Panic?

"JawzX2, Boost Addict. 1.6t, 2.7tt, 4.2t" (jawzx2) 04/11/2016 at 12:03 • Filed to: None

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My company is being sold to !!!error: Indecipherable SUB-paragraph formatting!!! . I’m not sure yet, but I’m certainly prepared for it... the panic that is.

d15b > JawzX2, Boost Addict. 1.6t, 2.7tt, 4.2t 04/11/2016 at 12:09

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It depends on what you currently do within the company and what the new owners plan to take the company in the future.

Aaron M - MasoFiST > JawzX2, Boost Addict. 1.6t, 2.7tt, 4.2t 04/11/2016 at 12:13

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I mean, even in capital management firms which don’t preach a holistic approach like Rivet does in their promotional materials, the aim is to make money with an acquired company and then exit. Romney’s Bain Capital track record is a solid horror story, but the truth is that squeezing your acquisitions into bankruptcy doesn’t generate you all that much money, and even in Bain’s case they did it to prop up more successful businesses they owned.

If you’re trying to figure out what the new owner is going to do, think like a management consultant for a moment. Reduce costs, increase revenues, increase profits. The first is going to come from cost center efficiencies, which are likely non-product areas like HR, IT, marketing, and so forth. The second two are going to come from growing the core business and growing your capabilities.

In short, capital firms are more likely to get the returns they seek by investing more money in the business than by trying to cut costs.

Ash78, voting early and often > JawzX2, Boost Addict. 1.6t, 2.7tt, 4.2t 04/11/2016 at 12:41

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I wouldn't fear yet. Acquisition by a public company is far scarier. In my experience, they start cutting people ASAP to boost the stock price. Private Equity usually has a more measured approach to their returns...assuming everything stays on their timeline, that is :D

JawzX2, Boost Addict. 1.6t, 2.7tt, 4.2t > Aaron M - MasoFiST 04/11/2016 at 12:50

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That sooths my initial panic a bit...

Aaron M - MasoFiST > JawzX2, Boost Addict. 1.6t, 2.7tt, 4.2t 04/11/2016 at 12:55

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My company is in the process of going through a big merger, so I know that feel. The only other thing I’ll say is that when I was a management consultant we spent way more time convincing our clients to spend more money in certain areas than helping them cut spending.

JawzX2, Boost Addict. 1.6t, 2.7tt, 4.2t > Aaron M - MasoFiST 04/11/2016 at 13:06

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I’ve been advoacting for a dedicated inventory manager and full-time IT for three, almost four, years.... could it be??? The owner and co-owner were both heavily involved in those areas because A) they’re used to running a tiny business (which it no longer is), and b) they’re both control freaks and work-aholics. But the truth is many of us do more than we should here, and getting some dedicated staff for IT and Finance should improve both sales/scheduling efficiency and design oversight... (OK, knowing the guy in charge of Design, “oversight” is.. well, an optimistic term, but at least more attention payed to customer requests and realization of the feasibility/cost of their demands prior to handing it off to production management (me) is likely to occur...)

WiscoProud > Aaron M - MasoFiST 04/11/2016 at 15:36

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Unless you're asset intensive, then the profit might be in selling off the physical assets and licensing out any brands or tech. I would bet of the first one though.

Aaron M - MasoFiST > WiscoProud 04/11/2016 at 15:53

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A company owned by one or two people like the one the OP works for has a lot more growth potential than larger asset-intensive firms, as well as probably minimal separable assets worth anything. Splitting apart a company and selling off the component parts is rarely going to make you back the purchase price unless the company is already distressed or undervalued in the market.

WiscoProud > Aaron M - MasoFiST 04/11/2016 at 16:08

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Agreed. That’s a common outcome for distressed manufacturers. Unless your manufacturing, your value is in intangibles, which cant easily be sold.

Aaron M - MasoFiST > WiscoProud 04/11/2016 at 16:41

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Yeah. In some markets things can get weird with big fixed assets...my day to day is electric power generation, and the market for used power plants can be wild.

WiscoProud > Aaron M - MasoFiST 04/11/2016 at 17:37

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I work for an appraisal firm (I focus on business valuations) and regularly talk with out inventory and M&E guys. Its impressive how much it can fluctuate. Not to mention the concept that some assets only have value in-place, and are worth nothing once you try to move them.