Читать книгу Applied Mergers and Acquisitions - Robert F. Bruner - Страница 133

The wide range of possible instruments for inorganic growth easily bewilders the senior executive. Yet the advantages and disadvantages of each alternative raise a number of considerations that can help the executive sort out the alternatives. These considerations help form a decision path:

1 Benefits from a relationship: learning and coordination gains. If one of the strategic objectives is knowledge transfer from the partner to your firm, a closer engagement would be warranted. Some targets of inorganic growth programs may be highly related to the main business activities of the buyer. In these instances, the demands of close integration necessary to realize benefits may dictate closer business ties. But other targets may have a weaker relationship to the core and thus may not require close ties.

2 Need for ownership and control. Control would be a priority in cases where the intentions of the partner are unclear and there is a risk that the partner will defect to a competitor, or worse, become a competitor. High control might also be dictated where the partner holds assets of strategic value to your firm, which would create a disadvantage if they fell into a competitor’s hands. In many cases, total ownership is not required. Partial ownership may deliver a place on the board of directors and a say in management. But in other cases, simply doing business through a contractual agreement (i.e., with no ownership) may be sufficient to deliver the strategic needs.

3 Manage risk exposure. The risks of some target operations will be well known to the buyer, appear to be manageable, and may be at an acceptable level. But for other targets, the risks will be uncertain, unmanageable, and potentially large—in these cases it may be desirable to isolate the target with legal “firewalls” that will contain the risk exposure to your firm. Another aspect of managing risk is in being able to intervene in the operations and financing of a weak partner with know-how and funds. As detailed in Chapter 19, a variety of acquisition structures permit the management of risks in a target. Nevertheless, the limited liability of minority investment or joint venture permits your firm to acquire a stake in the expansion business pending the resolution of uncertainty. Staged investing through these intermediate structures is a time-honored way to deal with uncertainty.

These three criteria convey the complexity of the choice. One could compound the complexity further with considerations of the desirability of a local identity (as in cross-border expansions) and size of the deal (i.e., large transaction costs for lawyers, due diligence, and financial advice may not be warranted for small transactions).

These considerations suggest a decision flowchart such as presented in Exhibit 6.20. First, one confronts the strategic perspective: How material are the benefits from a relationship in the expansion opportunity? Next is the need for control: Is this high or low? The third regards the risk exposure in the opportunity, and the possible need to isolate the risks: Are the risks and the need to isolate them high? Will the expansion opportunity need our capital? Is it financially weak? Tracing the branches of this decision tree over to the right-hand side one sees the array of transaction alternatives from merger or acquisition at the top extreme, to a simple contractual arrangement at the bottom. This tree was built from just these three considerations. Other considerations may dominate the thinking of senior executives, or they may bear influence in a different order of priority. But this decision tree is sufficient to illustrate a few conclusions about the choice among inorganic growth alternatives:

EXHIBIT 6.20 Decision Tree for Selecting among Inorganic Growth Opportunities

 One kind of transaction does not fit all needs. Be skeptical of “one-trick ponies,” those proposals by brokers and advisers that always amount to an acquisition. As the diagram suggests, you can achieve strategic aims of inorganic growth through a variety of alternatives.

 The choice among the alternatives is a logical result of balancing important considerations. Start the process by making a careful inventory of the decision criteria that are important to you. The three illustrated in Exhibit 6.20, relationship benefits, control, and risk management, will appear often in studies of inorganic growth alternatives. However, other considerations may be unique to a particular company or time, but no less important.

 Retain a bias for simplicity. Contractual arrangements are probably easier to structure than relationships based on an equity investment. Also, simple agreements may be a better foundation for getting to know a partner; with complexity come more opportunities for misunderstanding.

 Consider starting small. Staged investing will dominate lump-sum investing where risks are material. More is said about staged investing in Chapter 22.

 Remember value creation. The subtext for any comparison of alternatives should be their impacts on shareholder welfare.