The following list represents the Key Service Objectives (KSO) for the Appleton Greene Investment Consulting service.
The primary objective is to expand the set of investment opportunities by introducing additional trading strategies with attractive risk/reward profiles. In many cases, investment managers are interested in trades with low or negative correlation to existing portfolios and we can propose such trades, some of which can be expressed directly with derivative products or alternative investments. On the quantitative investment strategies side, we offer a variety of stand-alone trading strategies supported by statistical analysis. The portfolio return is enhanced by monetizing such items as factor premiums, dividends, coupons and option premiums. Example strategies are equity short/long – relative-value, dispersion, correlation, enhanced equity; currencies – carry, value and momentum; commodities – carry, momentum, seasonalities, curve, roll-down and volatility; fixed income – directional (corporate – investment grade, subordinated, high-yield, emerging markets sovereign and corporate) and relative-value, curve, convexity, roll-down, carry (single and cross-asset), credit and capital structure arbitrage (convertibles, covered bonds, COCOs); derivatives – relative-value, curve trades, volatility, smile/skew and correlation, interest rate cap/swaption arbitrage; asset allocation strategies. What is unique in our proposition is that the risk and rewards of these strategies can be analyzed quantitatively with our hybrid cross-asset Monte Carlo methodology both stand-alone and at portfolio level. In relation to investments and portfolio analytics, we help with asset allocation, portfolio optimization, portfolio risk analysis, overlays, hedging tactical and strategic asset allocation, scenario testing. Some examples of investment structured products that are used for complex trading strategies are Cap Calls, Cap Puts, Digitals, Multi-Asset Range Accruals, Multi-Callable Range Accrual Notes, Accumulators/Deccumulators, TARF, Shark-Notes, Equity Booster Swaps, Synthetic Convertibles, Reverse Convertible Baskets (with trigger barriers). On securities selection side, we can help investment managers to expand their investment universes by adding exposures to investment opportunities in developed – US, EU Core, Peripheries and selected emerging markets – CEE, SEE, Russia, LatAm and GCC. The Investment Consulting service provides advise generally on the markets, sectors, securities and strategies, alternative investments and also on the management and optimization of existing portfolios in these markets.
Our Investment Consulting services start with performance attribution analysis of an existing client portfolio with the main objective of improving investment performance, which is done primarily by exiting some inefficient allocations and executing additional trades to deliver desired exposures to set of investment factors with attractive risk premiums. These factors are broad, persistent drivers of asset returns and could be sub-classified as macro, sector, country and style factors. Identification of factor exposures for a portfolio is based on factor and attribution analysis and we perform also what-if analysis to assess the effects of adding new positions. For instance, for index funds, we consult on smart beta constructions that replicate systematic exposure of the index by using asset with lower volatilities and thus improving return versus risk tradeoff. Obtaining the desired factor exposures can be achieved swiftly and efficiently by executing deals in liquid alternatives and derivatives. This factor investing approach is suitable for investment managers with both asset allocation style and securities selection style. In addition, we offer bespoke portfolio construction containing directly the desired exposure levels to the preferred set of risk factors, which is usually realized by using liquid alternatives (e.g. ETFs, trading strategy indices, delta-one certificates), derivatives and structured products. A second investment objective is increasing diversification, which is achieved by adding new assets, and thus controlling the factor exposures, but sometimes is it more directly and efficiently realized by using derivatives overlay. Derivatives overlays allow fund of fund managers for adding or reducing exposures to factors (e.g., sectors, styles and markets), by combining investments in funds with investments in derivatives. These overlay solutions can be on existing or new funds or on instruments from the existing or other asset classes such as interest rates, equity indices, currencies, inflation, commodities, credit default swaps. Third, we use factor models also for asset and liability management (ALM) and liquidity management at balance-sheet level.
The Investment Consulting service provides return-generating investment ideas in developed and selected emerging markets in the traditional asset classes, specific to the return drivers for each asset class. This is based on our expertise in fundamental, technical and quantitative research (strategies). Proposed quantitative trading strategies are applicable for both developed (US, EU Core, Peripheries) and emerging markets, where we have substantial experience in the regions of CEE, SEE, Russia, LatAm and GCC and can advise on portfolio construction in the traditional asset classes and on available alternatives, overlays and hedges. The desired risk/rewards profile is achieved also by smart beta and portable alpha strategies, which are well suited for indexed and passive funds. The strategies are with various degrees of risks and can be combined to an existing investment portfolio or can be executed stand-alone. The objective is to enhance returns by using synthetic constructions which so far, because of their technical complexities, have been out of reach. We advise on strategies with derivative overlays, which can be used for managing slippage – portfolio inefficiencies that lead to lower return or bigger risk. They can be used also to reduce large exposure to systematic factors, which does not add much value to the fund’s performance. Alternatively, overlays can be used to add synthetic beta exposure to high portable alpha applications such as alternative asset investments and investments in real estate by, e.g., entering in index futures contracts, call options on index futures or enhanced indexing. Derivative overlays can be used to combine multiple hedge fund strategies in an integrated package.
One of the main objectives of our service is reducing financial risk by advising on portfolio insurance solutions, which can minimize volatilities of portfolio returns. This is achieved by adding positions with low or negative correlations to the existing portfolios. In this way, it is possible to offset market, equity, interest rate, credit spread and swap spread risks. This portfolio insurance works well in periods of market uncertainties when the preservation of capital is paramount. It is important to note that for exact risk quantification, an automated risk measurement and management platform is necessary and we can assess the cost and benefits of a risk platform and can advise on its design and architecture. In the insurance space, for retirement savings plans annuity businesses, we can consult on specific protection overlays, which can be activated. We help with the development and implementation of risk governance policies, risk and concentration limits for investment in specific asset classes, issues, sectors, geographies and countries. On market risk side, we help with implementation of VaR, ETL measurement, limits, sensitivities calculations (Delta, DV01, duration, CS01 and OAS sensitivities are very important in investment management) and design and implementation of hedging policies. For private banks, we help with balance-sheet management of portfolios of retail structured products by hedging portfolio sensitivities to the risk factors. Our approach is based on advanced statistical and econometric models. For insurance companies, we advise on implementing simulation engines to math assets and liabilities and satisfy regulatory under Solvency II. For depositary institution, we offer risk and regulatory advisory, which includes Basel II and Basel III frameworks and implementation (PFE, EE, EPE, LGD, IRC, DRC, Economic Capital, CRD IV), CCAR. For credit risk measuring, monitoring and hedging, we advise on PFE, CVA, DVA, BCVA, FVA and cVaR . We help with implementing the IFRS9 framework for reporting. We do stress-testing of our VaR models in order to identify situations that could create both extraordinary and plausible losses, following examples of previously defined scenarios which meet regulatory requirements. The requirements for the market risk stress testing are a set of simple parallel and inverting/steepening scenarios (in additional set of more complex scenarios can be required, these will be the combination of historical scenarios and complex term structure shifts; or configuration a contingent loss matrix, where the maximum loss under a fixed set of scenarios will be limited).
This objective aims to enhance the development of systems of strategic investment planning and management and the development of documentation. Specifically, we can help with design, description and analysis of technology requirements for investment management processes. This is necessary for trade booking, position evaluation and management, measuring, monitoring and mitigation of market risk. This service objective is to advise on technology improvements, toolkits for specific purposes and additions to the existing client infrastructures. We can consult on internal development of libraries for product and strategies evaluation and on developing of automated risk and performance management systems up to the levels of business and functional specifications. We can also make analysis and recommendations for purchasing of commercially available vendor solutions for trading, market access, return attribution and risk management. The second stage in formation and execution of an Information Technology Strategy Program (ITSP) is the analysis and assessment of the current state of strategic alignment between the investor’s established business strategy and existing IT services and operations. From the perspective of that current state as-is for the client at that time, a future-state projection is created to express the vision, purpose, value, and commitment to move toward a holistic enterprise strategy wherein business and technology strategy are very tightly coupled to achieve optimum outcomes for the corporation or organization. The Current State Analysis and Assessment element of the ITSP consists of: (1) a ‘RACI’ (Responsibility, Accountability, Consult, Inform) matrix of stakeholder and participant roles; (2) a ‘SWOT’ (Strengths, Weaknesses, Opportunities, Threats) analysis; (3) a ‘gap’ analysis review and assessment of fit (or lack thereof) between legacy or current technology relative to explicitly or implicitly stated business strategy; and, (4) a benchmark survey of the client’s IT services and operations value, performance and quality. The Future State Projection element of the ITSP consists of: (1) creation of an IT Service and Operations portfolio and catalogue; (2) definition of key performance indicators (KPIs), delivery metrics and success criteria; (3) specification of business and technology realignment objectives with refinement of Program Baseline deliverables as appropriate; (4) targeting and prioritization of strategic business outcomes and benefits to be achieved through holistic strategy alignment.
This service is primarily available to the following industry sectors:
Banking & Financial Service
Increasing regulation and competition are decreasing the profit margins in both investment and retail banking. With recent advances in information technologies, processing of information increased and the processes have become more automated and digitalized. It is important to have a clear view on the key drivers of performance and on the exposure to the main risk factors. Financial markets are becoming increasingly globalized, the transaction costs are decreasing and the restrictions to cross-border flows are eliminated. All these trends call for increasingly automated solutions for dataset management and measuring risks and rewards. Investment managers are making decisions very fast and the speed of execution became a major issue. Many complex derivative products are moving to organized exchanges where they are traded more transparently and are cleared and settled. Electronic trading is now becoming dominant and the share of retail traders is increasing. There is a new trend towards using more sophisticated products in the derivatives space. New generation of exotic option products on dividends, volatilities and correlations is emerging.
Insurance companies are divided among several sectors – life, property, casualty, health, and financial. One of the mainstreams in life insurance business is the distribution of retirement savings solutions such as IRAs, mutual funds and brokerage as well as annuities. Annuity retirement products are fast fast-growing areas in the developed markets, where, in the US, insurance companies offer fixed, index-lined, variable- and income annuities, while in the EU are popular unit-linked life insurance products. There is a growing demand for such products, but hedging of investment risks remains a major challenge for the issuers and some companies stopped issuing variable annuities. Life insurance is liability-driven as the insurers take on lapse, longevity, and biometric risks and new regulations are implemented to assure that insurance companies’ assets are sufficient to cover their liabilities. To comply with Solvency II, insurance companies implement complex Monte Carlo simulation engines such as these used previously by the commercial banks to comply with Basel II. One of the objectives of the Solvency II project is to establish a solvency system that is more appropriate to the real risks facing the industry by avoiding cross subsidization and hidden reserves. It also intends to give incentives to insurance companies to improve their internal risk management and assessment procedures through the enforcement of risk-adequate pricing of insurance products, while taking into account the different needs for harmonization not only at European and international levels, but also across the financial sectors. The ultimate objectives of the new regulation are: (1) to protect policyholders; (2) to ensure harmonization of the rules at EU level; and (3) to ensure a level playing field within the insurance sector and across financial sectors. The last two objectives have not been achieved by the current solvency rules. The Solvency II project was divided into two phases. The first phase involved the overall design of the system and the second one was oriented to the technical detailed rules filling the structure.
Information technology is playing a key role in the financial services industry. The processes are becoming more digitalized. Many investment funds are distributing their products over the Internet. Mobile applications are developing for transactional banking, but soon will follow for more complex financial products. The speed of processing large datasets is increasing. All these advances emphasize the need for more automated technology solutions for trading in complex derivative strategies and algorithmic trading spaces. Now there are professional trading systems that allow for backtesting and optimization of a trading strategy on a large dataset with a few lines of computer code. Many institutions are purchasing vended solutions for performance attribution and risk management. Only the most sophisticated investment managers are developing in-house solutions. On the strategies side, investment banks are still dominant because of their better access to derivatives modelling technologies. However, software vendors are developing new libraries with increasing capabilities for both buy-side and sell-side institutions.
Monthly cost: USD $1,500.00
Time limit: 5 hours per month
Contract period: 12 months
Bronze service includes:
01. Email support
02. Telephone support
03. Questions & answers
04. Professional advice
05. Communication management
The Bronze Client Service (BCS) for Investment Consulting provides clients with an entry level option and enables client contacts to become personally acquainted with Dr. Valchev over a sustainable period of time. We suggest that clients allocate up to a maximum of 5 Key Employees for this service. Your Key Employees can then contact the consultant via email, whenever they feel that they need specific advice or support in relation to the consultant’s specialist subject. The consultant will also be proactive about opening and maintaining communications with your Key Employees. Your Key Employees can list and number any questions that they would like to ask and they will then receive specific answers to each and every query that they may have. Your Key Employees can then retain these communications on file for future reference. General support inquiries will usually receive replies within 48 hours, but please allow a period of up to 10 business days during busy periods. The Bronze Client Service (BCS) enables your Key Employees to get to know their designated Appleton Greene consultant and to benefit from the consultant’s specialist skills, knowledge and experience.
Monthly cost: USD $3,000.00
Time limit: 10 hours per month
Contract period: 12 months
Bronze service plus
01. Research analysis
02. Management analysis
03. Performance analysis
04. Business process analysis
05. Training analysis
The Silver Client Service (SCS) for Investment Consulting provides more time for research and development. If you require Dr. Valchev to undertake research on your behalf, or on behalf of your Key Employees, then this would understandably require more time and the Silver Client Service (SCS) accommodates this. For example, you may want your consultant to undertake some research into your management, performance, business, or training processes, with a view towards providing an independent analysis and recommendations for improvement. If any research and development, or business analysis is required, then the Silver Client Service (SCS) is for you.
Monthly cost: USD $4,500.00
Time limit: 15 hours per month
Contract period: 12 months
Bronze/Silver service plus
01. Management interviews
02. Evaluation and assessment
03. Performance improvement
04. Business process improvement
05. Management training
The Gold Client Service (GCS) for Investment Consulting is intended for more detailed evaluation and assessment, that may require your Key Employees to have monthly meetings or interviews with Dr. Valchev. These meetings and interviews can be conducted over the telephone, Skype, or by video conference if required. The consultant can also attend your business premises, an Appleton Greene office, or another mutually beneficial location, but please note that clients are responsible for the costs of any disbursements separately, including travel and accommodation. This service enables you to integrate the specific skills, knowledge and experience of your designated consultant into your Key Employee management team. The Gold Client Service (GCS) can also incorporate training workshops, business presentations and external meetings with customers, suppliers, associations, or any other business-related stakeholders.
Monthly cost: USD $6,000.00
Time limit: 20 hours per month
Contract period: 12 months
Bronze/Silver/Gold service plus
01. Project planning
02. Project development
03. Project implementation
04. Project management
05. Project review
The Platinum Client Service (PCS) for Investment Consulting is our flagship service and will be required if you need Dr. Valchev to facilitate the planning, development, implementation, management, or review of a particular project relating to his specialist subject, which would obviously require more time and dedication. This service enables you to reserve up to 12.5% of the consultant’s working month and provides a more hands-on service as and when required. If you need more time than this, then this can always be arranged, subject of course to the consultant’s ongoing availability. The benefit of having an external consultant involved in projects is they provide an independent perspective and are not influenced by internal politics, day-to-day responsibilities, or personal career interest. They provide objectivity, specific knowledge, skills and experience and will be entirely focused upon the tasks at hand. The Platinum Client Service (PCS) will provide your organization with a valuable resource as and when you need it.
- Performance improvement
- Risk management
- Exposure monitoring
- Increasing transparency
- Portfolio management
- Return consistency
- Product valuation
- Risk measurement
- Portfolio insurance
- Alternative beta
- Pricing libraries
- Enterprise system
- Operation model
- Algorithmic trading
- Service optimization
- System architecture
- Modular design
- Dynamic approach
- Simulation engine
- Business alignment
- International diversification
- Market access
- Emerging markets
- International investments
- Equity markets
- Fixed income
- Scalable platform
- International distribution
- Transaction management
- Global branding
This service’s current clients or employers include:
Sberbank CIB is the corporate and investment banking business of Sberbank of Russia. Its key areas of activity are corporate finance (including trade finance), the documentary business, investment banking services, trade operations with securities, and private equity. Sberbank CIB provides integrated financial solutions and investment advisory services to its clients, which include major corporations, financial institutions, sovereign states and federal and sub-federal government bodies and organisations. Services over 7,800 companies, including the corporate sector, financial institutions and state agencies. Volume of the loan portfolio for “largest clients” RUB 8,2 tln. The leading market-maker for equity and fixed income products in Russia, making prices from 8 am Moscow time, before the rest of the Russian market opens, until the New York Stock Exchange closes at midnight Moscow time. One of the largest and most qualified analytical teams in Russia, the specialists from which are regularly featured at the top of international rankings of analysts. Wide spectrum of research products: Market Daily, Fixed Income Daily, Strategy Monthly, Economic Monthly, company analysis (research coverage of around 100 Russian, Ukrainian and Kazakh companies), sector reviews and a number of other reports; besides the traditional macroeconomic coverage of Russia and the rest of the CIS, analysis now includes countries in Central & Eastern Europe: Bulgaria, Croatia, Hungary, Poland, Romania, Serbia, Slovenia and Turkey.
Deutsche Bank is a leading global investment bank with a strong and profitable private clients franchise. A leader in Germany and Europe, the Bank is continuously growing in North America, Asia and key emerging markets. With more than 78,000 employees in over 70 countries worldwide, Deutsche Bank offers unparalleled financial services throughout the world. The Bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people. Specialties include: Investment Banking; Asset Management; Retail Banking; Private Wealth Management; Private Banking and Transaction Banking.
The European Bank for Reconstruction and Development was founded in 1991 when communism was crumbling in Europe and ex-Soviet countries needed support to nurture a new private sector and democracy. Today we invest to help build market economies from central Europe to central Asia and the southern and eastern Mediterranean. We are now the largest single investor in our region. Owned by 64 countries and two intergovernmental institutions, we provide project financing for banks, industries and businesses. We also work with publicly owned companies to support privatisation, restructure state-owned firms and improve municipal services. Wherever we are active, we promote policies that bolster the business climate. We also work closely with small and medium-sized businesses.
Emirates NBD is a leading banking Group in the region. As at 31st December 2014, total assets were AED 363 billion, (equivalent to USD 98.8). The Group has a leading retail banking franchise in the UAE, with more than 215 branches and over 889 ATMs and CDMs in the UAE and overseas. It is a major player in the UAE corporate and retail banking arena and has strong Islamic banking, Global Markets & Treasury, Investment Banking, Private Banking, Asset Management and Brokerage operations. The Group has operations in the UAE, Egypt, the Kingdom of Saudi Arabia, Qatar, Singapore, the United Kingdom and representative offices in India, China and Indonesia. The Group is an active participant and supporter of the UAE’s main development initiatives and of the various educational, environmental, cultural, charity and community welfare establishments. Specialties: Corporate banking solutions; Retail banking solutions; Islamic banking solutions and Investment
Expandia is a private holding company engaged in investing in projects of private equity and venture capital in the Czech Republic and Central and Eastern European countries. The Expandia group views its investment priorities in two primary areas. The first is industrial investments in the field of manufacturing and services in which Expandia typically assesses potential acquisitions of existing companies although projects in the early stages of development (greenfield, startup, early-stage) are often considered as well. The other major type of investment is into real estate projects (residential and commercial space, hotels and logistics parks). Since its establishment in 1995, Expandia has played a major role in the following areas: Operations in private equity and venture capital markets; Restructuring of industrial enterprises and the Financial sector. Under the name Expandia Banka, the group launched a project in 1997 to create the first bank in Central Europe specializing in the providing of direct and Internet banking services. The extremely successful undertaking quickly acquired many satisfied clients and won an array of prestigious domestic and foreign awards before being sold to a strategic investor. Expandia was one of the founders of the Penzijní fond Koruna (Koruna Pension Fund), established in 1995, which acquired more than 100,000 clients during its first four years of operations and ranked among the ten largest funds providing optionally additional pension insurance. After several years of active involvement in the Koruna Pension Fund, Expandia sold its stake to a strategic partner. Development in the field of privatization funds and security funds management.The activities of Investicní spolecnost Expandia (Expandia Investment Company) in the Czech Republic and Expandia Invest in Croatia proved extremely lucrative, acquiring more than 400,000 shareholders and ranking among the most successful funds in the region. As part of the changes in group strategy, Expandia sold its shares in these companies to leading asset management firms.
This service is primarily available within the following locations:
London generates approximately 20 per cent of the UK’s GDP (or $446 billion); while the economy of the London metropolitan area – the largest in Europe – generates approximately 30 per cent of the UK’s GDP (or an estimated $669 billion). London is one of the pre-eminent financial centres of the world and vies with New York City as the most important location for international finance. London’s largest industry is finance, and its financial exports make it a large contributor to the UK’s balance of payments. Around 325,000 people are employed in financial services in London. London has over 480 overseas banks, more than any other city in the world. Over 85% (3.2 million) of the employed population of greater London works in the services industries. The City of London is home to the Bank of England, London Stock Exchange, and Lloyd’s of London insurance market. Over half of the UK’s top 100 listed companies (the FTSE 100) and over 100 of Europe’s 500 largest companies have their headquarters in central London. Over 70 per cent of the FTSE 100 are within London’s metropolitan area, and 75 per cent of Fortune 500 companies have offices in London.
New York NY
New York is a global hub of international business and commerce and is one of three “command centers” for the world economy (along with London and Tokyo). The city is a major center for banking and finance, retailing, world trade, transportation, tourism, real estate, new media as well as traditional media, advertising, legal services, accountancy, insurance, theatre, fashion, and the arts in the United States. New York City has been ranked first among 120 cities across the globe in attracting capital, business, and tourists. Many major corporations are headquartered in New York City, including 45 Fortune 500 companies. New York is also unique among American cities for its large number of foreign corporations. One out of ten private sector jobs in the city is with a foreign company.
Zürich is a leading financial center and global city. The Greater Zürich Area is Switzerland’s economic centre and home to a vast number of international companies. By far the most important sector in the economy of Zürich is the service industry, which employs nearly four-fifths of workers. Other important industries include light industry, machine and textile industries and tourism. Most Swiss banks have their headquarters in Zürich and there are numerous foreign banks in the Greater Zürich Area. Located in Zürich, the Swiss Stock Exchange was established in 1877 and is nowadays the fourth most prominent stock exchange in the world. In addition Zürich is the world’s largest gold trading centre. Ten of the country’s 50 largest companies have their head offices in Zürich, among them ABB, UBS, Credit Suisse, Swiss Re and Zürich Financial Services. The high quality of life has been cited as a reason for economic growth in Zürich. The consulting firm Mercer has for many years ranked Zürich as a city with the highest quality of life in the world. In particular, Zürich received high scores for work, housing, leisure, education and safety. Local planning authorities ensure clear separation between urban and recreational areas and there are many protected nature reserves. Other cities in the country, Bern and Geneva, were also listed among the top ten. Zurich Lake Zürich is also ranked the sixth most expensive city in the world. The city ranked behind Hong Kong and ahead of Copenhagen. It is the third most expensive city in Europe and second most expensive city in Switzerland after Geneva. Zürich benefits from the high level of investment in education that is typical of Switzerland in general and provides skilled labour at all levels. The city is home to two major universities, thus enabling access to graduates and high technology research. Professional training incorporates a mix of practical work experience and academic study while, in general, emphasis is placed on obtaining a good level of general education and language ability. As a result the city is home to many multilingual people and employees generally demonstrate a high degree of motivation and a low level of absenteeism. Such characteristics are reflected in the high level of productivity the region enjoys and account for the opening of offices and research centres in the city
Moscow has one of the largest municipal economies in Europe and it accounts for approximately 22% of Russian GDP. Moscow is the undisputed financial center of Russia and home to the country’s largest banks and many of its largest companies, such as natural gas giant Gazprom. Moscow accounts for 17% of retail sales in Russia and for 13% of all construction activity in the country. Overall, economic stability has improved in recent years; nonetheless, crime and corruption continue still hinder business development. The Cherkizovskiy marketplace was the largest marketplace in Europe, with a daily turnover of about thirty million dollars and about ten thousand venders from different countries (including China, Turkey, Azerbaijan and India). Primary industries in Moscow include the chemical, metallurgy, food, textile, furniture, energy production, software development and machinery industries. Gazprom, the largest extractor of natural gas in the world and the largest Russian company, has head offices also in Moscow, as well as many other oil, gas and electricity companies. Additionally, some industry is now being transferred out of the city to improve the ecological state of the city. Nevertheless, Moscow remains one of Russia’s major industrial centers.
Dubai’s gross domestic product is US $83.4 billion. Although Dubai’s economy was built on the back of the oil industry, revenues from oil and natural gas currently account for less than 7% of the emirate’s revenues. It is estimated that Dubai produces 50,000 to 70,000 barrels (11,000 m3) of oil a day and substantial quantities of gas from offshore fields. The emirate’s share in UAE’s gas revenues is about 2%. Dubai’s oil reserves have diminished significantly and are expected to be exhausted in 20 years. Real estate and construction (22.6%), trade (16%), entrepôt (15%) and financial services (11%) are the largest contributors to Dubai’s economy. Dubai’s top exporting destinations include India (US$ 5.8 billion), Switzerland (US$ 2.37 billion) and Saudi Arabia (US$ 0.57 billion). The emirate’s top import sources are India (US$ 12.55 billion), China (US$ 11.52 billion) and the United States (US$ 7.57 billion). India is Dubai’s largest trade partner.
Bank Al Jazira
Dr. Valchev was my colleague, working on the Trading and Structuring desk, where he created many structured solutions to support the cross-border businesses of our clients: new structured deposit types, new interest rate derivatives, CDS RAS and improved the design of TARNs (TARFs) with exotic features such as new underlyings, auto-callable, barrier and range-dependent payoffs. In addition, he had a hawk eye on the chance and detected and designed many profitable relative-value derivative trading strategies between the GCC yield curves and the USD yield curve.
It was a great pleasure to work with Dr. Valchev at Emirates NBD. According to my experience with him, Dr. Valchev was the most knowledgeable and experienced quantitative expert in our banks risk department. Thanks to his great technical skills and due to his pro-active management style my team was able to develop a highly efficient work relationship with him and his team. Dr. Valchev validated a series of pricing models and market data models for us in the most professional manner which reduced the time for the model development/implementation process by more than 50%. I wished he would have stayed longer with us instead of moving on with his own company. I can only recommend him – a very valuable man.
Dr. Valchev has an excellent understanding and expertise of financial simulation and valuation models along with a thorough mathematical and analytical foundation. He is also very good in working across teams. When it comes to building risk models, Dr. Valchev has clearly designed cutting edge models to compute exposures of path dependent trades across all asset classes. Dr. Valchev has distinguishing ability to design models and methodologies in credit risk space. I had the pleasure to work with Dr. Valchev as part of the Credit Risk Methodology Group at Deutsche Bank in 2006/2007. Dr. Valchev is a very dedicated professional with a strong theoretical and practical background in Risk Management. These skills, coupled with his strong sense of ethics and professional conduct, make him a very strong candidate and I highly recommend him. Dr. Valchev is a strong risk management professional with deep knowledge of counterparty credit risk specifics and derivatives modelling. He is always looking to the solution without losing the big picture of his sight.
Dr. Valchev has implemented front-office valuation and hedging libraries for fixed income, commodities, interest rate, FX, credit derivatives. These were used both for pre-deal evaluations and post-trade transaction management and, in some special cases, for financial reporting. For many of the large deals, the credit valuation model was an integral part of the development and was used for credit risk hedging by the CVA desk. He implemented complex multi-factor models for valuation of exotic interest rate and commodity options to evaluate them consistently with the yield and commodity curves and volatility surfaces as well as with the assumptions on their future evolutions. These model captured products’ smile/skew risk, forward volatility risk and their exposure to multi-factorness, mean-reversion and correlation. Dr. Valchev also proposed advisory platforms and business development frameworks for private banking and structured retail products, notes and certificates.
Mr Chicles is an approved Certified Learning Provider (CLP) at Appleton Greene who is a business leader and strategist with broad experience in the global multi-industrial, aerospace and defense sectors. He is a seasoned operational leader of global industrial businesses, leading transformational strategies in highly competitive markets.
As a senior, C-suite strategist for multiple major industrial corporations he has led multiple mergers, acquisitions, divestitures and restructurings, as well as corporate break-ups and spin-offs. He has a distinguished track record of successful transformations of complex organizations in dynamic and uncertain market conditions while engendering the trust and buy-in of employees, customers, vendors, owners, corporate leadership and boards of directors.
A highly engaged leader at the personal and team level he has demonstrated the ability to engender effective senior teams and boards. He’s also an active mentor, teacher and community leader.
Mr Chicles is an active board member with AES Seals, global leader in sustainable reliability engineering, and Micro Technologies Inc, an electronics and advanced manufacturing company. He is a principal partner with ProOrbis Enterprises®, a management science consultancy with premier clients such as the US Navy and PwC, as well as the principal of Xiphos Associates™, a management and M&A advisory. Recently, he served as Board Director and Chairman of Global Business Development with Hydro Inc. the largest independent pump and flow systems engineering services provider in the world.
He was President of ITT’s Industrial Process / Goulds Pumps business segment a global manufacturer of industrial pumps, valves, monitoring and control systems, and aftermarket services for numerous industries with $1.2 billion in revenue, 3,500 employees and 34 facilities in 17 countries. Preceding this role he served as Executive Vice President of ITT Corporation overseeing the creation of a newly conceived ITT Inc. following the break-up of the former ITT Corporation to establish its strategy and corporate functions such as HR, communications, IT and M&A, building the capabilities, policies and organizations for each.
He joined ITT Corporation’s executive committee as its strategy chief in 2006 and instituted disciplined strategic planning processes and developed robust acquisition pipelines to respond to rapidly changing markets. Created successful spin-offs of 2 new public corporations Exelis Inc. and Xylem Inc. ITT Corporation was named one of “America’s Most Respected Corporations” by Forbes for exemplary management and performance during his tenure there.
Before joining ITT, Mr Chicles served as Vice President of Corporate Business Development and head of mergers and acquisitions for American Standard / Trane Companies, where he initiated and closed numerous transactions and equity restructurings globally.
Additionally, he created and led the corporate real estate function which entailed more than 275 real estate transactions around the world.
He began his career at Owens Corning rising through the ranks in various operational roles to Vice President of Corporate Development.
Recently, he taught advanced enterprise strategy at Stevens Institute of Technology as an adjunct professor and still supports start-ups through the Stevens Venture Center. He continues to be active as the Founding Board Member with several successful start-up technology businesses and non-profit organizations. A community leader, Mr Chicles has held the role of President of the Greek Orthodox Cathedral in Tenafly, N.J., He also led trips abroad to Cambodia and Costa Rica to build sustainable clean-water solutions and affordable housing.
His formal education includes earning a Masters of Business Administration from The Wharton School at the University of Pennsylvania, and a Bachelors in Finance from Miami University.
Appleton Greene corporate training programs are all process-driven. They are used as vehicles to implement tangible business processes within clients’ organizations, together with training, support and facilitation during the use of these processes. Corporate training programs are therefore implemented over a sustainable period of time, that is to say, between 1 year (incorporating 12 monthly workshops), and 4 years (incorporating 48 monthly workshops). Your program information guide will specify how long each program takes to complete. Each monthly workshop takes 6 hours to implement and can be undertaken either on the client’s premises, an Appleton Greene serviced office, or online via the internet. This enables clients to implement each part of their business process, before moving onto the next stage of the program and enables employees to plan their study time around their current work commitments. The result is far greater program benefit, over a more sustainable period of time and a significantly improved return on investment.
Appleton Greene uses standard and bespoke corporate training programs as vessels to transfer business process improvement knowledge into the heart of our clients’ organizations. Each individual program focuses upon the implementation of a specific business process, which enables clients to easily quantify their return on investment. There are hundreds of established Appleton Greene corporate training products now available to clients within customer services, e-business, finance, globalization, human resources, information technology, legal, management, marketing and production. It does not matter whether a client’s employees are located within one office, or an unlimited number of international offices, we can still bring them together to learn and implement specific business processes collectively. Our approach to global localization enables us to provide clients with a truly international service with that all important personal touch. Appleton Greene corporate training programs can be provided virtually or locally and they are all unique in that they individually focus upon a specific business function. All (CLP) programs are implemented over a sustainable period of time, usually between 1-4 years, incorporating 12-48 monthly workshops and professional support is consistently provided during this time by qualified learning providers and where appropriate, by Accredited Consultants.
In today’s context of changing markets, technologies and business models, and in conjunction with historic levels of available capital, acquisitive growth has emerged as an increasingly compelling approach to transformational growth. However, as has been empirically proven growth through acquisitions is fraught with pitfalls and inherently risky. Successfully acquisitive growth requires the confluence of many factors that go beyond the traditional phased steps of a typical process. In my experience success is a function of bringing together the elements of people, processes, and technologies into a set of capabilities that are custom-made for an organization’s particular strengths, circumstances and aspirations. Winning in today’s dynamic markets demands bold, unique and sustainable strategies. The following are the stages of such an approach that I have found to create high probability, profitable growth that stands the test of time.
Additionally, while the M&A industry has many advisors available, they tend not to be operating executives who have lived through all the elements I will lay out below. Many simplistic guidelines exist, however what its clear is that the difference between success and failure with acquisitive growth is not in rote adherence to some set of processes, rather it is found in the combination of process discipline and strong application of experiential, practical knowhow. The nature of this knowhow is to apply and allocate the elements below in a smart, efficient manner to achieve exemplary outcomes for the specific client’s unique situation and circumstances.
Strategy Development: Whether at the corporate level or in a specific business unit, clients would be taken through steps to clarify the markets and segments where they currently compete and where they want to go in the future, what differentiates them from competition, where capabilities need to be refined or built, and the various functional elements (e.g. systems, processes, structures, etc.) critical to sustain profitable growth. Approach would be a combination of review of current strategies/capabilities, interviews and facilitated discussions and structured workshops. Outcomes might be a strategy to bring a particular business into a new growth phase or to meet changing competitive environments, or at the enterprise level might entail “platform building” whereby new businesses, sectors or legs are build from the ground up through foundational initial acquisitions and subsequent organic and inorganic initiatives.
Market Focus: Where will we hunt for acquisition targets? If a company allows too-wide of a scope will find themselves suffering from expensive resource drains/distractions and/or dilute efforts. Therefore, following the alignment of enterprise/business strategies the process will seek to focus the market segments and the business criteria to qualify a company to be elevated to possible target.
Research Possible Targets: Simply put, take the descriptions and criteria from above and create lists of potential targets that might fit. Each such company is researched for available information, any currently available knowledge the client might have, etc. Output is a gross list of possible targets.
Target Approach: Utilizing a number of possible approaches, one that is appropriate for the client is determined. For example, some companies may have business development or sales teams who could participate in this stage, or on the other hand for reasons such as confidentiality, resource scarcity, etc this might need to be put into the hands of specific individuals (senior executives, dedicated M&A executives, 3rd party services, etc.). Each company is different, so this is an exercise of matching needs with capabilities. The objective is to screen the gross target list to elminate those who have “killer facts” such as big contingent liabilities, prohibitive complexity such as a company with a complex ownership structure, our any other aspects that renders a target not acceptable for the next step.
Cultivation: This is a very critical part of the overall process. The essence of this authentic, genuine and meaningful relationship-buidling which requires a combination of individuals with certain skill-sets to ‘sell’ the prospects on being acquired, patience and persistence. I have many approaches, processes and techniques that I have and continue to use to great effect in this regard. Output is a short list of interested targets who have moved to active discussions and in-person meetings.
Target Assessment: During the cultivation phase as it gets more advanced, a critical success factor for effective acquisitive growth is the ability to narrow the list with limited amounts of information. This is important because the next phase is quite intensive so any company can not practically thoroughly assess all such targets. In other words, how does a client gain the insights needed to do this? Some might consider this the ‘phase I due diligence’ whereby, prior to the engagement of expensive resources such as lawyers, accountants, etc., an overview of a target’s current status is determined. Through structured and open discussions, the client engages in discussions with the targets to learn as much as possible..
Preliminary Offer: Structuring of a term sheet or letter of intent based on finding to date. Depending on these findings, certain terms may be included to lay out a) value expectations; b) focus for due diligences and commitment to support it; and c) various legal terms typical for these agreements. This tend to be non-binding agreements meant to establish exclusivity of dealings for a period of time, high level terms that both parties agree to, and confidentiality. Given my background, I have the abilility to craft these documents with minimal legal cost.
Due Diligence: This is yet another element of acquisitions that can take several different forms. Depending on the situation and capabilities of both clients and targets, due diligence activites tend to have different scopes and approaches that match each particular circumstance. A simple example would be a private company target versus a public company. With the latter, sellers often limit potential acquirers to only publicly available information whereas private companies may have limited information at their disposal. Therefore, each approach must be designed for purpose, with the output being a customized plan for a particular target. This leads to both more efficient and cost effective processes as well as deeper insights to help with final decisions.
Deal Making: After the due diligence phase, and with a set of terms already agreed, the negotiations begin to finalized the terms of value, liabilities and the myriad legal and busses considerations that must be addressed and finalized. Whether as chief negotiator or as a trusted advisor to the same, I would bring my experience and talent to bear on this phase as well as some structured approaches/guidelines.
Integration Planning: Concurrent with the commencement of due diligence, full attention is required to determine the structure, resources, plans and teams for post-closing integration. Specific approaches and processes would be employed here to ensure that a proper integration leader is named (critical), robust but prioritized integration plans (e.g. IT and Finance integration might be a first priority for some companies), organizational and assimilation plans, and specific actions in several other area. Among the more difficult and critical elements of integration is culture. While culture is a key consideration in the pre-offer phases, it tends to be among the more challenging aspects to successful acquisitions and an area where experience from a career of hands-on accountability of acquisitions brings valuable insights. Several pro-active approaches can be introduced to the clients to determine which is best to employ with any particular integration.
Execution: From plans to execution requires much more than a roadmap. While such roadmaps are critical, it is the confluence of leadership and human capital, prioritized focused actions to achieve specific results, and finally sustainable integration to bring into the client’s company the full potential of the value creation possible. Tools exist and can be created to provide structure and management support to achieve this consistently.
Important And Strategic Elements Of A Growth By Acquisition Approach
This program has thus far concentrated on the role that acquisition strategies play in driving growth.
However, this assumes that the acquisitions are carried out properly on its own. Experience has shown that acquisitions may both produce and destroy value, with the execution of the transaction typically making the difference.
The following are crucial and strategic elements that support successful acquisitions:
• Considering strategic fit: Purchasing merely for the sake of purchasing is little more than management hubris. The target businesses should in some manner meet the needs of the buyer’s company strategy (i.e. product or service line, geographic reach, etc.).
• Addressing culture fit: Due to cultural mismatches between the two merging organizations, some of the largest mergers in history have failed. It is important to take into account a company’s culture because it directly affects how it creates value.
• Doing thorough due diligence: This guarantees that the buyer “looks beneath the hood” of the company they are buying and that the price they are looking to pay for the company reflects its intrinsic value.
• Integration: Even when the share purchase agreement’s ink dries, the deal is not finalized. The two businesses must now start an integration process to ensure that they grow into something greater than the sum of their individual parts.
Advantages Of Growth Acquisition
10 advantages of expanding your company through acquisition
If you’re deciding whether to enter into an acquisition contract, you might wish to take into account the following list of acquisition benefits:
1. Strengthens a failing business
The company you work for might be going through a period of underperformance, and an acquisition might be the answer. The ability to work together as a team rather than alone may be a key factor in the business’ success. As you get to share resources with the company you’re merging with, this can assist keep the business from failing.
2. Secure financing for growth
By making an acquisition, a company might gain access to money or other important assets that it might not otherwise have at its disposal. You can easily acquire these assets with the aid of an acquisition. The firm and its employees may benefit from collaborating with a company that has sufficient resources because the development of the enterprise is the ultimate objective.
3. Have access to skilled personnel of high caliber
An acquisition can aid in boosting both the amount and quality of employees who are knowledgeable about the demands of the company. The experienced staff often stays on the firm payroll after an acquisition is completed so they can integrate. Their business acumen contributes to the companies’ success after the merger.
4. Expand the company’s market.
The corporation may diversify its offerings of goods and services as a result of the acquisition. You can make a variety of goods and distribute them to various target consumers. An acquisition often aids in a company’s development and growth.
5. Increase market influence
When you enter a new market, making an acquisition might help you combine market forces and exercise control. The synergy it offers increases your market presence and market share. If you plan to establish branches or subsidiary businesses, an acquisition may assist you lessen competition and preserve market dominance.
6. Make sure more capital is available.
Because the company is now larger after an acquisition, access to cash is improved. Higher cash and funds are available and accessible as a result of the arrangement. Amountable capital may be extended to both companies according on the agreement the companies come to when making the purchase.
7. A decrease in training expenses
Through an acquisition, your company may be able to cut internal training costs by using resources from the other acquired company. The cost of employee training is not necessary if the acquired firm develops its resources. You can use the company’s resources, depending on their state of development, to train other employees so they can develop their skill set.
8. Boost the competitiveness of your business
A purchase can take care of the requirement to adhere to higher standards as a result of the development in technical advancements. By joining forces with a smaller company that possesses the required technologies, a larger corporation can maintain its competitive position. Long-term gains from this may accrue to both businesses.
9. Lower production expenses
If you can use another company’s production facilities, facilities, and storage space, merging with them can save your production expenses. Building these kinds of facilities can be expensive, but if the business expands, it might be necessary. Sharing resources could significantly affect the budget and production costs.
10. Enable you to fulfill stakeholder expectations
Stakeholders could have expectations for the company’s growth, and making an acquisition is an effective strategy to achieve such expectations. An purchase increases the likelihood of investment returns, which may gratify the stakeholders. The pressure from the stakeholders can be handled more easily by making an acquisition, and you can even surpass their expectations.
What To Watch Out For During The Entire Acquisition Growth Process
Investigating less evident problems within the target company is the goal of the due diligence procedure.
This ranges from contracts with sizable clients that are about to expire to potential legal proceedings resulting from past business decisions.
But there are a few things that the buyer should watch out for on a more strategic level.
They consist of the following:
• Culture: Even if this phrase keeps coming up, it is crucial to the success of M&As. The culture of the target company should be thoroughly researched by prospective buyers in order to have a sense of what they are getting into.
• Competitive Edge: Is the target company “plain vanilla” or does it engage in any activities that offer it a competitive advantage (which we’ll define as the capacity to produce above-market value over the long term)?
• Leadership: Would the target company’s leadership complement your own leadership team in a positive way? Spend some time with them while conducting your research to see whether this might be the case.
• Possibilities: Are there any prospects that the target firm can take advantage of that your business won’t be able to in the near future? Let’s say it’s because of a service or product line they offer that is expected to see rapid expansion.
• Synergies: Where do your two companies’ synergies lie? Are they really complementary, or does purchasing the target company actually run the danger of causing some of your company’s income streams to be cannibalized?
The following list represents the Key Program Objectives (KPO) for the Appleton Greene Acquisitive Growth corporate training program.
Acquisitive Growth – Part 1- Year 1
- Part 1 Month 1 Business Assessment – Assessments can be incredibly valuable tools for organizations of all sizes. A comprehensive assessment methodology can help you evaluate your organization across multiple dimensions. But what are business assessments, what do they entail, and what are the benefits? Business assessments can help you identify areas of improvement and potential acquisitive growth. By taking a comprehensive approach, you can get an accurate picture of your organization’s strengths and weaknesses. Assessments can also help you develop actionable plans to improve your business. At their core, business assessments are all about providing clarity. When you’re feeling overwhelmed by the day-to-day details of running a business, it can be difficult to step back and get a clear picture of where your company is headed. That’s where assessments come in. By taking a comprehensive look at your company’s strengths and weaknesses, you can develop a clear road map for success. Assessments are an essential part of any business plan. By evaluating your company’s strengths and weaknesses, you can develop a roadmap for growth. Furthermore, assessments can help identify areas where your company may be at risk. By addressing these risks early on, you can avoid potential problems down the road. In addition, assessments can help you benchmark your company’s performance against others in your industry. This benchmarking process can give you valuable insights into areas where your company may need to improve. Ultimately, regular business assessments are a crucial tool for any organization that is looking to grow and thrive.
- Part 1 Month 2 Strategic Aspiration – A Winning Aspiration defines the purpose of your enterprise, its guiding mission and aspiration, in strategic terms. The first choice of the strategic choice cascade is winning aspirations. Here we ask, “what is our winning aspiration.” Strategically, our winning aspiration defines our purpose. Aspirations are a view of the future. Qualified with “winning,” it is the ideal future that we strive to achieve. Unless you deliberately set out to win, it is impossible to do so. A business that only wants to participate rather than succeed will invariably fall short of making the difficult decisions and large investments necessary to succeed. Aspirations that are too modest rather than lofty are much more harmful. Most businesses fail because they have low expectations.
- Part 1 Month 3 Segment Focus – Every company aspires to grow. But, in a market where competition is fierce, inorganic business growth requires insight and innovation. Segmenting the market and customers is among the most effective techniques to promote acquisitive growth. Yet as numerous businesses have shown, artful segmentation can result in a significant competitive advantage. The purpose of segmentation is to inform your marketing approach. Using this method, it is feasible to recognize and categorize groups of potential clients based on their shared preferences, needs, and interests. This method effectively identifies the demographics most likely to value a specific good or service you provide. Furthermore, it may assist you in positioning that service so that it outperforms that of your rivals.
- Part 1 Month 4 Targeted Offerings – Everything the market offers, be it products or services or any experience, is known as a market offering. Market offerings are also divided among themselves based on the nature of the offering. Read along to understand the role and value of market offerings. Individuals within a market have different wants and needs. As a result, businesses in the market offer various products and services. The ultimate aim of businesses is to fulfill all the varying wants and needs of the population. Providing better target offerings and standing out in the market will eventually lead to more loyal customers and a broader customer base. People expect businesses to add value to their lives in various ways, precisely the purpose of market offerings – satisfying customer needs.
- Part 1 Month 5 Target Pool – The purpose of this workshop is to map out the offerings that one wants to develop or enhance for the focus segments defined by WDP3. A target pool is at the intersection of Targeted Offerings and Focused Segments. For example, if your strategy is focused on growing a currently manufactured product beyond your existing markets, you’ll want to know all the players who make these products in the markets where you don’t currently play but aspire to. In this simple case, the target pool would be derived by researching the current suppliers in these focus segments and profiling them for certain things such as size, channels to market, etc. The approach of this workshop is to take the Targeted Offerings and in a way and ‘map’ them with the Segment Focus areas we developed previously. In reality you might only need to do one or few of these approaches, but the workshop can develop the understanding and skills to do this work, which is in essence synthesizing the ‘strategic play’ associated with any acquisitive growth program.
- Part 1 Month 6 Target Identification – Target identification in acquisitive growth is the process of identifying potential companies or assets that align with the strategic objectives of the acquiring company. It involves conducting comprehensive research, market analysis, and due diligence to evaluate various factors such as financial performance, growth potential, synergies, industry trends, competitive landscape, and cultural fit. The goal is to identify targets that offer strategic value and can contribute to the acquirer’s growth, profitability, market position, or diversification objectives. This process requires careful evaluation, consideration of risks, and alignment with the acquiring company’s overall M&A strategy to ensure successful integration and value creation.
- Part 1 Month 7 Target Approach – All business investors are “financial” investors – the real question is how “strategic” is their ability to leverage the assets of the target. Providing practical guidance on approaching a business target and conducting initial due diligence depends on the investor’s criterion, competencies, and execution bandwidth. At this point, you will have identified a target or group of targets and you are attempting to learn enough about the target to determine whether to proceed with developing a meaningful indication of interest. Of course, an active seller is likely prepared for the sale process and represented by an advisor who is postured to provide the financial and operating information necessary for investors to quickly determine the suitability of a deal (i.e., a pitchbook and defined protocols for communication and information access). However, many desirable targets may not be seeking a sale because business conditions are favorable, and their businesses have been managed to provide options to the owners regarding continued independence and turn-key ownership and management succession. If the former, you, as a prospective buyer may have already pinged on the radar of the seller, and if the later, you have mined for target opportunities and are ready for the next step to accomplish an acquisition.
- Part 1 Month 8 Deal Approach – The M&A landscape is becoming increasingly competitive and the balance of power is shifting further in favour of buyers. For attractive businesses, however, sellers may wish to make divestments through an auction process which is designed to elicit competitive bidding among interested parties to facilitate the sale of a business or stake in a company at the highest price and on the best possible terms. Not all transactions require collaboration between the buyer and the seller, however. In many instances, an auction is still a better approach than a negotiation. The trick is in knowing which process to use when. To make that choice, you need to clearly understand your potential buyers, the characteristics of the asset in question, your own priorities, and the relative importance of speed and transparency to obtaining the best price.
- Part 1 Month 9 Cultivation – (non-auction)
- Part 1 Month 10 Cultivation – (organized process)
- Part 1 Month 11 Confirm Target – Assuming initial contact and conversations go well, the acquirer asks the target company to provide substantial information (current financials, etc.) that will enable the acquirer to further evaluate the target, both as a business on its own and as a suitable acquisition target. After producing several valuation models of the target company, the acquirer should have sufficient information to enable it to construct a reasonable offer; Once the initial offer has been presented, the two companies can negotiate terms in more detail.
- Part 1 Month 12 Talent Assessment – Talent decisions can be made with less precision, discipline, and data but frequently require more complexity than other integration decisions (such as decisions about goods, markets, or customers). M&A leaders must “up their game” in talent assessment if they want to succeed. In the end, the acquirer must decide if current employees from the target (the acquired company) are the most qualified to carry out the goals of the new organization.
Acquisitive Growth – Part 2- Year 2
- Part 2 Month 1 Talent Strategy – There are numerous tactics available for talent acquisition. But not every organization benefits from every method or strategy. When developing your strategy, consider the following factors: industry, size, development trajectory, types of positions, leadership, and more.
- Part 2 Month 2 Integration Strategy – The process of integrating a buyer and seller to the extent required to realize the anticipated benefits from a merger or acquisition is known as an M&A integration. An M&A integration plan outlines the merger’s goals, top priorities, performance indicators, non-negotiables, and scope.Getting agreement among your leaders on the integration strategy is the first stage in an M&A integration. At least two to three months before the deal closes, they should make it clear.
- Part 2 Month 3 Business Plan – Lack of a business strategy before an acquisition is one of the main mistakes that many M&A practitioners make. When considering an M&A, the business strategy is a vital resource. It provides comfort to those funding the deal that the reasoning behind it is sound and that the decision to acquire is not being made on a whim, as well as a roadmap for what you’re looking for in a business acquisition.
- Part 2 Month 4 First 90-Day Plan – HR must be quick and efficient when acquisition is at the core of a company’s growth strategy. The first 90 days are crucial for the organisation’s long-term performance as well as for the retention of individual employees. We can win hearts and minds by day 90 and have a better probability of them becoming productive team members if we have a robust acquisition plan.
- Part 2 Month 5 Valuation – One of the biggest challenges in negotiating a business acquisition is typically price haggling. The intricacy of business valuation makes this more challenging because a fair value cannot be determined without thoroughly examining the company’s financial data, sales trends, customer and supplier base, and many other factors.
- Part 2 Month 6 Synergy Analysis – A significant driver of value in M&A transactions is the potential for establishing synergies. A synergy is the idea that two businesses might be valued more highly when united than when valued separately. Knowing the possible synergies in an M&A transaction is crucial to any agreement, for both the buyer and the seller.
- Part 2 Month 7 Due Diligence (Foundational – Foundational due diligence is an organization’s baseline due diligence requirements that they must have on file for every vendor relationship, regardless of risk level, in order to do business with them. With origins in the private-sector world of business and finance, the term “due diligence” refers to the process through which an investor (or funder) researches an organization’s financial and organizational health to guide an investment (or grantmaking) decision. The decision to fund or not to fund is based upon a balance of objective data analysis, insight into the general state of organizational health and stability, and intuition. A sound and thorough due diligence review is the process through which all the factors that make up that equation are uncovered and understood. It is the process in which a program officer seeks the “truth” about an organization. Foundation program officers are faced with multiple challenges in assessing whether to recommend a grant to their board or decision-making committee. First, they must ascertain whether and to what extent the proposed activity coincides with the foundation’s guidelines and priorities. Next, they must assess the worth of the proposed activity itself — does it advance the fi eld, provide needed services or generate new learning? If the proposal survives this initial scrutiny, it must then be weighed for its relative merits beside many other worthy proposals. This process requires a great deal of skill and sensitivity. Due diligence protects a foundation’s investments and reputation and advances its mission and overall strategy.
- Part 2 Month 8 Due Diligence (Business Plan) – When you receive a proposal on your desk, the first step of proposal review is generally a consideration of the alignment of the applicant organization and proposed project with your foundation’s guidelines and interests. If this initial review is positive, due diligence typically commences with broad research and information gathering to provide a good understanding of the organization, how it fits into the field and the way in which this project will advance your foundation’s strategy. You might also contact colleagues for their view of the organization and its work. Then, you move on to get to know the applicant on a deeper level, including interviews with some combination of the executive director, board chair, other board members and staff members key to the proposed project. Each of these activities is covered in depth in this tool.
- Part 2 Month 9 Deal-Making (Direct Negotiation) – Direct negotiations are a deal making process in which an agency may contact a single contractor of its choice to submit a quote or tender without having first gone through a genuine competitive process.
A variation to an existing contract can also be a direct negotiation. Bargaining between buyer and contractor is a critical element of the process. The objective is to reach agreement on all terms and conditions and to obtain the goods and services at a price that is fair and reasonable to both the contractor and the agency. Direct negotiations are not intended to avoid competition or to discriminate against any organization and must be conducted in a manner consistent with the standards of behavior and requirements. A suitable assessment, based on comprehensive knowledge gained through specific market research, will need to be made to justify direct negotiation.
- Part 2 Month 10 Deal-Making (Auctions) – Many (if not most) complex deals between buyers and sellers—from home sales to purchasing auctions to corporate mergers—qualify as auction deal making. Deal making (auctions) give sellers the opportunity to avoid making the difficult tradeoffs of traditional negotiations or auctions— competition versus value creation, for example, or many versus few bidders. In fact, sellers can take the best of both worlds— negotiations and auctions—to ensure they get a great deal. Auction deals have the following features: 1. One-on-one negotiations. At some stage of the deal making process, the seller engages one or more buyers in private discussions about the asset on the table. 2. One or more rounds of bidding. The seller also pits potential buyers against one another in an auction. 3. Several, but not too many, potential buyers. Deal making at auctions need enough parties to spark an auction but not so many that one-on-one negotiation would be difficult for the seller to manage. 4. Process ambiguity. In a traditional auction, the seller determines the process (whether there will be a single round of bidding or multiple rounds, for instance), and buyers are passive participants. In auction deal making, by contrast, the process is up for grabs. Buyers can try to shape the process to their advantage, as in the case of an auction contestant who approaches a seller about negotiating privately to move beyond the single issue of price. In general, whether you are the process setter or a bidder in an auction that has features of a negotiation, don’t assume that the rules are set in stone. Instead, change the game by thinking about how you can influence the rules, parties, and assets to your advantage.
- Part 2 Month 11 Documentation – The paperwork phase of a merger or acquisition is crucial. It might be regarded as the merger and acquisition process’s soul. With due diligence complete, parties make the final decisions on moving forward to execute the transaction. For legal teams, this comes with several responsibilities. Corporate or pre-clearance filings must be made in advance of the closing date. These include merger filings, amendments, ordering of good standings, or issuance of bring-down letters.
- Part 2 Month 12 Communications – An increase in M&A activity indicates a potential deal for entrepreneurs, business owners, and C-suite executives. In the event that a tempting deal is successful, it would be advisable to view an employee communication plan as a crucial component.
It’s challenging to make this kind of acquisition successful. Seven fundamental operating principles are used by profitable corporate and financial purchasers, according to research. Almost all phases of the acquisition process, from the selection of candidates through post-merger management, are impacted by these ideas.
• Insist on cutting-edge operating tactics.
• If you can’t identify the leader, don’t make the deal.
• Provide top executives with significant incentives.
• Connect pay to variations in cash flow.
• Accelerate the rate of change.
• Encourage lively interactions between the board, managers, and owners.
• Employ the top acquirers.