CEO's need to be comfortable with some level of diversification to keep their companies relevant over the long-term. Long-time Anheuser-Busch InBev (ticker: BUD) CEO Carlos Brito was not afraid of big acquisitions. However, his most notable large acquisitions (Anheuser-Busch and SABMiller) failed to add new beverage categories to the tired product portfolio while weighting it … Continue reading Carlos Brito Is On His Way Out as BUD CEO. Did BUD’s Board Try To Help Brito?
Return On Invested Capital ("ROIC") is my preferred measure for analyzing how well acquisitions perform post close. My formula is not textbook and uses a couple of variations. The first uses operating cash flow, the second uses revenue in the numerator. The denominator in both instances consists of purchase consideration (cash, equity and debt), legal … Continue reading ROIC Is A Good Measure of M&A Effectiveness
SPACs are popular at the moment accounting for approximately 38% of IPO activity through May. Pershing Square filed for the largest SPAC on record earlier this week with its $3 billion Pershing Square Tontine Holdings filing. SPAC filings of Pershing Square's size suggest more competition for private equity firms may be forthcoming. https://youtu.be/1U2PxBGetqw https://soundcloud.com/ceorater
Disney CEO Bob Iger stepped down from his CEO post effective immediately and will remain Executive Chairman through December 2021. Bob Chapek has been named Chief Executive Officer. Our expectation was that Kevin Mayer - Chairman Direct-to-Consumer & International - would be named Mr. Iger's successor. Does this abrupt CEO change foreshadow a larger transaction? … Continue reading Disney’s Sudden CEO Change – What Does It Foreshadow?
It ought to be an interesting earnings call next week for CVS Health (ticker: CVS). Former Aetna CEO Mark Bertolini resigned from CVS Health's Board of Directors last night. Bertolini told the Wall Street Journal that the CVS Health / Aetna post-deal integration is far from over - a statement that contradicts CVS Health CEO … Continue reading CVS Health, Aetna Post-Deal Integration Hiccups
Roper Technologies has generally executed well over the past number of years. We offer three recommendations to Roper for driving superior operational performance and shareholder returns. 1.) Focus the Enterprise Software M&A strategy: This is Priority One. To date Roper has taken a buckshot approach to M&A with acquisitions scattered across the Software landscape. This … Continue reading Here’s How Roper Technologies (tkr: ROP) Can Raise Its Game
The TEK2day PropTech Outlook provides our perspective on where we believe the PropTech industry is headed over the next few years. Major themes include: I.) further industry consolidation and II.) AI-driven revenue opportunities and operating efficiency gains. The TEK2day PropTech Landscape (link at the bottom of this article) includes company names, descriptions, CEOs, 2019 revenue … Continue reading TEK2day PropTech Outlook & LandscapePremium
When is the correct time to sell your company? Many entrepreneurs and CEOs struggle with this question. A blueprint unfortunately does not exist. Below are signposts we have observed primarily across Application Software, FinTech, InsurTech, Information Services, IT Services and Technology-Enabled Services. The company participates in a mature end market and continued growth is dependent … Continue reading Is It Time to Sell Your Company?
Based on June quarter earnings call results, management teams have less visibility into Sales pipelines, Revenue forecasts and Profitability in the aggregate than several months ago. This in turn causes would be acquirers to haircut purchase price valuations if not walk away from deals entirely. In the former case, valuation haircuts typically either stall deal … Continue reading It Takes Two to Tango. Don’t Expect M&A Activity to Accelerate Anytime Soon
PE firms can’t cut their way to prosperity in perpetuity. Strategic Acquirers We applaud when strategic acquirers defeat PE buyers for coveted assets (for a list of strategic acquirers that do M&A well click here). Our rationale is that strategic acquirers are typically motivated to optimize acquired assets so as to maximize ROIC over the … Continue reading The PE Model Is Unsustainable