Month: September 2018

#AxSAKnowledge (03/14/2017)

Pay attention to your business strategy and the culture of your organization. All too often, the best-laid plans can be inadequate for their practical environments, and culture ends up eating strategy for breakfast.

When decision-makers of a company, for example, try to integrate the dynamic team of an acquired company into their own staid troupe, the innovative nature of the newcomers usually becomes crippled and dies off.

As a manager implementing new strategies in your organization, you would do well to consider the following approach, in order to overcome cultural impediments within the organization:

— Survey the terrain
— Anticipate resistance, and identify those individuals and practices likely to pose the greatest challenge to new strategies
— Develop qualitative and quantitative metrics for measuring results
— Designate key personnel to lead the implementation of the new strategies
— Articulate your strategies and goals well enough to secure the buy-in of your team
— Get to work
— Evaluate feedback
— Deal swiftly with deficiencies
— Be adaptable, and make changes where necessary
— Stay on course, commit to best practices, and strive through your actions to succeed each day

(Photo taken from the AxSA video presentation to Startup Grind Johannesburg; April, 2015)
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#AxSAKnowledge (08.13.2018)

Acquiring an existing business comes with some challenges. While the buyer is likely getting a talent pool and an established customer base, there is no guarantee that the target company will live up to its price tag. In fact, particularly when the valuation of the existing business is lofty, the buyer should consider using earnouts as a way to protect his or her interests in the transaction.
Essentially, with an earnouts, the buyer will pay only a portion of the purchase price for the existing business, while making the balance of the purchase price contingent on the future performance of the business. Consequently, the seller may receive the remainder of the price if revenue, market-share, and cost-control milestones are met.
Because this approach can get complicated, the buyer and seller are well-advised to clearly negotiate the performance milestones, and the metrics used to measure them, in advance of reaching an agreement, while also setting the terms for payouts and their timetables.
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