I was asked to talk to a local O&G services company about what's driving this wave of deal making and what it means for the industry.

Producers are taking advantage of robust cashflows, strong balance sheets and (for public companies) higher stock prices. The main driver for most deals is portfolio optimization: these acquirers are looking ahead to the next commodity down cycle (favoring assets with lower production costs) and are very keen to ensure longer-term cash flows for themselves (and their stockholders).

Yesterday Diamondback Energy announced that it's to buy rival Endeavor Energy Partners in a $26bn cash plus stock deal (https://lnkd.in/eum7mDCE). We've now seen almost $300bn worth of deals done by E&Ps/ integrated oil & gas acquirers in less than 12 months. And it's certainly not over yet!

02/11/2024

Absolutely adore this gem from Warren Buffett: 'Price is what you pay. Value is what you get.' It's a powerful reminder that price and value are not the same. The true worth of an investment (e.g. an acquisition) can vary wildly from one person to another. Factors like synergies, cost of capital, and even sentimentality or situational circumstances add layers of subjective value. Be wary of those who try to convince you of the absolute, objective value of something or what they consider to be 'market.' True value often lies beyond the numbers.

02/08/2024

CNP helps our clients to grow and to navigate change, complexity and risk. M&A is a big part of what we do... but it's just one tool in the tool box!

02/03/2024

02/01/2024

'Post-merger integration,' often just called 'integration,' is the process of combining an acquired business into the acquirer's existing business. Integration is often neglected, something that can have a dire impact on the success of a deal, leading to the loss of employees and customers.

Want to know more about what integration is and what are some of the key factors to the success of bringing two businesses together? We have just the article for you! :-)

https://conceptandperspective.com/2024/01/30/post-merger-integration-what-is-it-and-why-should-you-care/

The objective of M&A is to increase the value of a business. That value can be measured in terms of increased cash flow or a reduced risk profile. When the business press covers a splashy deal,…