Elizabeth Perry/White Bull:
What is this M&A Madness?
Falk Müller-Veerse/Cartagena Capital:
As we all know, there was virtually nothing happening anywhere between September 2008 and all the way up until September 2009 (Q4 of last year). There was the occasional “must-have” deal, but certainly not the “nice to have” deal. It all seems to have started again in Q1 2010. The first sign of recovery was already observed in September of 2009, when companies like Cisco began to acquire again. The North American Venture Capital Association now says this first quarter 2010 was the busiest ever quarter for M&A activity since they started tracking transactions.In Q2 we already saw the return of large deals, such as the Sybase acquisition by SAP and the Verisign/Symantec deal.
Now also European investors are looking to do deals again. The “window of opportunity” is wide open. And it’s wise to find a bank soon because who knows how long that window will be open!
WB:
You’ve done a great deal of work with the so-called Big Dogs throughout your career. Can you give me a little peek? How should one approach them?
FM:
Well, as with any other Big Deal, one has to go about this in a very specific way, depending on the company. We spend a good deal of time crafting a proposal or pitch that carefully outlines, not only the “thing” that the company is offering, but also the return on investment for the potential buyer.
WB:
So, now that this Exit market is open, as you say, where is the focus?
FM:
Well, it’s no secret that the Americans are still the biggest buyers. Google, IBM, Cisco .. They are all looking to acquire superior technology companies in Europe and elsewhere.
WB:
Is Europe a good place to invest?
FM:
A very good place indeed. Not only is there fantastic innovation coming out of Europe, but European companies also tend to be less capital intensive. This means that the cost of starting a company is less, but also the purchase price is less. However, it is still potentially a good return on investment. … That said, in the “Valley”, everything is there. The network. The perfect ecosystem. … That kind of geographical Disneyland doesn’t exist in Europe … Over here, it’s still pretty fragmented.
WB:
Where is the “room for improvement” with European Innovation.
FM:
I think companies need to be pushed more to grow or move along more quickly. Europeans tend to hold on too long to their companies for the ideal exit timing. Right now there’s a window for Exit. There are a lot of companies that would benefit from taking advantage of that.
WB:
What can a company like Cartagena Capital offer a firm that they can’t accomplish on their own?
FM:
We have the relationships with potential buyers and the know-how to get to the right decision makers. We are also experts in smart strategy. We know how to position the company for sale and rigid process management.
The fact is, companies who are going through an Exit need to be able to focus primarily on running their business. They shouldn’t need to deal with the process on their own. The truth is that there is too much emotion when you’re “running your own show.” … We help mediate the process. Companies need an advisor, especially at this stage of the game … one who really understands their business, their technology and can help manage the relationships with all of the various stakeholders.
WB:
We hear lots of criticism about companies who “sell out” to the larger firms. How do you maintain, for example, the unique attributes of your company or product? And, can you retain the “personal” or “intimate” relationship with the customer?
FM:
This is really all about finding the right acquirer at this point, but something that should be discussed early on … One has to be careful about just this if the goal is to see the technology or business to continue rather than just maximizing returns.
WB:
What are some of the misconceptions about getting ready for Exit?
FM:
I think often Europeans believe that the M&A advisor has to be American to be effective. … This is not always the case as it is usually more important to be close to the sellers as there will be lots of support needed in managing the entire process and all the stakeholders. US advisors tend to not get involved as much in those discussions. In addition, US firms may not care as much about international clients as they will continue to have their main client base in their home market.
WB:
What’s the best part of your job?
FM:
I love the roadshows and get a kick out of negotiating a great deal for my clients. … It is lots of fun working with clients … seeing them shine and seeing them the reap the rewards they have been working so hard for. It is also so stimulating meeting fascinating and talented people who are passionate about what they are doing. I think it’s really very exciting out there right now with so many deals to be done!