There was an interesting article in the Telegraph this week about a growing trend in London for property prices to be influenced by the proximity to cycle path. At one time it was a Tube Station which was the important feature!

Amsterdam - cycling a way of life?

I was interested to see some new housing launched in Bristol (who are aiming to be the first Cycle City) at The Chocolate Factory. The architects Acanthus Ferguson Mann are planning a cycle village element – with central cycle dock, cycle café, cyclists’ stopover hostel, a repair and sales workshop, and maybe a cycle b&b in the future. It sounds great!

Last week I had a meeting with the Travel Team (not time travel team unfortunately!) from the City Council. I think they have some great ideas in trying to reduce the reliance on the car, but most of us have to have the flexibility I alluded to. But I also have issues with public transport. It is not as good as other countries. As an example the use of the Park & Ride scheme in Nottingham for my office at NG2 for the majority of our staff simply doesn’t work. They would have to drive past the office to get there and then walk 5 minutes to the office. and then do this in reverse. It doesn’t save time. It doesn’t reduce engine fumes! And the alternative is that quite a number of staff would have to take two bus rides to get to the office – not exactly convenient!

The thorny issue of the workplace levy was raised – and, in general terms, accepting a long term strategy I think we have to live with it. But business is not having a good time and imposing a further tax which only benefits a limited number of people (the tram won’t come to Wollaton in my lifetime!) is quite difficult to reconcile. The nearest tram stop (with parking) to where I live is 4 miles – town is 3 by car… The Tories have already hinted at a review if they come to power next year.

I am not sure what the answer is, I can see that efforts are being made to make improvements. But we still have a long way to go!

One of the things we have to do is make the roads safer for cyclists (I have had quite a few near misses!) – and if people see those improvements it looks as though people will be influenced in the place they choose to make home.

By Michael F. Coyle, CBI

I’m not usually one for making predictions, but I think I’m on solid ground with these two statements: First, 2008, and perhaps 2009, will not go unmentioned in either history or economics textbooks. Second, being able “to tell your grandkids” is a small consolation as you consider the challenges you and your company face as we endure this storm.

Business owners are getting hit from all fronts. The value of real estate and equity investments are declining due to factors mostly beyond their control. For most business owners the value of their business is the majority of their net worth. The good news here is that the long-term value of your business is most often determined by what YOU do with it rather than external factors. Now, more than ever, is the time for you to set exit goals for your business so that this crucial part of your net worth will deliver to you the life- style you expect in the future. It is never too early for exit planning, but so often you can be too late.

I’ve given much thought to these challenges lately and I have several ideas about helping you and your company keep on track to achieving your business goals and to eventually making a successful exit from your business. Here are some ideas and strategies to consider:

Get a plan. If you suspect that the current downturn means that you may have to work years beyond your target departure date, or that your business is at risk, objectively analyze areas where you may be vulnerable, set or recalibrate goals, and put new business and personal action plans in place to keep you on target.

Protect your Business Value. Make sure your critical assets are protected from unexpected risks, including loss of trade secrets, customer lists, customer relationships, supply sources, and intellectual property. Establish proper security and implement appropriate employment agreements. Also make sure you have solid contingency plans that protect the value of your assets and minimize tax burdens in the event that you, your partners, or any of your key employees die or become unable to contribute to building company value. Finally, make sure you develop or revisit your Buy-Sell agreements with your partners to be certain that they reflect your current wishes, have valuations that are appropriate, and have proper funding mechanisms.

Grow Value Through Actions of Key Employees. Get key employees on board with properly designed incentive plans and long-term rewards that are in line with YOUR goals and building value of the business. A key value driver of all businesses is a strong and committed management plan.

Consider a Good Offense. Scaling back is usually a business owner’s first response to lean times. Consider stepping up your marketing to capture customers who are leaving weakened competitors. While cutting unnecessary cost is always good, this may also be the perfect time to acquire smaller, less adaptable, less capitalized or less well-managed competitors. Certainly this is a buyer’s market and there are ways to help minimize your financial exposure while also leveraging strategic value through acquisition.

Prepare for an Exit to A 3rd Party. The M&A market for multi-billion dollar companies has been tenuous, but the market for well-prepared and well-performing companies in the $5 million to $150 million range is healthy. While we aren’t seeing the multiples we did during the boom part of the cycle, there is financing available for solid transactions in this marketplace. We can’t predict when another boom market will occur, but for many of you who are poised to exit your businesses, it will unfortunately not happen in your investment timeframe. Private Equity Groups have hundreds of billions of dollars available to acquire operating companies. These PEGs are looking for profitable companies in the $5 million to $150 million range and today are paying good value with reasonable terms. Understand and maximize the key Value Drivers for your business.

If your company is worth less than $5 million, cash flow is king in realizing value. For companies with good and predictable earnings there are both individual and financial buyers with the ability to finance deals with local banks and business lenders who use SBA 7a and SBA 504 loans. The bottom side of most economic downturns is higher unemployment. Today there are many misplaced, and reasonably capitalized, corporate executives and financial investment professionals seeking the entrepreneurial experience. The features and availability of SBA loans continue to be good and the current economic stimulation package will deliver new equity into these areas. The bottom line is that financing, especially for “smaller” companies may be more available than you thought.

Transferring to Junior. If you have planned an ownership transfer to your children, look at the timetable. Assuming your children are nearing an appropriate age, now may be the perfect time to begin that transfer. As you may know, the success of this type of transfer depends less on the value of the company than on the amount of money you receive and the risk you retain. With a reduced business valuation possible due to current business conditions, it should make the transfer to family members much more tax effective.

Transferring to a Key Employee Group (KEG) If transferring your company to your key employees is your preferred exit route, this is an optimal time to begin that transfer. Again, a lower valuation may allow you to bonus your key employees with stock while having minimal effect on business cash flow and with reduced tax considerations for employees. You can bonus that stock so that you retain control until you receive full value for that stock as you simultaneously motivate key employees to stay and build the value of the company.

Get a Team. The kinds of business exit planning areas discussed above are complicated and

diverse. To be most effective you need a proven process and a team of multi-disciplinary advisors to maximize the outcome. Whether your business value is $2M or $150M the same issues exist for the business owner. What may differ is the complexity and depth of the plan. Start with finding an Exit Planning Advisor that can help set a direction and plan, tailor the scope of planning for your needs, and then quarterback the team of specialists that makes it all work (Legal, Tax, Investment, M&A & Business Advisory). You can focus on managing your business and building value.

Don’t stand impassively on the sidelines during a time of economic volatility. Unlike the “average” investor, you aren’t limited to the single strategy of pulling dwindling assets out of the market. Even if the general economy suffers, your business value need not. Look at your alternatives and get to work. CenterPoint Business Advisors would be pleased to discuss these topics with you or your advisors personally.

In mijn gedachten en uitspraken ben ik altijd iets of iemand aan het waarderen. Niets is gelijk voor mij. Ieder mens, ieder object, ieder aspect van deze wereld is waardevol, heeft zijn eigen waarde.

Maar in die chaos van waarderingen verdrink ik in de details en deelaspecten. Ik zie zoveel differentiatie dat ik er weer naar verlang het bos te zien. Het liefst reduceer ik dit grootse complexe leven tot een kleine simpele waarheid.

“Welke simpele waarheid geeft me een gevoel van richting in dit leven?”

Een simpele oplossing heeft zich aan mij openbaard die ik graag met je deel. Een oplossing die vele media al jaren geleden ontdekten: “Alles in dit leven start bij 1 en eindigt bij 10!”

De beste 10, de mooiste 10, de favoriete 10, de populairste 10, de grootste 10, de vervelendste 10, de rijkste 10 en ga zo maar door.

Het leven kunnen we simplificeren tot top 10 waarderingen!

Wat het me oplevert? Rust, overzicht, keuze vereenvoudiging en daarmee richting in het leven. Ik focus me op de grote keien in het leven en waardeer de kiezels voor wat ze zijn.

Probeer het zelf eens! Schets je eigen top 10!

Wat het je oplevert? Krijg grip op het leven, maak duidelijke keuzes en geef daarmee richting aan je eigen koers.

En dan nu mijn top 10 lijstje van bezigheden op dit moment:

1. Maranza – De toekomst in persoonlijke, team en organisatie ontwikkeling
2. Ghislaine  – De kleine meid gaat praten en vooral haar eigen gang!
3. Madeleine – Bijna 5 en grote liefhebber van verkleedpartijen
4. Annemarie – Steun en toeverlaat, dedicated als vrouw en moeder
5. TOP 10 Rankings – Een ideetje om uit te proberen
6. Cursus Columns schrijven – Mijn manier om eens wat gedachten op papier te zetten
7. De keuken – Klaar voor verbouw en reorganisatie
8. Familie reunie – Een weerzien met de familie in Denemarken is gepland
9. Zwemmen – Nadat de marathon al eens is gelopen
10. Het Ontdekkingsbureau – Een ideetje dat zich langzaam uitkrisalliseert

I’ve been gone an embarrassingly long SIX MONTHS (or about that)… let’s see, what have I been up to?

First, Greenfield is still around and busy. Like so many other firms, we had to do some belt-tightening in early 2009, and that left a lot more stuff on my desk. Ergo, this blog (and a lot of other “important but not urgent” stuff) got left on the back burner.

Second, it’s increasingly hard to write ABOUT the economic turmoil when you’re PART of the economic turmoil — or at least ADVISING clients who are deep in the depths of the front-page issues of the day.

So, I’m back — at least I’m going to TRY to be back, on a regular basis this time. Recent event number one — I’ve now spoken at two different conferences on the Chinese Drywall matter — both legal CLE conferences and both, coincidentally, in New Orleans. For the uninitiated, Chinese Drywall (“CDW”) was imported a few years ago, at the height of the housing boom, when U.S. supplies of drywall simply couldn’t keep up with demand. The shortage was exacerbated by the numerous hurricanes (Katrina, Wilma, etc.) that hit the southeastern U.S.

Now, apparently, CDW contains impurities which are allegedly linked to other problems, both structural (degradation of copper elements) and health/safety. Hundreds of lawsuits have been filed, and the Federal District Court in Louisiana has been assigned oversight under what is known as a “multi-district litigation” or MDL. They hope to conduct bellweather trials in early 2010, although the venue isn’t yet known (probably state court in Florida). Naturally, Greenfield has been involved since the onset with position papers on the economic and valuation implications. For a pdf copy of our most recent white paper on the topic, please click here.

Fluxo de caixa é um dos principais conceitos em finanças, pois o valor de um ativo está na sua capacidade de gerar fluxos de caixa. Embora todo mundo tenha uma boa noção do que é um fluxo de caixa, acho importante explicar o conceito para que tenhamos uma compreensão uniforme do termo fluxo de caixa. Para isso, o escopo aqui é definir fluxo de caixa, ativos, as atividades geradoras de fluxo (de acordo com a contabilidade) e advertir sob as diferenças entre a visão contábil e financeira.

De maneira geral, podemos defini-lo como um movimento monetário que altera o saldo de dinheiro acumulado, em outras palavras, o movimento do dinheiro que efetivamente entra e saí. Como notação geral, consideramos um fluxo de caixa positivo como uma entrada de recursos que aumenta o caixa e o contrário, um fluxo de caixa negativo, uma saída de recursos.

Sob o ativo, consideramos um ativo um elemento de valor econômico que gera receita e/ou custo, como por exemplo: uma empresa, um projeto, um título, um equipamento, etc. Outro aspecto que devemos ter em mente é que geralmente os ativos são negociáveis, logo sua compra ou venda também gera fluxo de caixa.

De acordo com a contabilidade, a origem dos fluxos de caixa de uma empresa está associada a 3 tipos de atividades:

• Operacional – Refere-se ao fluxo de caixa gerado pelas operações de uma empresa, como por exemplo, receitas, custos, despesas administrativas, etc. O fluxo de caixa operacional está diretamente ligado a demonstração de resultados (DRE) e variação no capital de giro. Contudo, lucro e fluxo de caixa são conceitos distintos. Esta advertência será mais bem explorada adiante neste post. 
• Financiamento – Atividades de financiamento são as formas de obter recursos e repagá-los, como por exemplo, um empréstimo, um aporte de capital, pagamento de uma dívida, dividendos, etc. O fluxo de caixa financeiro está diretamente ligado à como a empresa financia suas necessidades por recursos e paga suas obrigações com investidores e bancos. Há duas fontes de financiamento possíveis: dívida e patrimônio líquido. Fontes de financiamento serão mais bem exploradas em um post próprio do assunto. 
• Investimento – Atividade de investimento são formas de a empresa alocar recursos em ativos que trarão benefícios futuros, como por exemplo, uma nova máquina num complexo fabril, pesquisa e desenvolvimento, a compra de outra empresa, etc. Os investimentos são feitos com a expectativa do aumento de um benefício. No caso de empresas com fins lucrativos, investimentos visão maiores lucros.  

A advertência sob a diferença entre a visão contábil e a financeira está no fato que lucro e fluxo de caixa são medidas distintas. O lucro apresenta convenções contábeis para apurar movimentos que nem sempre geram fluxos de caixa, o exemplo mais recorrente: a depreciação. Enquanto o fluxo de caixa é uma medida que apresenta o movimento monetário, isto é, o dinheiro que efetivamente flui pela empresa.

A idéia deste post era apresentar a definição do fluxo de caixa como movimento monetário (ou dinheiro que entra e saí), a definição do que são os ativos que geram o fluxos de caixa, a definição das 3 atividades (operacional, financiamento e investimento) e advertir sobre a diferença entre fluxo de caixa e lucro.

Us, M&A advisors make the most money, when we are hired for all 3 major parts of the job: (1) Dress up the bride, (2) Find and bring the groom, and (3) Negotiate the prenup. True, not all sell mandates end up successful and some take too long to be profitable. So, having much to do for a success fee is not always a blessing. But if all works, the payout can be handsome.

Occasionally, we are hired just as a best man, by the bride to check if the groom is well behaved and endowed and to negotiate the wedding contract on her behalf. Being best man is mostly a routine job and less risky. But best men are poorly paid compared to the bonanza of catching a rich bride. Therefore, best men are known to occasionally get jealous and try to seduce the bride so that they might end up with the riches themselves. Naive brides might fall for the smoothtalk of the greedy best man, believing that he would make a better husband than the one trying to marry them. We all suspect that such stories have rarely happy endings.

Dear seller, beware of fairy tales of would be buyers waving blank cheques. Chances are, the one who is here and keen is the best one to deal with. Many a company I’ve seen selling at half price, or even  going bust 1-2 years after rejecting a bona fide, reasonably priced bid from a keen buyer, in the hope of the Korean (now increasingly, Indian) prince on a white horse.

If you would like to read more, deeper stuff, treat yourself to a one-year subscription of M&A Hungary. You may download a free sample, if you don’t believe me.

Working for a private company? Got some stock? Best of Luck figuring out the value without math.

Do you know how much your company is worth? If you work for a public company the answer is pretty easy — the stock market values your business every day. If you work for a private company it’s a bit harder. In this post we’ll discuss a technique that can be used to estimate the enterprise value of your private company.

Enterprise value is a financial concept that describes the amount of money the market believes your business to be worth. More here

Pigs Eating Pork – Not Quite Kosher or A Broad Market Approach!

When I first saw this commercial, it was at lightening speed on Tivo, so it didn’t click.  It only clicked when my 3 year old said he wanted to look at the pigs, so I slowed it down.  Not so glad I did, as I suspect this is offensive to whole populations by just the pork piece alone, but what about the cannibalism implications?

LOSERS! ZL Tech going to be a niche solution provider for a while I suspect, I wouldn’t pay the Gartner bill this year.

So while ZL clearly admits a short coming in marketing, which is the reason they aren’t leaders, thus the law suit, they might want to spend some time reflecting on the Ability to Execute concept when this is all over.

Never Met a PM I didn’t Like, well maybe a product manager or two…

I’ve never considered myself a people pleaser, but corporate politician or favor trader works, which is not inconsistent with the Tweets above.  Ultimately the activities, ownership and accountability for PM’s is a difficult thing when a company has all 4 of the PM’s types – Product Managers, Product Marketing, Project Managers and Program Managers.  On any given product, project or initiative all 4 can be involved and ownership can be difficult to discern and each may have some level of conflicting goals/motivations, but that is have the fun of being a PM.   So I’ve been stuck on the 4 PM concept for like 2 weeks since I talked to a friend…

WikiWealth.com, a user generated provider of interactive investment analysis, initiated coverage of Qiao Xing Mobile (QXM) with a $15 price target giving QXM an estimated 250% investment potential. Wikiwealth.com’s coverage of QXM includes a comprehensive analysis of its short and long-term investment potential, company description wiki, real time company news, telecom industry analysis, SWOT analysis, WACC discount rate computation, cash flow analysis, comparative valuation approach, and Buffett-inspired valuation conclusion.

A summary of the QXM research report is presented below:
Description: Qiao Xing Mobile Communication Co. (QXM) develops and sells mobile communication devices and accessories for mobile cellular technologies in the People’s Republic of China.

Investment Conclusion: A conservative estimate of value indicates that Qiao Xing Mobile has a $15 price target and over a 250% short-term investment potential. The long-term potential has positive ratings on business simplicity and the SWOT analysis.

Industry Analysis: The telecom industry performs best during the early stages of bull markets. The largest telecom companies have a weighted average potential of 54% and the most undervalued telecom stocks have an average potential of 123%. Based on the telecom industry SWOT analysis, the long-term outlook for the telecom industry is positive.

Valuation Analysis: Each quantitative analysis features a Wikiwealth Innovative Experiment Mode (WIEM) where users can experiment with QXM’s valuation analysis. A Discounted Cash Flow analysis produced a $17 price target and 280% investment potential; a Comparative analysis produced a $14 price target and 215% potential; Buffett valuation conclusion is a $4 price target and zero percent potential. QXM’s WACC discount rate conclusion was 12%.

SWOT Analysis: QXM has more strengths than weakness and more opportunities than threats, which results in a positive SWOT analysis. The full investment report has full details for the SWOT statements listed here: SWOT Strengths: emerging market phone development, low cost input, take-over candidate, country market leader; SWOT Weaknesses: company resources; SWOT Opportunities: domestic market potential, Chinese currency revaluation, mobile device growth, government bias, supply chain cost reductions, high-end phones, emerging markets, smart phones; SWOT Threats: counterfeit products, iPhone.

The full valuation report, found at http://www.wikiwealth.com/research:qxm, features detailed analysis of each section listed above. Users can also use the WIEM to experiment with the analysis and create their own conclusions and add their input to improve the investment community’s analysis of Qiao Xing Mobile (QXM).

About WikiWealth.com: WikiWealth.com mobilizes the diverse talents of Main Street investors to produce interactive research reports of the highest quality, clarity, and transparency. The wiki-based platform – popularized by Wikipedia – gives investors the ability to add content, openly discuss opinions and influence investment ratings. Control your future with the world’s only interactive investment analysis. http://www.wikiwealth.com/. Get our latest investment alerts by following us on WikiWealth Twitter. Facebook Interactive Fan Page: Latest WikiWealth News.

Disclosure: WikiWealth.com is not a registered investment advisor. Nothing contained in any materials should be construed as a recommendation to buy or sell any investments.

Here’s one more in our ‘What was that Again?’ series. This one is an example of how markets will over react when their mood and direction are clearly set. These days the market is in a bullish mode, so it bumped HCL Tech a good 5.8% on what is perhaps a minor news.

HCL Tech has a market cap of around Rs 14,800 crore. So 5.8% of this is about Rs 850 crore. The news today was this –

Software services firm HCL Technologies on Monday said it won a contract worth $200 million from British insurer Equitable Life.

The contact begins in March 2011, HCL said in a statement, but the Indian firm would receive 8 million pounds ($13 million) by then as it begins work towards the implementation of the project, Stuart Drew, HCL’s senior vice president, financial services, told reporters on a conference call.

While the deal runs for 30 years, the bulk of the revenue would accrue in the first eight years, Drew said.  Equitable Life, Britain’s oldest mutual insurer with 1.5 million policyholders at its peak, closed to new business after it almost collapsed in 2000 after being forced to honour unsustainable guarantees stretching back 30 years.

So check this. The contract does not even start till FY12. Also, the $200mn is what HCL Tech will earn over 30 years. Even if it gets $160mn of it in 8 years, it is only $20mn or about Rs 100 crore a year. This means, it will earn a net profit of about Rs 20-30 crore a year from this contract (that too from FY12 maybe). Is it worth an extra Rs 850 crore?

Also, there is no gaurantee the company will be around in FY12 to honor the contract, considering it almost went under not in the too distant a past.

Rompuy has been requested to step forward from the back of the stage (or on the side) to play on the main stage in the spotlights. It was clear that the EU PM/Presidents didn’t want a big personality extra on stage; afraid the current Heroes would be challenged in their role on stage?

So they choose a sober hard working man with a humble attitude in service to a country in despair. Might he be be a protestant? Newly elected President of EU Rompuy, never a hero, always a worker.

He is not alone on the international political stage. With the rising of India (PM Singh) and China (President Hu) in the world of power and influence, the Workers are on the rise. The change of power in the USA and the election of Medvedev in Russia are also signs of ‘Worker’ attitude on the political stage. They join German chancellor Merkel starting her second term in office for me representing the Worker attitude as well.

These are the people with a moderate profile, relatively not outspoken in their opinions. It seems to me they think things over before anything is said or proclaimed.

On the other side I see some self-acclaimed heroes like Sarkozy, Poetin, Berlusconi, Chavez and former presidents/prime-ministers Chirac and Bush. Very outspoken personalities with charisma and opinions that leave you question the intellect supporting them in decision making.

What would make someone be a Hero or a Worker? What characteristics would one see as differentiating factors for valuating a PM/President. Below a quick list of 10 parameters I drafted based upon my personal viewpoint only!

1. Forefront – Background (Does the person present him/herself on the forefront of background?)
2. Realist – Idealist (Do you value him/her as an realist of idealist?)
3. Outspoken – Thoughtful (Is he/she outspoken or thoughtful to you?)
4. Risk taking – Risk averse (How does he/she value risk?)
5. Black/White – Shades of grey (In what way does the person portray his/her opinions?)
6. Speaking – Listening (What do you see him/her doing most?)
7. Scoring – Assisting (Are results in the political arena caused by him/her scoring or assisting?)
8. Attention seeking – Attention giving (Does the person seek personal attention or give people in society attention?)
9. God – Disciple (Is he/she identified as God or a Disciple?)
10. Action – Reflection (What modus would you see him/her in?)

How does your PM/President score on these parameters? I would say each parameter is a scale of 1 to 5. The lower the score the more Hero attitude this person would express to me. Sum up the scores from all parameters and you will get a figure in between 10 and 50. An archetype Hero would score 10, an archetype Worker would score 50.

Now let me give you my rating of the Dutch PM, Balkenende. He has been PM during four consecutive periods since 2002 and didn’t make it to become the first EU President. Coming from the background in 2002 and rising to the PM role he would have gotten a score in the 40-50 zone. Nowadays his results and behavior are leading me to shift my opinion:

1. Forefront – Background                        2
2. Realist – Idealist                                     2
3. Outspoken – Thoughtful                       3
4. Risk taking – Risk averse                      2
5. Black/White – Shades of grey              3
6. Speaking – Listening                              2
7. Scoring – Assisting                                 4
8. Attention seeking – Attention giving  2
9. God – Disciple                                         3
10. Action – Reflection                                 4

Total score:                                                         27

With this score the Dutch PM scores just above the normally distributed average, expecting an equally distributed population of Workers and Heroes in the office of PM/President. More a Worker than a Hero.

What would your PM/President score? Is he/she a Hero or Worker?

Over the past few weeks I have learned about an awesome micro-seed incubator in Cleveland called Goldstein, Caldwell & Associates (www.GoldCald.com) that is experiencing some impressive growth. While there are certainly other incubators in town, what makes GCA unique is their focus on young entrepreneurs, many of whom are still in college, who are launching companies with technologies ranging from clean energy to web-based businesses.

Modeled after incubators on the coasts such as TechStars (techstars.org) in Boston and Colorado, and YCombinator (ycombinator.com) in California, GCA’s goal is not only to provide companies with seed capital (typically in the $5k to $10k range), but also with a place to work, mentorship, and strategic assistance with simply getting a young business off the ground.

They have a number of companies in their portfolio already, including Flex Hire (flexhire.com) that streamlines the application process for job seekers, and Sunflower Solutions (www.sunflower-solutions.com) which created a way to manually re-position solar panels to capture more energy as the sun moves throughout the day. Both of which are run by young, passionate entrepreneurs.

They are always looking for new portfolio companies, so check out the site if you’re interested in finding out more and applying for a position in the incubator.

304442     การประเมินค่าป่าไม้     Forest Valuation

วัตถุประสงค์และหลักเศรษฐกิจในการจัดการป่าไม้ การประเมินค่าที่ดินสต๊อกไม้และหมู่ไม้ในป่า ตลอดจนความเสียหายใน ลักษณะและชนิดต่าง ๆการประเมินค่าตอไม้ ไม้ยืนต้น ท่อนซุงและไม้แปรรูป ดอกเบี้ยและการลงทุนโดยประยุกต์สูตรต่าง ๆ รวมทั้งส่วนลดในธุรกิจของการป่าไม้

(Objectives and economic principles in forest management. Valuation of forest lands, growing stock and stands, including various types of damage, Appraisal of stumpage, standing timber, logs and lumber. Interest and investment, applications of compounding and discounting formular in forest business.)

(304442 มหาวิทยาลัยเกษตรศาสตร์)

I originally bought into Einstein Noah Restaurant Group (BAGL) on 10/21/09 for $13.19 after it had been running against a longer term 61.8% line which seemed bullish to me because the bears hadn’t been able to push it back down. I also liked them on a valuation basis because they compete with the likes of Starbucks (SBUX) and Panera Bread (PNRA) who are each fetching P/E’s more than twice as big as BAGL’s.

I sold about 2/3 of my position at $11.63 because the chart was breaking down. It proceeded to fall another 14% all the way down to $10 where I bought all my shares back for the discounted price of $10.12. They have revenue per share of $25 which compares to $44 and $13 for Panera Bread and Starbucks respectively. At the time of this writing, Starbucks is trading at a price to revenue per share ratio of 1.7 and Panera is trading at 1.4. Einstein Noah looks very good here with a ratio of just 0.4. They also are the best in terms of book value and price/sales.

I ran a discounted cash flow on Einstein Noah using the following values and it was undervalued under all of the circumstances. In an absolutely horrible situation, I think they could fall into the $8’s but in a best case scenario they could hit $25.

1.) Conservative Projection
EPS: 1
Projected 5yr EPS Growth: 10
Terminal Growth Rate 4
Discount Rate: 12
Book Value/Share: -1
Price: $11.94 (10.6% Upside)

2.) Semi-Optimistic
EPS: 1.25
Projected 5yr EPS Growth: 15
Terminal Growth Rate: 4
Discount Rate: 10
Book Value/Share: -0.5
Price: $21.44 (98.7% upside)

Now before you get all excited, there are some risks though. Einstein Noah only has $11M in cash and is carrying $117M in debt. Their current ratio is .52 and they had negative total net assets to the tune of $10.5M in the most recent quarter although net common shareholder equity went positive for the first time in 2009. However, all of these negative issues have been improving of over the last couple of years and I think the low valuation more than accounts for the problems.

- Michael J. Burns

Disclosure: Long BAGL

TEEB – a study on The Economics of Ecosystems and Biodiversity was launched by germany and the European commission to develop a global study on the economics of biodiversity loss.

A new report has been published, summarizing the study findings for policy makers. The main points:

1. Valuing ecosystems makes economic sense

Losses in the natural world have direct economic repercussions that we systematically underestimate.

2. It is essential to measure nature and biodiversity

Developing our capacity to measure and monitor biodiversity, ecosystems and the provision of services is an essential step towards better management of our natural capital.

3. Investing in nature pays off

Investing in natural capital supports a wide range of economic sectors and maintains and expands our options for economic growth and sustainable development.

4. The social dimension needs to be fully taken into account to develop successful strategies to protect biodiversity

This involves making sure the right people pay – both locally and globally. It also means looking at property and use rights and potentially easing any transition pains.

5. Nature is an asset in future economic strategies

Biodiversity and ecosystem services are natural assets with a key role to play in future economic strategies seeking to promote growth and prosperity.

I figured that there is a great deal of confusion about valuations out there. Hence, I decided to shed some light on this from the other side of the table. I am going to concentrate on early stage businesses here. There is a great deal of books for mature companies (I personally recommend McKinsey’s book on Valuations on this topic).

Misconception #1: it’s all about other valuations
Nothing can be further from the truth. Although this might sound counter-intuitive at first, other valuations are just one piece of the puzzle. Only because a competitor might receive a high valuation does not imply the same for your business. There is a great deal of factors that make up a valuation, even more so in the early stages of a business. The reason why so many VCs state that the team is a great factor, comes from the fact that it is common knowledge that you might switch your business model around three times before you hit the right market.

Misconception #2: the higher the valuation the better
This is something that you might not realize when you’re just thinking about your first round. However, it might get back to you in the following rounds. Down-rounds, i.e. rounds in which the current stock price is considered lower than in previous rounds, may have many implications. For one, your previous investors might receive more shares due to anti-dilution clauses. But even worse: it signals that you might not have hit the target set out by your previous investors, maybe decreasing your chances of raising another round.

Misconception #3: there is a fixed formula
If there were, we would not have those nice negotiations, right? There are many tools that you can use to calculate the pre-/post-money value, the share founders get if the option pool is considered, etc. But the real valuation, determined by the amount of the investment for the share of the company, is always a plug-in number. Therefore, a tool like the Valuation Calculator should not be taken too seriously. There are some indicators (stock market prices, general market development) but they may have different value for different people.

Misconception #4: first revenue means higher valuations
The more data you have on the actual money value of your business, the more likely it is that the valuations from different people might be closer. More data points usually help assessing a business better, hence the valuation can be done more accurately. But it doesn’t necessarily mean that your valuation will rise. If you are greatly underselling your product, this might also indicate that the customer does not value the product as high as you might have expected or your ability to sell is just weak. And having missed certain milestones or not being able to expand the business is at least equally bad for a valuation.

Misconception #5: valuations are a primary business concern
It is reasonable to think that you should only pursue the fields driving most revenue and thus creating most company value. And higher revenues usually drive valuations up. Nevertheless, constant business does not increase valuation. There were a couple of companies which were once valued less than the money they had in the bank. Don’t forget: valuation alone does not help you grow your business–business does.

Photo: http://www.cbc.ca/

I can’t believe I was off the blog for close to two weeks. Two weeks! But all that downtime was spent on good things, foremost of which was Dragons’ Den watching. I am forever grateful to YouTube, specifically the DDRepeat Channel, for all the videos of DD uploaded thus far. I’ve been working myself backwards from the most current season to the oldest. Today, I decided to skip to the very first season, so there could be some order to my writing. I had promised you loads of posts about it, so I’m starting now.

I don’t even know where to begin sharing the great lessons I’ve been reaping from the shows. It’s just so much to take in, but let me start with Season 1, Episode 1. (There are other blogs and sites doing recaps of DD, so this is not the place to look for them. If you want recaps, be warned that you’ll be disappointed.)

The very first entrepreneurs who came up were trying to sell an aid for rocking babies to sleep on their strollers. Great and novel idea! Even the dragons said good things about it. Only problem was that they were asking for GBP 150,000 for just five percent equity. Essentially, they were valuing their fledgling company, with nothing but a prototype for a product, at three millions pounds sterling. GBP 3,000,000 — count the zeroes. Though the initial interest was there, in the end, all the dragons walked away from the deal because the price of the business was simply unrealistic.

So how should entrepreneurs value their companies? I’m not about to go technical on you and overwhelm you with fancy business jargon and formulas. There are other sites and blogs for that. And for sure, you’ll need a financial coach/accountant/auditor to help you in that respect, but something I know I needed to work on in my mind was how I priced my business, above and beyond standard criteria.

In the past year alone, I’ve ran out of fingers to count the number of people and institutions I’ve approached, looking for capital. Cash injection. Call it what you will. In that journey, I set the price of my business on the following things: my sweat capital, the cold hard cash I put into its operations, shared assets from my other business (Master Publishing), potential resources, and projected revenues from our products and services. I came up with what I thought was a good, round, conservative number. Nonetheless, for my start-up, it was still a hard sell. I found myself ratcheting the price lower and lower.

When I finally did find my own dragons who “punted” (a nice word I learned from DD) for me, I had set my price to just seven figures instead of the original eight figures. In Kenyan shillings. And, remember, there’s inflation to contend with. So had I sold myself short? Did I undervalue my company?

I’ll let others decide that, but what was clear in my mind was that I needed the cash injection. And with the entry of my own dragons, I knew that their cash, expertise, and technology were likely to catapult CAN-DO! to a higher valuation anyway. Later. For now, it’s work time. And a great opportunity to prove myself and the company.

From my own experience, because my priority was clearly to secure the money and the knowledge, I wasn’t going to make my price tag way too high. I wanted it to be accessible to my potential investors. And if they were of any worth, I knew that we could work together towards an even greater valuation, this time reflecting CAN-DO’s real price. But it has to prove itself. It has to earn it. And that’s what valuation is in the CAN-DO! business dictionary.

I believe that there is only 2 ways to sell a company for market price, defined, as the „highest possible price that would be worth paying by the most synergistic bidder”. 

The first is to run a successful auction. This however, requires that the company would be suitable for a wide range of bidders. The bidders must also have the motivation to bid at the same time. Financing must be available so that these bidders can pay a full price, allowed by maximum leverage. Unfortunately these days conditions are not ideal for auctions.

The second solution works without an auction, with limited number of bidders. Sometimes even with a single buyer.  This requires that we change the subject of the sale from the company… to a business opportunity.  Effectively we have to sell a pre-packaged investment gain to the buyer. Let’s see how this works in practice.

In order for the buyer to pay a full price, they need more than the opportunity to buy the company as is, based on its earnings or EBITDA multiple. If they did, they would overpay, as the current profitability may not be sustainable. It may even be inflated by creative accounting.  For getting the market price, we need to deliver to the investor a blueprint on how she will make money by buying this company.  The blueprint must be common sensible, credible and its assumptions verifiable by the buyer.

This strategy is the inverse of what private equity investors call the “angle”. We have to “manufacture” an angle for the buyer, so that they will buy our product, being the target at market price.

If you are interested in how to build a top selling blueprint with your company, please visit here.

SITUATION

After ten years in business, an entrepreneurial furniture retailer in western North Carolina had established stable revenues and a loyal customer base due to a compelling value-creation strategy: name-brand designer furnishings at discount prices, acquired directly from manufacturers and distributors of discontinued and close-out stocks.

The problem: the business was not large enough or growing at a pace sufficient to fund the eventual retirement of the owner. 

The owner had identified a potential investor and partner in the business, but lacked a business plan that outlined and supported growth strategies or established a valuation basis for an investment.

ACTION PLAN

Our founding partner was retained by the owner and potential investor to develop:

•  a business plan (including strategies and considerations for growth),
• pro forma financials (including key cost and revenue variables for testing), and
• a valuation range upon which to base a private equity investment. 

RESULTS

The business owner and potential partner were able to agree on the terms of a capital investment and key strategies within the business plan, leading to:

• relocation to a larger and more favorable location in one of the city’s primary art, design and decorating corridors;
• an expanded merchandise and pricing strategy to broaden market appeal;
• the ability to hire staff and expand store hours; and
• increased owner capacity to pursue additional high-margin commercial projects.

Within the first year, annual sales volume exceeded prior year results by more than 50%.

With the holiday season quickly approaching, I thought it would be a good idea to offer some buyers tips before you head out and spend you’re hard earned money.  Besides the great offers and one time deals that the holiday season offers customers, one of the most alluring eye catchers is the use of: lighting!! Have you ever walked into a department store and noticed that mannequin draped in that DKNY dress? Standing high on it’s own pedestal, towering over the showroom floor and how the light just brings out the seams and fine lines of the dress? That dress is practically calling your name!!!

Well, this is the same technique that jewelry stores use to draw your attention to their store and to accentuate their product. Proper lighting, diamonds, white gold and platinum are all best friends. Displayed under the right lighting, almost every diamond that is mounted is going to look amazing, have fire, be sparkly, and a must have!!! With me not getting too technical: diamonds are cut with angles, so when light passes through a diamond that light will be returned outward, causing that mesmerizing  sparkle which is called light refraction.

The true fire and color of a stone is best measured out of the showroom light or what is called natural light. Keep in mind, when you walk out of that store with a necklace or ring, the lights will not be included.  So here is what you would do will being shown the ring or necklace: While holding the ring in one hand, cup your free hand over it (blocking out the showroom lights). This will give you some indication of what the ring would look like out of the store. Secondly, you can turn your back away from the display cases and cup your hand around the ring for more of an advantage.

Those are two easy and quick ways to discovery the true fire of a diamond while shopping this holiday. I hope you found this blog informative and useful. Please feel free to leave comments and suggestions. Remember, be safe and choose wisely!!

The single most critical element of an M&A transaction is the speed of execution. Companies are living organisms that dynamically change.  Consequently their value fluctuates depending on the market for its products, new innovations, marketing moves of competitors, exchange rates or its financing environment. The same may be true for the buyer, and if it owned by a corporation, the seller too. Their respective desires to buy or sell may change due to evolving circumstances: shifting corporate strategies, another acquisition for which the cash was needed gets cancelled, alternative financing sources open up.

Some companies take 2-3 years to sell. But in general, the longer the sale process takes, the bigger the chance that the deal would fall through. Thus the probability weighted sale price of the business will be less. Also, the later the sales take place, the less it will be worth in today’s money. The value that can be extracted may fall by 50% or more due to delays.

The inverse is true for the costs of the process. The longer it goes, more money will be spent on advisors and travel and the more management time and effort will be invested. Not counting the potential loss in enterprise value, if the company’s performance starts slipping… A swift process may be half or more cheap than a slow one.

No wonder that the bigger the deal, the faster it is executed. Business brokers might keep a company listed for years, or forever, before it sells. Big takeovers on the other hand are closed in a matter of weeks, or even days. In 1998, the Czech government sold IPB Bank to Nomura over a weekend to avoid an impending bankruptcy and a banking crisis that could have cost billions to taxpayers.

For more, download a sample copy of the M&A Hungary newsletter.