If You Can’t Beat ‘Em, Buy ‘Em Out

A gleeful businessman with a suitcase full of money.

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It’s not an uncommon occurrence: two companies duking it out in the marketplace, their battle only ending when one buys out the other. Whether it’s GoDaddy buying up European rivals to expand its reach or Billtrust taking its competition, Invoice Connection, out of the game to do away with constant low ball pricing scares, there are plenty of reasons why a company might choose to buy out a rival.

Of course, ideally, the situation is more of an amicable, strategic merger. San Francisco investment banker Thom Weisel is no stranger to this sort of development: his Montgomery Securities was sold to NationsBank in 1997, and in April of 2010, Stifel Financial purchased Thomas Weisel Group.

Montgomery Securities, a privately held investment bank that focused on lucrative IPOs of high tech companies, ultimately became a subsidiary of NationsBank called NationsBanc Montgomery Securities Inc. Weisel continued to serve as the unit’s chairman. This came after Weisel announced several months earlier that Montgomery was looking for strategic partners. So rather than a foundation of anger and distrust, this deal was made based on a desire for compromise.

“The combination of our two companies is a great fit and will allow us to reach our goal of providing one-stop shopping to our clients,” Weisel said at the time.

As for Stifel’s acquisition of Thomas Weisel Partners, the all-stock transaction, involving more than $300 million, definitely sweetened the deal. And while Stifel did basically buy Thomas Weisel Partners out, Stifel made the purchased investment bank a fairly autonomous subsidiary with Weisel himself a co-chairman of the board.

Unfortunately, not all buyouts are this smooth. Flint Lane’s Billtrust, an electronic and paper billing service aimed at plumbing, electrical, and lumber supply wholesalers, suffered from years of bitter rivalry with Invoice Connection, a rival company who consistently went after Billtrust’s clients by offering much lower prices.

Still, Lane wasn’t going to let the simmering animosity affect his business decisions. He met with Invoice Connection co-founder Earl Beutler, and on June 6, 2011, the two companies signed a letter of intent for Billtrust to buy out Invoice Connection. The deal closed in September of that year.

The world of mergers and acquisitions is, at least in theory, a realm of utmost professionalism. Companies make decisions about expanding, partnering, and buying based on the market and what’s best for each individual business. But there’s always the cutthroat underbelly, where sometimes the best solution to the problem of competition is to…well, buy it out. No matter what unpleasantness may (or may not) occur during the actual handoff, the positive outcomes are usually worth it: the subsequently formed businesses are stronger and can offer their clients more services and opportunities.

So in the end, having a rival might not be such a bad thing after all.

Print Media Isn’t Dying

A picture of a typewriter with the words "the end" printed on a piece of paper.

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For a while there, everybody was concerned that print media was going extinct because people were reading newspapers and books online. That’s turning out to be a false alarm though, as several studies have shown that physical books are experiencing a resurge in popularity.

Newspapers, which have been seen as struggling in the digital age, are also doing fine (at least in the United Kingdom, anyway). According to a recent study, print newspapers are more popular than their digital counterparts, with readers spending 89% of their time with print editions and only 4% and 7% with web and mobile versions.

Other studies have shown that in Germany, print newspapers are 38% more likely to be used as a weekly news source than the web, while in the U.K. that number is only 13%. The authors of the British study think that German readers could spend even more time with their print papers. So while not everybody is reading print newspapers, or maybe newspapers at all, those that are seem to prefer print.

What this tells us is that digital technology hasn’t been as “disruptive” as we’d thought (disruptive in this case meaning that it would kill print media). The people lamenting the death of print media have mostly been people who were slow to embrace digital media in the first place. But there’s no reason that print and digital media can’t coexist, since they serve different purposes for different people.

Could print media eventually die out? Sure, but that’s still a ways down the road. In the meantime, it’s here to stay.

What does that mean for publishers, whether that be books, newspapers, magazines, or comics? It means that they need to pay attention to the way readers actually engage. Better than wasting their time trying to find ways to hinder digital media, they should find ways to work with it, or to find audiences that prefer print products they already make. Adaptability, and paying attention to what’s actually happening, is key here.

Study Shows That People With ADHD Add Value to Business

A clipboard that reads "ADHD." There are several prescription medications and medical devices surrounding it.

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There are numerous traits associated with entrepreneurial success, including risk taking, passion, persistence, and time commitment. But these traits are also associated with something else: ADHD. Most of us are used to hearing ADHD discussed as a problem, making it hard for students or workers to focus. But that’s only because we’re used to discussing ADHD in the context of structured environments that expect the same thing from everyone.

New evidence gathered from an international study found that, “some of the symptoms of ADHD resemble behaviors commonly associated with entrepreneurship—in a positive sense.” Some of the symptoms even had “a decisive impact on the subjects’ decision to go into business and on their entrepreneurial approach.”

These symptoms include impulsiveness, which allowed the study participants to make decisions without getting bogged down by details and concerns. Additionally, their boredom with their jobs often led them to start their own businesses. Hyper-focus allowed them to hone in on a task and really go after it, which contributed as well to their high activity level. But all of these pros could just as easily become cons, such as when impulsiveness makes it difficult to focus on routine tasks like bookkeeping.

It’s worth nothing that not all ADHD participants were successful, and sometimes their businesses failed, but so do a lot of business, regardless of who starts them. What this study does is gives us a new light in which to look at both entrepreneurship and ADHD, which should help us develop better understandings of both.

The markers by which we measure the success of a business might not be telling us everything about what makes a successful business, or who should start one. And by finding these connections to their symptoms, we can take a more positive look at ADHD as something other than a problem. It’s not something that needs to be treated or cured, but something that people need to learn how to make work to their advantage.

Private Equity Tycoon Reveals How He Turned His Company into a $90 Billion Business

Bundles of cash.

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Everybody loves a good story about the American Dream, and this one’s pretty big. In a recent interview with Institutional Investor, American financier Henry Kravis gave the inside scoop on how he built one of the biggest private equity firms in the world.

It all started in 1976, when Henry Kravis and his cousin, George Roberts, decided to start their own investment company. Both men were 32 years old at the time. With limited financial resources, they each invested $10,000 into the company. Their partner, Jerome Kohlberg, was about 20 years older and was able to put $100,000 into the company.

Their strategy was to build a company with a unique workplace culture. Both Kravis and Roberts had worked for global investment bank Bear Stearns in the past, which Kravis described as being an “eat what you kill” environment. Kravis and his partners decided very early on that they didn’t want that type of culture, so they set out to design a company that was centered on active involvement and collaboration.

“We set a firm up that everyone would participate in everything we did, and that way we got everybody to work together. And today, 40 years later, that’s the same kind of culture that we have,” Kravis stated.

Being the optimists that they are, Kravis and his partners set an extremely high goal for themselves: raise $25 million. But they soon figured out that they couldn’t raise $25 million on terms that were acceptable to them. So they decided to regroup and set the bar a little lower: raise $500,000 to cover overhead costs.

“And so we said, ‘okay. Let’s go out to have a group of individuals that will put up $50,000 each for a commitment for five years, and if they put that kind of money up, we’ll show them every deal we do. They can come in or not come into the deal, but if they come in, we want 20% of the profits.’”

And that’s how KKR was born. Kravis says that to this day, neither he, Roberts, or Kohlberg have needed to put another penny into the company. With just $120,000, the three of them built the second largest private equity firm in the world, managing a total of more than $90 billion in assets.

Burger King Buys Popeyes Chicken

A photo of the outside of a Popeyes Restaurant.

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Restaurant Brands International, the company that owns Burger King, will be buying Popeyes Louisiana Kitchen for $1.8 billion. Popeyes is known for its Cajun cuisine and extremely popular fried chicken which can be found in its 2,600 restaurants worldwide.

Daniel Schwartz, CEO of Restaurant Brands International, is excited about the new venture.

“RBI is adding a brand that has a distinctive position within a compelling segment and strong U.S. and international prospects for growth,” he said in a statement. “As Popeyes becomes part of the RBI family we believe we can deliver growth and opportunities for all of our stakeholders including our valued employees and franchisees. We look forward to taking an already very strong brand and accelerating its pace of growth and opening new restaurants in the U.S. and around the world.”

Restaurant Brands International is already doing well in the fast food market due to Burger King’s rising sales, but this Popeyes purchase can make it a formidable opponent in the fried chicken arena, where KFC is still king. Wall Street seems to think it has a chance. As of Tuesday morning, the company’s value rose 19% (up from Friday’s closing numbers), bringing Popeyes’ stock up to $79 per share.

Popeyes was founded in the early 1970s in New Orleans, and has since become a staple for chicken lovers in more than 25 countries. Cheryl Bachelder, CEO of Popeyes, is just as excited as Schwartz when it comes to the RBI/Popeyes partnership.

“As Popeyes enters its 45th year,” she said, “it’s success reflects the amazing brand entrusted to us by founder Al Copeland, Sr. and the unique high trust partnership that we enjoy with our franchise owners. RBI has observed our success and seen the opportunity for exceptional future unit growth in the U.S. and around the world.

Restaurant Brands International also owns Tim Horton’s, the Canadian coffee and doughnut chain.

Online Ads Result in Offline Sales

A screenshot of the Google AdWords logo.

Photo courtesy of Martin Lafrance at Flickr Creative Commons.

The question of whether or not online ads are a worthwhile investment is one that plagues many companies. Unless customers are clicking on ads and those ads are directly resulting in a sale, its hard to gauge whether or not they’re beneficial. That’s where statistics and experiments come in, which can help make more sense of online advertising. But there’s still a gap in the data, namely, how do you know if online ads are working if the vast majority of your sales are in-store?

To investigate that question, researchers from the University of Rochester, Netflix, and Pandora worked with Yahoo! and an unspecified clothing retailer to figure out how effective that retailer’s online ads were. It turns out that, according to the data, they’re pretty effective. On average, the ads increased revenue by 3.6%.

While that may not sound like a lot, it’s actually about three times what the company spent on those ads, which is a really good return on investment. What’s really interesting though, is that about 84% of in-store sales increases came directly from online ads. In other words, the ads were working and driving people to the physical stores, instead of driving them to the online store.

There are likely a few reasons behind that, which may not be applicable to all retailers. Shopping for clothes is, generally speaking, a more personal experience than shopping for home goods or books. Buying clothes generally requires trying them on, unless you have a very good understanding of how a specific company sizes and cuts their clothing.

So while people might buy books and movies online with no worry, a lot of them seem to be still buying clothes in stores. But the online advertisements are still working, because those same people are spending enough time online that this is where the ads are having the most effect.

Telecommuting Often Means More Hours, But Not More Pay

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Telecommuting is all the rage these days, with several companies using it as a way to attract and retain employees. It’s long been heralded as a way for companies to offer more flexible hours to their employees. But according to one survey, what it’s actually doing is adding more hours to the work week… without offering adequate compensation for those hours.

The National Longitudinal Survey of Youth, operated by the U.S. Bureau of Labor Statistics from 1989 to 2008, found that people (especially salaried workers) ended up putting in an average of three extra hours per week when they telecommuted. These additional hours did not result in more compensation.

While the flexibility exists to work outside the typical 9 to 5 range, the problem is that work tends to get more stretched out, and people are working more to make up for actually using that flexibility. And since the workplace has become increasingly connected via smart devices and social media, this problem is actually getting worse.

And since telecommuting continues to be used as a perk to attract employees, that problem could become even more entrenched. Luckily, there are some companies that have not only realized that they can recruit talented people by offering telecommuting, but that they need to reign that in and make sure their employees aren’t working too much from home.

The key is in maintaining contact, so that bosses know what employees are working on and when. Time tracking is also important, as it allows employees to gauge exactly how long they’ve been working.

Companies should also make it a point to bring these issues to light in training. Burnout is no joke, and employees should be aware of the signs and symptoms before it becomes a major concern. But more than anything, the workplace culture has to change. There’s this dominating ideology that one must work copious amounts of hours in order to be successful, and that couldn’t be further from the truth.

Celebrating a Job Well Done in the World of Private Investing

A bunch of first-place ribbons lined up side-by-side.

Photo courtesy of Matt Northam at Flickr Creative Commons.

The world of private investing may seem stuffy on the surface, but just like any profession, it comes with its perks, including the glitzy world of awards for a job well done. These awards bring the community together to honor and support coworkers, competitors, and big time accomplishments. Some of the most notable awards are the Private Debt Investor Award (US), Investor All Stars (UK), and the US Investment Management Awards (US).

Private Debt Investor Awards

These awards honor the private investment companies that are at the forefront of the industry. PDI, an industry website and print publication, offers annual awards in more than 40 categories. Winners are determined by votes from industry professionals. You can’t nominate yourself or your own company, but you can nominate colleagues and partners.

This year the competition has been pretty fierce. Adamas Asset Management, Barings, KKR, and SSG Capital Management were all neck-and-neck for Asia Pacific Lender of the Year in early December. In the Global Newcomer of the Year category, Adams Street Partners, CPRDET Capital, Northleaf Capital, and Marc Lipschultz’s Owl Rock Capital Partners were all duking it out right up until voting closed at midnight on January 5.

Final results have yet to be announced.

Investor Allstars

For fifteen years, Investor Allstars has been known as the “Oscars” and the “Must Attend” event for European investors. More than 600 entrepreneurs and investors from both Europe and the US have attended the glamorous annual awards ceremony, taking place this year on September 27 at Westminster Bridge, Park Plaza, London.

These awards honor the successes of the broader European investment industry, as well as singling out CEOs who dare to take calculated risks to improve investments around the world. Awards include Venture Capital Fund of the Year, Growth Fund of the Year, Corporate Development Team of the Year, and Investor of the Year.

Investor Allstars also offers a supplementary award for Europe’s Allstar Company, which is voted on by attendees. The award honors Europe’s most valuable technology companies.

Nominations for these awards are currently open.

US Management Investment Awards

The 7th Annual US Investment Manager Awards ceremony took place on May 19, 2016 in New York City. The awards honor US institutional investors who implement innovative strategies, as well as the excellent performance of money managers in 39 asset classes.

The winners are determined by Institutional Investor Magazine’s editorial and research teams, which consult with eVestment’s research team before reaching their decision. They look for particularly impressive investment strategies based on performance over time, information ratio, standard deviation, and upside market capture. In addition, more than 1000 leading US pension plans, foundations, endowments, and other institutional investors are surveyed for their thoughts on the most impressive investors of the year.

Nominations for 2017 are now open.

Every industry likes to take a moment to honor their truly exceptional members, and private investors are no exception. These three awards are just some of the options for celebrating the clever—not to mention lucrative—business decisions being made every year.

American Express to Offer Substantial Parental Leave

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American Express is upping their game by offering a substantial and still uncommon parental leave package to employees: 20 weeks full-paid time off.

Beginning in January 2017, American Express will be expanding its parental leave policy to both mothers and fathers to 20 weeks, as well as an additional six to eights weeks for women who require medical leave after giving birth. This expansion is substantial, as their current policy offers six weeks paid leave for the primary caregiver and two weeks for the secondary (which is usually the mother and father, respectively). The additional time for moms requiring medical leave is the same.

This offer is available to all full and part-time employees who have worked at American Express for at least one year.

“American Express remains deeply committed to our working families and an inclusive culture that supports all of our employees,” says Kevin Cox, Chief Human Resources Officer at American Express. “These significant enhancements to our benefits reflect a continued investment in the overall well-being of our employees and their families.”

American Express is just one of many companies making parental leave more appealing and generous to employees, thus making life significantly easier for everyone involved. Plus, American Express is going above and beyond with extended benefits. New parents will now be offered:

  • Free 24/7 access to board-certified lactation consultants
  • Up to $35,000 in reimbursement of adoption and surrogacy expenses (up to two times per employee)
  • A lifetime benefit of $35,000 (maximum) for reproductive and fertility treatments, under the company’s health plan
  • Free breast-milk shipping for nursing moms who have to travel for work
  • Access to a parent concierge who can help with any questions or concerns they may have about their benefits.

Backup daycare and flexible working arrangements are also being offered to new and expectant parents. It’s good to see the workforce finally become more friendly towards women and families.

Sears is Going Down Like the Titanic

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Today, Sears reported huge losses, causing many analysts to speculate that the company will be liquidating all stores within the coming year or so. Sears is no stranger to losses; the store’s revenue has been falling for quite some time now. But after losing $748 million this last quarter, it looks like stakeholders are finally ready to call it quits.

“In our view, it is now too late to turn this around,” wrote Neil Saunders, CEO of retail consulting firm Conlumino. “It is just not financially feasible to reverse it.”

Saunders further compared Sears to the Titanic, saying that the company looks “set to sink.” But Saunders’ pessimistic outlook didn’t stop Sears Chief Financial Officer Jason Hollar from trying to reassure investors.

“We understand the concerns related to our operating performance,” Hollar stated in a prerecorded conference call. “We have fallen short on our own timetable for achieving the profitability that we believe the company is capable of generating. With that said, the team remains fully committed to restoring profitability to our company and creating meaningful value.”

The situation has gotten so bad that there are now widespread rumors that the company will go bankrupt. But according to Hollar, the company still has plenty of assets to draw from, meaning that they will keep stores running for at least a little while longer.

“We believe that our liquidity needs will be satisfied through the foreseeable future using the levers available to us through our portfolio of assets,” Hollar stated.

But there is at least a little hope at the end of the tunnel. According to Hollar, several companies have expressed interest in either purchasing or licensing Sears’ in-house brands. Kenmore, Craftsman, and DieHard are just some of the brands that investors are looking into.

Sears also owns Kmart, which is rumored to be closing its doors as well. But despite widespread accusations, Sears CEO Edward Lampert said that, “there have never been any plans to close the Kmart format.”

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