We're finally getting settled into the new year (and getting used to seeing an 8 at the end of today's date instead of a 7). But it's always a good time to make some predictions about what lies ahead in the coming months. In particular, it's especially important to pay attention to the venture capital industry, which can reveal a great deal of insight about the state of the startup landscape.Read More
For most entrepreneurs, the ultimate goal and often a clear sign of success is taking a private company public by virtue of an initial public offering, usually referred to by its acronym IPO. This seemingly simple transition, which involves the public sale of the company’s stock on an open exchange, has gotten increasingly complicated over the years due to frequently changing regulations. These days, public companies must pass stricter scrutiny given that the sale of stock on the public exchange allows a company to increase its access to capital as well as its liquidity, but does so at the potential risk and expense of what are generally conceived of as more average investors. With venture capital and private equity, there are less onerous expectations given that the firms and individuals involved in those types of investments tend to be of higher net worths and able to take on more risk. In light of the complexity and expense associated with taking a company public, here are four ways to prepare:Read More
Before even considering a pitch to prospective investors, company leaders must have a strong sense of how their company is faring including its anticipated trajectory. The numbers must be crunched and the data meticulously analyzed to ensure that those involved in the pitch presentation can speak intelligently on operational and financial matters. The pitch deck must be prepared well in advance and polished to near perfection, and any potential questions or concerns should be considered and discussed beforehand to avoid mid-pitch flubs. Investors will be interested in understanding a company’s goals and vision, how it intends to use the funds it is seeking, and particularly keen to gather information relating to performance. Here are five key performance indicators to master before making that pitch:Read More
The board of directors is responsible for overseeing the goals and strategy of a company. The board does this by hiring a Chief Executive Officer and perhaps some of the other C-level executives, and by establishing the high level objectives of the company. The management team then executes or manages that strategy by handling the day-to-day operations. Of course, overseeing business strategy includes wide-ranging duties and obligations, with some boards taking a more active role in their companies’ operations than others. In addition, the scope or nature of a decision or transaction often affects whether and to what extent the board will be involved. High risk, high value transactions, such as mergers and acquisitions (M&A), clearly require extensive involvement from the board. Here is the role most boards will play during M&A:Read More
Merging with, or acquiring, another entity is always going to be a risky venture no matter how extensive the negotiations and due diligence process are. As with any major purchase, issues may not be clear until after the fact, and a lot of things can happen once everything is already said and done that may end up destroying any potential value before it is even realized. Here are six common reasons that M&A deals fail:Read More
When it comes to investing, few strategies theoretically have as few risks as arbitrage. This term refers to when financial assets are purchased in one market and immediately resold in another market in order to exploit and benefit from discrepancies between the two prices.
One special form of arbitrage that's used by investors during an M&A deal is a merger arbitrage (also known as a "risk" arbitrage). So how exactly does a merger arbitrage work, and what are the upsides and drawbacks?Read More
It is fairly common for both small and large companies to merge with and acquire other firms to gain a competitive edge. Although mergers and acquisitions are often considered together, the end result is obviously slightly different. Mergers tend to occur when both companies are on more equal footing, and many of the attributes of each company are retained post-merger to maximize the results of the integration. On the other hand, acquisitions usually involve a larger company purchasing another company, with some aspects of the smaller company remaining and others likely being changed to suit the needs of the acquiring company.Read More