A Business Case
Post inspired by some recent e-mail exchanges with AgentDouble0-Z:
AD0-Z: So this girl I used to bang last winter got engaged.
Me: I think you should send a note to her fiance.
AD0-Z: What would I say?
Thus, the following corporate merger analysis/analogy was developed regarding the next 10 years in life for this girl’s fiance:
Prior to Purchase: Significant “proof of concept” testing performed. Much attention paid to transactional durability and stress testing. Risk-taking and new venture aptitude of takeover target is evaluated. Ability of takeover target to handle liquidity is analyzed.
Purchase: Significant expense outlay, often resulting in massive debt. Third-parties provide some start-up funds and equipment. News coverage and media review purchase, noting bright future prospects as a “merger of equals.” Formal merger agreement signed. Company founder and takeover target continue transactional processing and stress testing with renewed vigor.
Shortly After Purchase: Initial euphoric high in stock value. New business partners are not considered. Negotiation begins for starting a subsidiary company. Probable addition to debt with purchase of real estate for value-creating activities. Transactional processing and stress testing occur less frequently.
Subsidiary Company Formation: At this point, contact with former business partners and acquaintances is forbidden or fails to exist. Debt level is crushing the spirit of original company founder. Little to no possibility for continuance of risk-taking and new ventures. Transactions and stress testing happen only in the mind of company founder, or at original takeover target’s convenience. Subsidiary company exists solely to extract hard-earned capital from original company founder. Favorable analysis of takeover target’s ability to handle liquidity proves completely wrong.
Corporate Maturity: All funds poured into ensuring subsidiary company is a success. New business partners are sought, in some cases without original takeover target’s knowledge or consent. Occasionally, original company and/or original takeover target propose separation of business entities. Original merger analyzed in news coverage and media, with various levels of approval/disapproval.
Decline/Bankruptcy: Original company founder works long hours to ensure survival of the merger or guarantee merger dissolution fees are paid to original takeover target. Subsidiary corporation continues to divert attention and funds away from core competencies. Further debt is incurred with purchase of additional real-estate or non-income producing assets. Original merger is potentially still in place, but with reduced transaction processing events.
1 Comment
