Mergers & Acquisitions
My M&A experience is broad and diversified in pretty much every sense of the word: My first due-diligence was in China in 1984 when a provincial angora wool manufacturer wanted to team up with the catering company I was working for in those days (SHRM) to build a number of industrial kitchens around Beijing and Shanghai to provide other State Owned Enterprises with affordable quality meals for their staff; The last acquisition, where I was leading, in 2008, resulted in the purchase of the assets of a medium-sized precision engineering company and the offer of employment to all its staff. This was followed in 2014 when I participated in the take-over of an Indonesian engineering company. Other countries involved have been South-Korea, Philippines, Singapore, China, Malaysia and the Netherlands, while the target companies ranged from 5FTE to 1,000FTE.
Also the results vary tremendously; In Asia I frequently had to conclude that the target companies were only profitable as they were breaking all kinds of rules, like not paying the official minimum wages. This obviously created an impossible situation: while the potential seller valued the company based on his/her profitability track record, I frequently doubted, once all issues were put in order, profit could be made all. Maybe my capability of improving efficiency (see EQIB) would ultimately lead to a positive result, but should we reward the potential seller for the mess he made? Still, target companies in the Netherlands were not necessarily more realistic, standing in a deep hole they kept on digging while at the same time asking for the sky.
Lastly I feel as CFO one should be highly critical of any proposed M & A. The remaining C-suite is most likely gung-ho about the opportunity and you are the only one to truly take a critical look at the issue at hand, better to err on the side of caution.
Some of my Cases
Acquiring Precision Engineering
See also: